UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MINNESOTA
Robin E. Figas,
and all others similarly situated,
Plaintiffs,
v.
Civil File No. 08-CV-4546 (PAM/FLN)
Wells Fargo & Company, Employee
Benefit Review Committee, Howard I.
Atkins, Patricia Callahan, Ellen Haude,
Mike Heid, Clyde Ostler, Tim Sloan, John
G. Stumpf, Peter J. Wissinger, and Doe
Defendants 1-20.
Defendants.
PLAINTIFFS’ MOTION FOR AWARD OF ATTORNEYS’ FEES,
REIMBURSEMENT OF EXPENSES, AND CASE
CONTRIBUTION AWARD FOR CLASS REPRESENTATIVE
Plaintiff Robin E. Figas and the Class respectfully move the Court for the
entry of an order (1) awarding attorneys’ fees in the amount of $5.25 million—
30% of the $17.5 million Settlement Fund, (2) awarding costs and expenses in the
amount of $485,891.21, and (3) awarding a case contribution payment in the
amount of $20,000 to Ms. Figas.
The grounds for the requested relief are set forth in the accompanying
memorandum of law and supporting exhibits and declarations.
Respectfully submitted,
Dated: July 5, 2011
By: /s/ Gregory Y. Porter
McTIGUE & VEIS LLP
J. Brian McTigue (admitted pro hac vice)
Bryan T. Veis (admitted pro hac vice)
James A. Moore (admitted pro hac vice)
4530 Wisconsin Avenue, NW
Suite 300
Washington DC, 20016
BAILEY & GLASSER LLP
Gregory Y. Porter (admitted pro hac vice)
James B. Perrine (admitted pro hac vice)
910 17th Street, NW
Suite 800
Washington, DC 20006
SPRENGER & LANG PLLC
Michael D. Lieder (admitted pro hac vice)
Bryce M. Miller (MN Bar No. 386901)
1400 Eye St. Ste 500
Washington, DC 20005
ROBBINS, KAPLAN, MILLER &
CIRESI LLP
Joel A. Mintzer
800 LaSalle Avenue
2800 LaSalle Plaza
Minneapolis, MN 55402
Attorneys for Plaintiffs
2
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MINNESOTA
Robin E. Figas,
and all others similarly situated,
Plaintiffs,
v.
Civil File No. 08-CV-4546 (PAM/FLN)
Wells Fargo & Company, Employee
Benefit Review Committee, Howard I.
Atkins, Patricia Callahan, Ellen Haude,
Mike Heid, Clyde Ostler, Tim Sloan, John
G. Stumpf, Peter J. Wissinger, and Doe
Defendants 1-20.
Defendants.
MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFFS’
MOTION FOR AWARD OF ATTORNEYS’ FEES,
REIMBURSEMENT OF EXPENSES, AND CASE CONTRIBUTION
AWARD FOR CLASS REPRESENTATIVE
McTIGUE & VEIS LLP
J. Brian McTigue (admitted pro hac vice)
Bryan T. Veis (admitted pro hac vice)
James A. Moore (admitted pro hac vice)
4530 Wisconsin Avenue, NW
Suite 300
Washington DC, 20016
BAILEY & GLASSER LLP
Gregory Y. Porter (admitted pro hac vice)
James B. Perrine (admitted pro hac vice)
910 17th Street, NW
Suite 800
Washington, DC 20006
Co-Lead Counsel for ERISA Plaintiffs
SPRENGER & LANG PLLC
Michael D. Lieder (admitted pro hac vice)
Bryce M. Miller (MN Bar No. 386901)
1400 Eye St. Suite 500
Washington, DC 20005
ROBINS, KAPLAN, MILLER &
CIRESI LLP
Joel A. Mintzer
800 LaSalle Avenue
2800 LaSalle Plaza
Minneapolis, MN 55402
Attorneys for Plaintiffs
TABLE OF CONTENTS
I.
INTRODUCTION……………………………………………………….1
II.
FACTUAL AND PROCEDURAL BACKGROUND..............................5
A. Description of the Action…………………………………………….5
B. Investigation of Claims and Plaintiffs’ Complaint…...………………8
C. Summary of the Litigation……………………………………………9
D. Discovery Undertaken……………………………………………….10
E. Settlement Negotiations……………………………………………..11
F. The Proposed Settlement……………………………………………12
III.
REQUEST FOR ATTORNEYS’ FEES……………………….………..13
A. The Eighth Circuit Favors the Percentage-of-the-Fund Approach in
Common Fund Cases…………………………………………….…..13
B. Class Counsel’s Fee Request is Reasonable in Light of the Eighth
Circuit’s Criteria for Determining Appropriateness of Fee Requests..15
1.
The Benefit Conferred on the Class……………………...16
2.
The Risk to which Plaintiffs’ Counsel was Exposed…….19
3.
The Difficulty and Novelty of the Legal and Factual Issues
of the Case………………………………………………..20
4.
The Skill of the Lawyers…………………………………21
5.
The Time and Labor Involved……………………………21
6.
The Reaction of the Class………………………………...22
i
7.
The Comparison between the Requested Attorney Fee
Percentage and Percentages Awarded in Similar Cases….23
C. Lodestar Cross-Check and Multiplier………………………………...25
D. Reimbursement of Payment of Class Counsel’s Expenses…………...27
E. Case Contribution Award for Named Plaintiff……………………….28
IV.
CONCLUSION…………………………………………………………..30
ii
TABLE OF AUTHORITIES
FEDERAL CASES
Page(s)
Boston & Maine Corp. v. Sheehan, Phinney, Bass & Green, P.A.,
778 F.2d 890 (1st Cir. 1985)…………………………………………………..…..27
Camden I Condo., Ass’n v. Dunkle,
946 F.2d 768 (11st Cir. 1991)………………………………………………..……14
Carlson v. C.H. Robinson Worldwide, Inc.,
No. 02-3780, 2006 WL 2671105 (D. Minn. 2006)……………………………16, 24
Cosgrove v. Sullivan,
759 F. Supp.166 (S.D.N.Y. 1991)………………………………………………...26
EEOC v. Fairbault Foods, Inc.,
No. 07-3976, 2008 WL 899999 (D. Minn. Mar. 28, 2008)………………………23
Goldberger v. Integrated Res. Inc.,
209 F.3d 43 (2d Cir. 2000),………………………………………………………14
Harman v. Lyphomed, Inc.,
945 F.2d 969 (7th Cir. 1991)……………………………………………………..14
Hecker v. Deere & Co.,
556 F.3d 575 (7th Cir. 2009)……………………………………………………..19
In re Rite Aid Corp. Secs. Litig.,
146 F. Supp. 2d 706 (E.D. Pa. 2001)…………………………………………….26
In re Thirteen Appeals Arising out of the San Juan DuPont Plaza Hotel Fire Litig.,
56 F.3d 295 (1st Cir. 1995)………………………………………………………14
In re Triangle Indus. S’holders Litig.,
No. 10,466, 1991 Del. Ch. LEXIS 203 (Del. Ch. Dec. 19, 1991)……………….26
In re. U.S. Bancorp. Litig.,
291 F.3d 1035 (8th Cir. 2002)……………………………………….………..3, 15
iii
In re UnitedHealth Group, Inc. PLSRA Litig.,
643 F. Supp. 2d 1094 (D. Minn. 2009)…………………………….……13, 25, 26
In re. Xcel Energy, Inc. Secs. Derivative & ERISA Litig.,
364 F. Supp. 2d 980 (D. Minn. 2005)………………………………………..3, 14
Johnston v. Comerica Mortgage Corp.,
83 F.3d 241 (8th Cir. 1996)……………………………………………………..13
Johnson v. Ga. Highway Express,
488 F.2d 714 (5th Cir. 1974)……………………………………………………16
Loomis v. Exelon Corp.,
No. 06-CV-4900, 2009 WL 4667092 (N.D. Ill. Dec. 9, 2009)………………….19
Oh v. AT&T Corp.,
225 F.R.D. 142 (D.N.J. 2004)…………………………………………………..27
Petrovic v. Amoco Oil Co.,
200 F.3d 1140 (8th Cir. 1999)………………………………………………….13
Rawlings v. Prudential-Bache Props., Inc.,
9 F.3d 513 (6th Cir. 1993)………………………………………………………14
RJR Nabisco Inc. Secs. Litig.,
MDL No. 818, No. 88-Civ-7905, 1992 WL 210138 (S.D.N.Y. Aug. 24, 1992).26
Six Mexican Workers v. Arizona Citrus Growers,
904 F.2d 1301 (9th Cir. 1990)………………………………………………….14
Swedish Hosp. Corp. v. Shalala,
1 F.3d 1261 (D.C. Cir. 1993)…………………………………………………..14
Taylor v. United Techs. Corp.,
No. 2:06-CV-1494, 2009 WL 535779 (D. Conn. Mar. 3, 2009)………………19
Tibble v. Edison Int’l,
2010 WL 2757153 (C.D. Cal. July 8, 2010)…………………………………..19
iv
Yarrington v. Solvay Pharms. Inc.,
697 F. Supp. 2d 1057 (D. Minn. 2010)…………………..…3, 14, 15, 16, 24, 25
Weiss v. Mercedes-Benz of N. Am. Inc.,
899 F. Supp. 1297 (D.N.J. 1995), aff’d 66 F.3d 314 (3d Cir. 1995)………….26
FEDERAL STATUTES
29 U.S.C. §§ 1104, 1105 and 1106……………………………………….…7, 8
RULES
Fed. R. Civ. P. 23……………………………………………………………..21
v
Class Representative Robin E. Figas and the class she represents respectfully
submit this brief in support of their Motion for an Award of Attorneys’ Fees,
Reimbursement of Expenses, and Case Contribution Award. The Motion seeks an
award of attorneys’ fees of $5.25 million, which represents thirty percent of the
Settlement Fund1 of $17.5 million and reimbursement of out-of-pocket costs and
expenses in the amount of $485,891.21. Plaintiffs also request the Court approve
the payment of a case contribution award in the amount of $20,000 for the Lead
Plaintiff.
Plaintiffs seek an award of fees and expenses only on behalf of Co-Lead
Counsel and the additional Plaintiffs’ counsel2 who worked on this case at the
direction of Co-Lead Counsel (collectively “Class Counsel”).
I.
INTRODUCTION
On March 31, 2011, this Court preliminarily approved the proposed
Settlement of $17.5 million. Class Counsel negotiated vigorously on behalf of the
Class, ultimately achieving a recovery through settlement that is exceptional in
light of the potential damages and litigation risks in this case. The settlement
negotiations were mediated by the Hon. James H. Rosenbaum (Ret.). The
1
The Settlement Agreement is attached as Exhibit 1. The provisions of the
Settlement Agreement, including all definitions of terms, are incorporated by
reference herein. Thus, all capitalized terms not otherwise defined in this
Memorandum of Law have the meaning as in the Settlement Agreement.
2
Additional counsel are Sprenger and Lang PLLC, the Law Offices of William G.
Bertain, and Robins, Kaplan, Miller & Ciresi LLP.
settlement will provide substantial benefits to Class members and resolve all
claims asserted by Plaintiffs. The attorneys’ fees sought by Class Counsel are fair
compensation for their efforts in bringing this action to a favorable conclusion and
for undertaking the considerable risks associated with prosecuting the action,
including the substantial risk they would receive no compensation at all.3
Class Counsel faced considerable challenges in prosecuting this action.
ERISA lawsuits of this type face significant risks as they involve complex and still
evolving law. As detailed below, the risks included the very real possibility that,
despite Class Counsel’s best efforts, the Class would have received less money
than the Class Settlement Amount or even nothing at all if this case proceeded
through trial. For example, had the litigation continued, Defendants would likely
have argued that the claims were barred by ERISA’s statute of limitations,
Defendants’ actions were consistent with industry practices, and the investment
funds at issue outperformed relevant benchmarks once complex fee rebates and
other fee reductions were taken into consideration. In sum, Plaintiff and Class
Counsel believe this to be an excellent result for the Class.
3
It should also be noted, as described in greater detail below, that the reported
lodestars do not include time for work on the motion for final approval, preparation
for and travel to the hearing on final approval, and the significant, ongoing role of
Class Counsel, and in particular, Co-Lead Counsel, in the administration of the
Settlement that will be necessary following any final approval. As noted below,
Co-Lead Counsel estimate approximately $50,000 in fees for the foregoing
anticipated tasks, which, if added to the reported lodestar, would yield a multiplier
of 1.571.
2
Despite the risks, Class Counsel thoroughly investigated the merits of, and
then filed, this Action. In the end, this Settlement, which was achieved by the skill,
creativity, perseverance and hard work of Class Counsel, offers significant relief
for the Plan and its participants.4 The requested fee of thirty percent of the total
recovery, is justified under the factors considered by the courts in this Circuit in
determining fee awards. See In re Xcel Energy, Inc. Securities, Derivative &
ERISA, 364 F. Supp. 2d 980, 998 (D. Minn. 2005) (relying on several factors in the
Fifth Circuit’s 12-factor test and finding that courts in the Eight Circuit and the
District of Minnesota frequently award attorney fees between twenty-five and
thirty-six percent of a common fund in class actions); Yarrington v. Solvay
Pharms., 697 F.Supp.2d 1057, 1061 (D. Minn. 2010) (“In the Eighth Circuit,
courts have routinely awarded attorney fees ranging from 25% to 36% of the
common fund under the percentage-of-the-fund method.”); In re U.S. Bancorp
Litig., 291 F.3d 1035, 1038 (8th Cir. 2002) (approving an award representing 36%
of the fund amount).
4
The extensive efforts of Class Counsel in achieving this excellent result are
summarized below and described in (1) Exhibit 3, Plaintiffs’ Memorandum in
Support of Unopposed Motion For Preliminary Approval of Settlement,
Modification of Class Certification Order, Approval of Settlement Notice and
Setting a Date for Final Fairness Hearing; (2) Declaration of Gregory Y. Porter;
(3) Declaration of J. Brian McTigue; (4) Declaration of Michael D Lieder;
(5) Declaration of Joel A. Mintzer; and (6) Declaration of William G. Bertain.
Plaintiffs fully incorporate the contents of each of these filings and declarations
into the instant submission, including the terms defined formally therein.
3
Ms. Figas, the Class Representative, actively participated in this litigation.
She consulted with counsel on all key decisions, including, in particular,
amendments to the pleadings and the settlement terms. She reviewed pleadings,
reviewed and provided answers to interrogatories and requests for production of
documents, and sat for deposition.
Class notice was mailed by the settlement administrator on June 6, 2011. In
addition, the settlement administrator has maintained a dedicated website, an
automated Interactive Voice Response system, and a Call Response Center with
experienced, trained staff to respond to Plan participants and class members calls
about the settlement. A more detailed description of the means and manner of class
notice and communications with class members will accompany Plaintiffs’ Motion
For Final Approval Of Class Action Settlement, Certification Of Settlement Class
And Approval Of Plan Of Allocation, to be filed on July 7, 2011.
To date, only one objection has been filed (Dkt. No. 263), and one other
received, which are addressed below.
For the foregoing reasons, and as demonstrated below, we respectfully
request that the Court approve Plaintiffs’ request for fees, expenses and case
contribution award.
4
II.
FACTUAL AND PROCEDURAL BACKGROUND
A.
Description of the Action
Class Representative Robin E. Figas is a current employee of Wells Fargo &
Co. (“Wells Fargo”) and a participant in the Plan. (Third Amended Complaint
(“TAC”) ¶15.) During the Class Period, she invested in three funds covered by the
Settlement, the Wells Fargo Large Company Growth Fund (id.), the Wells Fargo
Capital Growth Fund (Dkt. No. 123-1, pgs. 211-212), and the Wells Fargo Asset
Allocation fund during the Class Period (TAC ¶15).
The Plan is a defined contribution plan under ERISA. (Id. ¶27.) Wells Fargo
is the Plan sponsor and, by definition, a party in interest to the Plan. (Id. ¶¶16, 29.)
Wells Fargo was also a fiduciary for the Plan for much of the Class Period, through
July 31, 2005. (Id. ¶ 6.)
The Wells Fargo Employee Benefit Review Committee (“Benefit
Committee”) and its members (collectively the “Committee Defendants”) are
fiduciaries to the Plan. (Id. ¶¶17-25, 36-37). All the members of the Benefit
Committee are officers or employees of Wells Fargo. (Id. ¶38.) Among other
things, the Committee Defendants selected the investments which were offered by
the Plan to participants. (Id. ¶37.) Wells Fargo Bank, N.A. (“Wells Bank”) is the
trustee of the Plan, and holds and invests the Plan’s assets. (Id. ¶39.)
5
Plaintiffs alleged that during the Class Period, the Committee Defendants
caused the Plan to invest in certain investment funds offered and advised by Wells
Fargo Funds Management, LLC, (“Wells Funds”5), an affiliate or subsidiary of
Wells Fargo (TAC ¶2). The Plaintiffs alleged the Committee Defendants did not
conduct an objective review of the available investment options when selecting
Wells Funds, but instead selected Wells Funds because those funds generated
substantial revenues for Wells Fargo and because Plan assets provided essential
“seed money” to those funds, allowing them to be financially viable and attract
investment dollars from other investors. (Id. ¶¶3, 51.) Plaintiffs alleged that the
Plan was by far the largest investor in many Wells Funds (Id. ¶¶51-52). Plaintiffs
further alleged that better performing, lower cost, comparable investment funds
were available from unaffiliated companies, and that the Committee Defendants,
by virtue of their positions at Wells Fargo, one of the largest financial services
companies in the United States, knew or should have known this. (Id. ¶¶43-46).
5
The “Wells Funds” referenced in the Complaint are the Wells Fargo Diversified
Small Cap Fund, Wells Fargo Diversified Equity Fund, Wells Fargo Large
Company Growth Fund, Wells Fargo Growth Balanced Fund, Wells Fargo
Moderate Balanced Fund, Wells Fargo Aggressive Allocation Fund (formerly
Wells Fargo Strategic Growth Allocation Fund), Wells Fargo Conservative
Allocation Fund (formerly Wells Fargo Strategic Income Fund), and the Wells
Fargo Asset Allocation Fund. (TAC ¶2.) The Settlement Agreement also covers the
Wells Fargo Capital Growth Fund. (SA ¶1.41.) The Wells Fargo Capital Growth
Fund was also offered by Wells Funds Management. (TAC ¶51.)
6
Furthermore, Plaintiffs alleged that the Committee Defendants caused the
Plan to invest in the Administrator rather than the Institutional share classes of
many of the Wells Funds. (Id. ¶¶47-50).6 The Administrator share class for each
Wells Fund charges higher expense ratios than the Institutional share class of each
fund. (Id. ¶49). This preference for the more expensive share classes of the Wells
Fargo investment funds occurred even though the Plan - because of the large
amount of assets it was investing - was clearly eligible for lower cost Institutional
class shares. (Id. ¶48.) Plaintiffs alleged this decision to invest in the Administrator
share class enriched Wells Funds at the expense of the Plan, and caused the Plan to
pay millions of dollars in excess fees. (Id. ¶50). Plaintiffs alleged Defendant Wells
Fargo knew or should have known that the Committee Defendants were breaching
their ERISA fiduciary duties, but took no steps to protect the Plan. (Id. ¶62.)
Instead, she alleged, Wells Fargo was aware of and participated in the breaches. Id.
Plaintiffs alleged in Count I that the Committee Defendants engaged in
prohibited transactions in violation of 29 U.S.C. §1106(a)(1)(A), (C), and (b) by
causing the Plan to invest in Wells Fargo affiliated investment products provided
by Wells Fargo subsidiaries and affiliates. (TAC, Count I.) In Count II, Plaintiffs
6
Many mutual funds offer several share classes. The expense ratios, sales charges,
and redemption charges vary by share class. Institutional shares generally have the
lowest expense ratios, do not pay sales or redemption charges, and carry no 12b-1
distribution fees. See John Downes et al., Barron’s Finance & Investment
Handbook 51 (7th ed. 2007).
7
alleged that the Committee Defendants breached the ERISA fiduciary duties of
loyalty and prudence specified in 29 U.S.C. § 1104(a)(1)(A), (B) by causing the
Plan to invest in Wells Fargo affiliated funds. (TAC, Count II.)
Count III alleges Wells Fargo breached its co-fiduciary duties under ERISA,
29 U.S.C. § 1105, by participating in the breaches of the Committee Defendants,
and failing to take steps to remedy those breaches. (TAC, Count III.)
Count IV alleges Wells Fargo violated ERISA by knowingly participating in
the fiduciary breaches and prohibited transactions of the Committee Defendants.
(TAC, Count IV.)
Count V alleges Wells Fargo itself breached its duties of loyalty and
prudence by causing the Plan to invest in Wells Funds. (TAC, Count V.)
B.
Investigation of Claims and Plaintiffs’ Complaint
Before filing the initial complaint, Co-Lead Counsel reviewed Plan
documents and filings with government agencies to evaluate the Plan’s
investments and assets under management. Co-Lead counsel compared the returns
of the Plan’s investments in the Wells Funds to appropriate benchmarks, examined
the percentage of assets within the Wells Funds represented by the Plan, and
engaged consultants to examine various aspects of the Wells Funds. Co-Lead
counsel also reviewed pertinent cases, researched legal claims and reviewed
voluminous public records regarding Wells Fargo. (Porter Decl. ¶3.)
8
C.
Summary of the Litigation
Plaintiffs filed this suit on November 1, 2007 in the United States District
Court for the District of Columbia. Defendants included Wells Fargo, one of the
largest financial institutions in the country. Defendants had enormous financial
resources to contest Plaintiff’s claims, and they vigorously defended this case and
were prepared to contest it through trial had the parties not settled the lawsuit.
After the suit was filed, Defendants moved to transfer the litigation to this
Court. Their motion was granted on July 8, 2008 and the case was transferred.
(Dkt. No. 19.)
Thereafter, Defendants moved to dismiss the Complaint, contending, among
other things, the returns of the Wells Funds were competitive, the fees charged, net
of rebates, were reasonable and lower than the fees charged for Institutional share
class, and that they acted appropriately and prudently in selecting and monitoring
the Plan’s investment offerings. Defendants also raised affirmative and procedural
defenses which, if accepted by the Court, could have been dispositive of some or
all of Plaintiffs’ claims. After oral argument on Defendants’ motion to dismiss, the
judge assigned to the lawsuit, the Hon. David S. Doty, recused himself. (Dkt. No.
54.) This Court subsequently granted in part and denied in part Defendants’ motion
to dismiss. (Dkt. No. 57.) The Court also dismissed plaintiff Yvonne W. Gipson
for lack of standing under ERISA, but denied Defendants’ motion to dismiss the
9
claims against Defendants. On September 17, 2009, Plaintiffs amended their
complaint. (Dkt. No. 89.) Shortly thereafter, Plaintiffs moved to certify the lawsuit
as a class action; Defendants opposed class certification and submitted an expert
report in opposition. Defendants also moved for summary judgment on Count I,
arguing that Plaintiffs’ prohibited transaction claim was not timely. On April 6,
2010, the Court granted Plaintiffs’ motion for class certification and Defendants’
motion for summary judgment on Count I. (Dkt. No. 150.)
Thereafter, Plaintiffs moved to amend their complaint in light of evidence
adduced in discovery. The Court granted that motion in part and denied it in part
on June 4, 2010. (Dkt. No. 175.) The TAC was filed on June 7, 2010.
Subsequently, Plaintiffs moved to amend the class certification order to conform to
the TAC. The Court granted that motion on September 1, 2010. (Dkt. No. 233.)
D.
Discovery Undertaken
Plaintiffs entered into the Settlement with a full and comprehensive
understanding of the strengths and weaknesses of their claims, which are based on
Co-Lead Counsel’s extensive investigation during the prosecution of this Action as
well as their extensive experience with claims of this type. Before filing the
Complaint, and afterward, Co-Lead Counsel consulted with merits and loss
experts, reviewed pertinent cases, researched legal claims and reviewed
voluminous public records regarding the Company. Defendants produced and
10
Plaintiffs reviewed more than 211,000 pages of documents. (Porter Decl. ¶6.) The
document review included detailed coding and analysis of all documents using an
online document management database customized to fit the case as discovery and
document review proceeded. (Id.)
The Parties submitted expert reports and took two expert depositions on
class certification. (Porter Decl. ¶7.) Defendants took the deposition of Ms. Figas.
(Id. ¶8) Plaintiffs took the deposition of eight current and former Wells Fargo
employees, including several of the individual defendants, and took discovery and
depositions of two non-party witnesses. (Id.) Plaintiffs served two principal and
two rebuttal reports from two expert witnesses on the merits and the amount of
losses. (Id. ¶9). Defendants served four expert witness reports on the merits. (Id.
¶10). Defendants took the depositions of Plaintiffs’ experts on the merits. (Id. ¶11).
In all, the Parties took fourteen depositions. (Id. ¶13.)
E.
Settlement Negotiations
On October 18, 2010, the Parties engaged in an all-day mediation supervised
by the Hon. James Rosenbaum (Ret.), former Chief United States District Judge
for the District of Minnesota. (Porter Decl. ¶14.) In preparation for the mediation,
Plaintiffs engaged in detailed liability and loss analyses, consulted with their loss
expert, and analyzed the case in comparison to settlements in similar cases. (Id.) In
addition, the Parties prepared and submitted joint and separate mediation
11
statements. (Id.) During the course of the mediation, the Parties exchanged detailed
loss analyses. (Id.) The Parties reached a settlement in principle in the evening,
after intense and extensive negotiation. (Id.) The settlement negotiations were
arm’s length, wide-ranging, intense, and based on the complete discovery record,
expert and consultant reports, as well as an analysis of settlements in similar cases.
(Id. ¶15.)
F.
The Proposed Settlement
The Settlement, Exhibit A hereto, provides for a $17.5 million cash payment
to the Class, which will be allocated to members of the Class pursuant to the Plan
of Allocation, Exhibit B hereto. In exchange, the Plaintiffs and the Plan will
dismiss and release all claims made in the litigation. The cash value of the
settlement compares favorably to other settlements involving similar claims, which
have ranged from $1.72 million to $26 million. (Porter Decl. ¶16.) The Plan of
Allocation, Exhibit 2 hereto, was developed after extensive dialogue about the
available data with staff of an experienced class action settlement administrator
and Defendants. (Porter Decl. ¶19.) Plaintiffs’ counsel and the settlement
administrator reviewed numerous documents detailing the data components and
reviewed and analyzed very large and complex data files. (Id.) The Plan of
Allocation allocates settlement funds to participants based on the amount a given
participant invested in Wells Funds during the Class Period on a quarterly basis.
12
(Id.) This method fairly and reasonably allocates settlement funds to those
participants who invested in the Wells Funds during the Class Period. (Id.)
III.
REQUEST FOR ATTORNEYS’ FEES
A.
The Eighth Circuit Favors the Percentage-of-the-Fund
Approach in Common Fund Cases
There are two prevailing methods for calculating attorneys’ fees in common
fund cases: the percentage-of-the-fund method and the lodestar/multiplier method.
The percentage method requires the court to determine counsel’s fee based on what
it determines is a reasonable percentage of the fund recovered for those benefited
by the litigation; the lodestar method requires the court to determine the number of
hours reasonably expended multiplied by a reasonable hourly rate. Johnston v.
Comerica Mortgage. Corp., 83 F.3d 241, 244-5 (8th Cir. 1996) (citations omitted).
The lodestar sum may then be increased by a “multiplier” to account for the costs
and risks in the litigation, as well as the complexities of the case and the size of the
recovery. In re UnitedHealth Group Inc., PLSRA Litig. 643 F. Supp. 2d 1094, 1106
(D. Minn. 2009).
In the Eighth Circuit, the percentage-of-the-fund method should “be
employed in common fund situations.” Johnston, 83 F.3d at 245. See also
Petrovic v. Amoco Oil Co., 200 F.3d 1140, 1157 (8th Cir. 1999) (“It is well
established in this circuit [the Eighth Circuit] that a district court may use the
‘percentage of the fund’ methodology to evaluate attorney fees in a common-fund
13
settlement. . . .”); Xcel Energy, Inc. Securities, Derivative & ERISA, 364 F. Supp.
2d 980, 991 (D. Minn. 2005) (“In the Eighth Circuit, use of a percentage method of
awarding attorney fees in a common-fund case is not only approved, but also ‘well
established.’”) “Awarding attorney fees based on the percentage of the common
fund is a routine calculation of fees.” Yarrington, 697 F. Supp. 2d at 1061 (D.
Minn. 2010) (citing Blum v. Stenson, 465 U.S. 886, 900 n.16 (1984)).
The Manual for Complex Litigation also endorses the use of the percentage
of the fund method in awarding attorneys’ fees in common fund cases. See
MANUAL FOR COMPLEX LITIGATION (FOURTH) (“MANUAL”) 14.21
at 187 (2004)
(commenting that “the vast majority of courts of appeals now permit or direct
district courts to use the percentage-fee method in common fund cases.”).
Practically every Court of Appeals that has addressed the issue has approved the
percentage-of-the-fund method.7
In recognition of their skill, extensive efforts and the excellent result
achieved for the Class, and consistent with Eight Circuit law, Class Counsel
7
See In re Thirteen Appeals Arising out of the San Juan DuPont Plaza Hotel Fire
Litig., 56 F.3d 295, 305 (1st Cir. 1995); Goldberger v. Integrated Res. Inc., 209
F.3d 43, 47-49 (2d Cir. 2000); In re GMC Pick-Up Truck Fuel Tank Prods. Liab.
Litig., 55 F.3d 768, 821-22 (3d Cir. 1995); Rawlings v. Prudential-Bache Props.,
Inc., 9 F.3d 513, 515-16 (6th Cir. 1993); Harman v. Lyphomed, Inc., 945 F.2d 969,
975 (7th Cir. 1991); Six Mexican Workers v. Arizona Citrus Growers, 904 F.2d
1301, 1311 (9th Cir. 1990); Camden I Condo, Ass’n v. Dunkle, 946 F.2d 768, 77374 (11th Cir. 1991); Swedish Hosp. Corp. v. Shalala, 1 F.3d 1261, 1269-71 (D.C.
Cir. 1993).
14
request an award of attorney’s fees from the common fund created in this Action
pursuant to the “percentage-of-the-benefit” method. The Eighth Circuit has
endorsed the common fund percentage approach and noted that it is more
appropriate for common fund cases.
B.
Class Counsel’s Fee Request is Reasonable In Light of the
Eighth Circuit’s Criteria for Determining Appropriateness of
Fee Requests.
Class Counsel request $5.25 million in fees, representing thirty percent of
the Class Settlement Amount, plus $485,891.21 for reimbursement of out-ofpocket costs and expenses. For the reasons that follow, these requests are fair and
reasonable under the relevant standards and should be awarded in this case.
Yarrington, 697 F. Supp. 2d at 1061 (“In the Eighth Circuit, courts have routinely
awarded attorney fees ranging from 25% to 36% of the common fund under the
percentage-of-the-fund method.”); In re U.S. Bancorp Litig., 291 F.3d 1035, 1038
(8th Cir. 2002) (approving an award representing 36% of the fund amount).
The Eighth Circuit has not decided all the factors that a district court must
consider when determining what percentage of the fund is reasonable. Yarrington,
697 F. Supp. 2d. at 1061. The Eighth Circuit also has not established a
“benchmark” percentage that the court should presume to be reasonable in a
common fund case, as other circuits have. In re Xcel., 365 F. Supp. 2d at 993, n.7.
Even so, decisions from the Eighth Circuit have relied on factors set forth by other
15
Circuits, including the Third and Fifth Circuits. Yarrington, 697 F. Supp. 2d at
1061 (citing Carlson v. C.H. Robinson Worldwide, Inc., No. 02-3780, 2006 WL
2671105, at *7 (D. Minn. Sept. 18, 2006) (considering several factors of the Third
Circuit’s 10-factor test in finding that a fee award of 35.5% of the common fund
was “reasonable and appropriate”) and In re Xcel, 364 F. Supp. 2d at 993
(considering seven factors of the Fifth Circuit’s 12-factor test established in
Johnson v. Ga. Highway Express, 488 F.2d 714, 719-20 (5th Cir. 1974)). In Xcel,
the court considered seven factors: (1) the benefit conferred on the class, (2) the
risk to which plaintiffs’ counsel was exposed, (3) the difficulty and novelty of the
legal and factual issues of the case, (4) the skill of the lawyers, both plaintiffs and
defendants’, (5) the time and labor involved, (6) the reaction of the class, and (7)
the comparison between the requested attorney fee percentage and percentages
awarded in similar cases. In re Xcel, 364 F. Supp. 2d at 993. Each of these factors
supports the award of Class Counsel’s requested fees.
1.
The Benefit Conferred on the Class
The proposed settlement is clearly beneficial to the Class. Pursuant to the
Parties’ Settlement Agreement, the Class will obtain an immediate and certain
benefit from the creation of a $17.5 million fund. This $17.5 million fund is an
excellent result for the approximately 200,000 Settlement Class members. The
Settlement Class is comprised of Plan participants and beneficiaries who invested
16
in the Wells Funds during the Settlement Class Period. Thus, many Plan
participants will receive a financial benefit without any further delay. This is no
small feat given the obstacles facing the Class in this case. Such obstacles and risks
included statutes of limitation and other affirmative defenses, uncertainty
surrounding the measure of losses and relevant benchmarks and therefore
questions about the amount of losses, whether losses would be measured fund-byfund or across all funds, including those that outperformed benchmarks, as well as
a defense on the merits at trial. Further, the $17.5 million recovery represents just
over 19.5% of claimed losses where performance of the subject funds was
measured against the performance of the Morningstar8 category for each subject
fund.9 (Porter Decl. ¶17.) Further, settlements in similar ERISA cases have ranged
from $1.72 million to $26 million. (Id. ¶16.) And the settlement amount exceeds
the median gross recovery in ERISA cases as reported in a 2010 article by 25%.
8
Morningstar is a leading provider of investment information for professionals and
investors. “Morningstar provides data on approximately 380,000 investment
offerings, including stocks, mutual funds, and similar vehicles, along with realtime global market data on more than 5 million equities, indexes, futures, options,
commodities, and precious metals, in addition to foreign exchange and Treasury
markets.” http://corporate.morningstar.com/us/asp/subject.aspx?xmlfile=177.xml.
9
The Morningstar benchmark consists of the performance of all mutual funds in
the relevant Morningstar peer group, i.e. the Morningstar mutual fund category
(e.g. domestic large company growth equity funds) in which Morningstar places
each of the subject funds. Morningstar’s database includes virtually every mutual
fund offered in the United States, so this benchmark is comprehensive. The
performance of each of the subject funds is compared to the average of the
performance of the funds in the Morningstar category, as Morningstar calculates
this average. (Porter Decl. ¶17.)
17
Theodore Eisenberg & Geoffrey P. Miller, Attorneys Fees and Expenses in Class
Action Settlements: 1993-2008, 7 J. Emp. Leg. Studies 248, 262 & Table 5 (2010)
(hereinafter “Fee Study”) (Porter Decl. Ex. C.)
Thus, in negotiating the Settlement, Co-Lead Counsel assessed the
probability of ultimate success on the merits against the risks of establishing
liability and maintaining a class action through trial and appeal. (Porter Decl. ¶15.)
Among other things, Co-Lead Counsel considered the strength of the evidence
adduced by both sides, including the admissibility of such evidence, the expert
proof, the mixed success plaintiffs have achieved at trial in similar cases, the
applicable measure of damages, and defenses such as statute of limitations. (Id.)
See Xcel, 697 F. Supp. at 994 (discussing the benefit to the class). Co-Lead
Counsel’s assessment is based on extensive experience litigating ERISA class
actions involving investment funds and an extensive investigation of the facts
during the prosecution of this action. Co-Lead Counsel reviewed the expert proof,
the facts, and consulted with their loss expert. (Porter Decl. ¶15.) Co-Lead Counsel
reviewed settlements and case law from similar ERISA lawsuits. (Id.) Plaintiffs
reviewed over two hundred thousand pages of documents and took the depositions
of multiple witnesses. (Id.)
Further, Co-Lead Counsel evaluated the value of the Settlement in light of
the risks of litigation, including statute of limitations and merits defenses,
18
prevailing trends in the case law, and the culpability of each of the Defendants.
Absent this Settlement, this case would likely continue to generate disputed issues
of law and fact. (Id.) In addition, the Settlement Class will receive settlement
benefits sooner than they would receive awards obtained after trial and a likely
appeal.
2.
The Risk to which Plaintiffs’ Counsel was Exposed
“Courts have recognized that the risk of receiving little or no recovery is a
major factor in awarding attorney fees.” In re Xcel, 364 F. Supp. 2d at 994; see
also Fee Study at 265 & Table 8 (“courts systematically reward risk”). Cases of
this type, involving allegations of improper selection and/or retention of
investment options, are especially risky cases for plaintiffs to undertake because
they are a relatively novel type of litigation involving many unsettled issues of law.
Only one case of this type has proceeded to judgment on the merits in the favor of
plaintiffs, and then only partly in favor of plaintiffs, Tibble v. Edison Int’l, 2010
WL 2757153 (C.D. Cal. July 8, 2010), while many others have been resolved on
the merits against plaintiffs with no recovery at all, see, e.g., Hecker v. Deere &
Co., 556 F.3d 575 (7th Cir. 2009); Loomis v. Exelon Corp., No. 07-CV-4900, 2009
WL 4667092 (N.D. Ill. Dec. 9, 2009); Taylor v. United Technology, No. 2:06-CV1494, 2009 WL 535779 (D. Conn. Mar. 3, 2009). The uncertainty of the outcome,
and in particular the statute of limitations risk at summary judgment, as well as the
19
risk of establishing liability and losses at trial, and likely appeals, favors the
Settlement, which provides a certain benefit to the members of the class.
In sum, the significant risk undertaken by Class Counsel supports the
reasonableness of the thirty percent attorneys’ fee award.
3.
The Difficulty and Novelty of the Legal and Factual Issues of the
Case
As discussed immediately above, this is a particularly difficult case because
it is a relatively novel type of litigation involving many unsettled issues of law. As
noted above, only one has been finally adjudicated on the merits in favor of
plaintiffs, and then only partly, while plaintiffs have lost many such cases without
obtaining any recovery at all for the class. In addition, in this case the Plaintiffs
faced statute of limitations risk at summary judgment and a vigorous defense on
the merits by Wells Fargo, one of the largest financial services companies in the
world. This case is particularly challenging because the plan sponsor’s proprietary
investment products and services are at issue, many of which remain in the market
place for other investors. Thus it could be expected to continue vigorously
defending the case through trial and appeal. Even if Plaintiffs proved liability on
the merits, the risk of appeal, and the uncertainty of the method of computing
losses, makes a thirty percent attorneys’ fee reasonable.
20
4.
The Skill of the Lawyers
Co-Lead Counsel and other Plaintiffs’ counsel have extensive experience
and expertise in litigating ERISA class actions involving investment funds. See
generally Declaration of Bryan T. Veis in support of Plaintiffs’ Motion to Certify
Class (Dkt. No. 104), Exs. A (McTigue & Veis LLP Firm Resume) and D
(Bailey & Glasser LLP Firm Resume), Exhibit 4 hereto. Indeed, the Court has
already ruled that Co-Lead Counsel satisfied Fed. R. Civ. P. 23(g) and “are
knowledgeable, experienced, and have the resources to commit to representing the
class,” that “[c]ounsel have worked to identify and investigate potential claims,”
and that “counsel will fairly and adequately represent the interests of the class.”
Memorandum and Order at 17 (Dkt. No. 150.) In pursuing this litigation
vigorously for more than three years, Plaintiffs’ counsel have advanced and fully
protected the common interests of the Settlement Class and have successfully
navigated the complex legal and factual issues presented. Defense Counsel are
from a well-respected firm and have extensive experience in ERISA litigation.
They aggressively challenged Plaintiffs throughout the litigation. This factor
supports Class Counsel’s request for fees.
5.
The Time and Labor Involved
Since the inception of this litigation, Class Counsel have expended
approximately 8,236 hours to litigate and resolve this litigation. (Porter Decl. Ex.
21
D.) Plaintiffs’ counsel moved the case expeditiously, and made every effort to limit
duplicative efforts and minimize the use of judicial resources. (Porter Decl. ¶29.)
The time and effort expended by Class Counsel was reasonable and supports
Class Counsel’s request for fees.
6.
The Reaction of the Class
To date, only one objection has been filed. (Dkt. No. 263.) The objection
does not complain about any of the terms of the Settlement as such. Rather, it
simply expresses disbelief that Wells Fargo and its officers would place the
company’s interests ahead of employees.
Plaintiffs’ counsel also received an objection on July 5, 2011. A copy of that
objection is attached as Exhibit E to the Porter Declaration. Ms. Christina Johnson,
the objector, complains about the requirement that former participants for whom
Wells Fargo no longer has electronic plan transactional records must submit
documents supporting their eligibility for a distribution, i.e., documents showing
the claimant invested in the subject Wells Funds. She writes that her records were
destroyed in a fire. She asks for $6,000 from the Settlement Fund, based on her
representations. Unfortunately, neither the Plan nor Johnson has records to
determine Ms. Johnson’s eligibility for a recovery. (Porter Decl. ¶18.) The Claims
Administrator has no way to determine whether Ms. Johnson invested in any Wells
22
Funds at issue in the litigation, let alone whether she should receive $6,000 per the
Plan of Allocation.
Also on July 5, 2011, Co-Lead Counsel received a phone call from a class
member who did not want to identify himself. He commended the named plaintiff
Ms. Figas for her courage in representing the class. He commended Class Counsel
for their efforts in obtaining a recovery on behalf of the Class. (Porter Decl. ¶30.)
Considering the claims administrator, Gilardi & Co. LLC, (1) mailed over
230,000 class notices by U.S. Mail, First Class, postage prepaid, (2) has
documented 2,703 unique visitors to the website dedicated to this Settlement,
(3) has handled 1,233 calls to an Interactive Voice Response system, and
(4) trained staff at a Call Response Center have spoken directly with 214 callers
about the Settlement, the dearth of objections shows the Settlement has been wellreceived by the Class. Declaration of Michael Joaquin ¶¶4, 7-8. If any objections
are submitted after the motion for final approval, Plaintiffs will submit a response
thereto before the hearing on the motion for final approval.
7.
The Comparison between the Requested Attorney Fee Percentage
and Percentages Awarded in Similar Cases.
The District Court of Minnesota recently approved attorney fee awards in
other cases amounting to between 30-36% of a common settlement fund based on
factors similar to the instant case. See, e.g. EEOC v. Fairbault Foods, Inc., Civ.
No. 07-3976, 2008 WL 879999, at *4 (D. Minn. Mar. 28, 2008) (approving fee
23
award of approximately 30% of the settlement fund and finding that the amount of
fees is reasonable and appropriate given the significant financial recovery);
Carlson v. C.H. Robinson Worldwide, Inc., No. 02-3780, 2006 WL 2671105, at *8
(approving a fee award representing 35.5% of the $15 million settlement fund and
stating that 35.5% is within the range established by other cases in a case whereby
settlement was similarly reached through arms-length negotiations, faced risks if
the case has continued to trial, would have continued to be protracted and
expensive, was litigated by class counsel with extensive experience, and presented
difficult and novel legal questions); Yarrington, 697 F. Supp. 2d at 1064 (awarding
33% stating that this percentage is “certainly within the range established by other
case in this District” in case whereby Class Counsel outlined their time, effort, and
hard work on this complex and hard-fought litigation resulting in significant
benefits to the Settlement Class).
Further, a fee award of 30% is well within the norms for a settlement of this
size. See Fee Study at 265 Table 7 (median fee of 23.5% for settlements between
$14.3 and $22.8 million with standard deviation of 7.5% means fee award of 30%
within 66th percentile.)
This factor certainly weighs in favor of awarding Class Counsel thirty
percent of the Settlement Fund.
24
C.
Lodestar Cross-Check and Multiplier
A lodestar cross-check is a “suggested practice” utilized by some courts as a
second layer of review regarding requested attorneys’ fees in these types of cases.
Yarrington, 697 F. Supp. 2d at 1065 (“The lodestar method confirms the
appropriateness of the requested fee award.”) “The lodestar cross-check need entail
neither mathematical precision nor bean counting but instead is determined by
considering the unique circumstances in each case.” Id. (quoting In re Xcel, 364 F.
Supp. 2d at 999). In addition, in cases where fees are calculated using the lodestar
method, counsel may be entitled to a multiplier to reward them for taking on risk
and high-quality work in a case such as the instant one. In re UnitedHealth Group
Inc. PLSRA Litig., 643 F. Supp. 2d 1094, 1106 (D. Minn. 2009). Each of these
factors supports Class Counsel’s request for attorneys’ fees.
Class Counsel’s aggregate lodestar to date is 1.595 (multiplying hours
worked for each attorney and staff person by their respective rates- all of which are
in line with those charged by national complex class action law firms). (Porter
Decl. Ex. D.) Based on the collective lodestar, the resulting “lodestar multiplier
crosscheck” of 1.595 results from awarding thirty percent of the $17.5 million
settlement fund. (Id.) This lodestar is inherently conservative as it does not reflect
the substantial work Class Counsel will undertake subsequent to filing the instant
motion, including work on the motion for final approval, preparing for and
25
appearing at the hearing on final approval, and ongoing matters of Settlement
implementation and administration after the Court enters an order of final
approval. Factoring in the work performed and to be performed on the foregoing
tasks (an estimated $50,000 in fees), Plaintiffs’ counsel project an ultimate
multiplier close to 1.571.
Moreover, Class Counsel took this case on a contingency basis, working
without pay for over three years. Regardless, the lodestar above is inherently
reasonable under Eighth Circuit standards. See, e.g., UnitedHealth Group Inc.
PSLRA Litig., 643 F. Supp. 2d at 1106 (finding that a multiplier of 6.5 is
appropriate under Eighth Circuit standards.)
In addition, the multiplier sought in this case is well within the range of
multipliers awarded by courts in other districts. See, e.g., Weiss v. Mercedes-Benz
of N. Am. Inc., 899 F. Supp. 1297, 1304 (D.N.J. 1995), aff’d 66 F.3d 314 (3d Cir.
1995) (multiplier of 9.3 times hourly rate; In re Rite Aid Corp. Secs. Litig. 146 F.
Supp. 2d 706, 736 (E.D. Pa. 2001) (multiple of over 6); In re Triangle Indus.
S’holders Litig., No. 10,466, 1991 Del. Ch. LEXIS 203 (Del Ch. Dec. 19 1991)
(awarding fee equal to 6.6 multiple on $70 million recovery); Cosgrove v. Sullivan,
759 F. Supp. 166 (S.D.N.Y. 1991) (awarding fee equal to multiplier of 8.84); RJR
Nabisco Inc. Sec. Litig., MDL No. 818, 1992 WL 210138 (S.D.N.Y. Aug. 24,
26
1992) (multiplier of 6); Boston & Maine Corp. v. Sheehan, Phinney, Bass &
Green, P.A., 778 F.2d 890, 894 (1st Cir. 1985) (multiplier of 6).
The 1.595 multiplier here also is consistent with the mean (1.68) and median
(1.51) multipliers typical of settlements between $14.3 and $22.8 million. See Fee
Study at 274 Table 15. And it is consistent with the average reported multiplier of
1.58 in ERISA cases. Id. at 272 Table 14.B.
This case presented many factual and legal challenges, yet Class Counsel
addressed each of them resulting in a significant benefit to the Class. Finally, Class
Counsel performed high-quality work in moving this case from the initial
Complaint through settlement.
In sum, cross-checking using the lodestar method confirms that the thirty
percent attorneys’ fees award to be reasonable. Considering the circumstances of
this litigation, this multiplier is more than fair. Accordingly, the lodestar in this
matter strongly supports the reasonableness of the fee request.
D.
Reimbursement and Payment of Class Counsel’s Expenses
Class Counsel, in the prosecution of this complex case, expended at least
$485,891.21. (Porter Decl. Ex. D.) These expenses include substantial fees for
experts; deposition costs; management and customization of an electronic database
of discovery documents; online legal research fees; and travel expenses.
Reimbursement of similar expenses is routinely permitted. See e.g., Oh v. AT&T
27
Corp., 225 F.R.D. 142, 154 (D.N.J. 2004) (finding the following expenses
reasonable and appropriately incurred- “(1) travel and lodging, (2) local meetings
and transportation, (3) depositions, (4) photocopies, (5) messengers and express
services, (6) telephone and fax, (7) Lexis/Westlaw legal research, (8) filing, (10)
postage, (11) the cost of hiring a mediator, and (12) [costs involved to apply for] . .
. pro hac vice”).
E.
Case Contribution Award for the Class Representative
Class Counsel respectfully requests that the Court approve the payment of a
Case Contribution award of $20,000 for Class Representative Robin Figas. The
enforcement of the ERISA laws by private litigants is in the interest of the public
and should be encouraged. See Zilhaver v. UnitedHealth Group, Inc., 646 F. Supp.
2d 1075, 1085 (D. Minn. 2009) (awarding case contribution award to named
plaintiff when named plaintiff protected class interests and expended time and
effort in pursuing litigation).
In the instant case, the Class Representative, Ms. Robin Figas, stepped
forward and protected the Class’s interests by filing suit on behalf of the Class and
the Plan, undertaking the responsibilities attendant with serving as Plaintiff. Ms
Figas is a long time employee in Wells Fargo bank branches in Humboldt County,
California, a five hour drive north of San Francisco, California. Ms. Figas
reviewed and provided documents and information in her possession in response to
28
discovery requests; aided Class Counsel in describing relevant facts and the
operations regarding Wells Fargo, the Plan, and other information to support the
claims presented in the Complaints; and helped make strategic decisions, including
negotiation and approval of the Settlement’s terms. She took time off of work to
travel from Eureka, California, to Minneapolis where she was deposed by
Defendants counsel. She was subjected to interrogation by defense counsel at the
deposition, including detailed probing of her three-decade-long employment
history with Defendant Wells Fargo. In short, she contributed significantly to the
prosecution of this action, and, as a current employee of Wells Fargo, undertook
this lawsuit at considerable risk to her employment, particularly considering the
job climate that has prevailed over the past few years. (See Declaration of Robin
Figas, Ex. 9 hereto.) In sum, Mr. Figas actively participated throughout the
litigation and admirably performed her role as a Class Representative.
The amount of the case contribution award requested here is in line with
amounts typically awarded in analogous cases. See, e.g. Zilhaver, 646 F. Supp. at
1085 (awarding $15,000 to the named plaintiff); Koenig v. U.S. Bank, 291 F.3d
1035, 1038 (8th Cir. 2002) (citing Cook v. Niedert, 142 F.3d 1004, 1016 (7th Cir.
1998) for a $25,000 award to Lead Plaintiff).
For all of these reasons, Class Counsel submit that the requested Case
Contribution award is appropriate and reasonable.
29
IV.
CONCLUSION
For the foregoing reasons, Plaintiffs respectfully request that the Court award
Class Counsel attorneys’ fees in the amount of $5.25 million and expenses in the
amount of $485,891.21 and approve a Case Contribution award to the Class
Representative in the amount of $20,000.
Respectfully submitted,
Dated: July 5, 2011
By: /s/ Gregory Y. Porter
McTIGUE & VEIS LLP
J. Brian McTigue (admitted pro hac vice)
Bryan T. Veis (admitted pro hac vice)
James A. Moore (admitted pro hac vice)
4530 Wisconsin Avenue, NW
Suite 300
Washington DC, 20016
BAILEY & GLASSER LLP
Gregory Y. Porter (admitted pro hac vice)
James B. Perrine (admitted pro hac vice)
910 17th Street, NW
Suite 800
Washington, DC 20006
SPRENGER & LANG PLLC
Michael D. Lieder (admitted pro hac vice)
Bryce M. Miller (MN Bar No. 386901)
1400 Eye St. Ste 500
Washington, DC 20005
ROBINS, KAPLAN, MILLER &
CIRESI LLP
Joel A. Mintzer
800 LaSalle Avenue
2800 LaSalle Plaza
Minneapolis, MN 55402
30
Exhibit 1-
The Settlement Agreement
Exhibit 2-
The Plan of Allocation
Exhibit 3-
Plaintiffs’ Memorandum in Support of Unopposed Motion for
Preliminary Approval of Settlement
Exhibit 4-
Declaration of Bryan T. Veis
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EXHIBIT 1
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UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Robin E. Figas, and all others similarly
situated,
Civil File No. 08-cv-4546 (PAM/FLN)
Plaintiffs,
v.
Wells Fargo & Company, Employee
Benefit Review Committee, Howard I.
Atkins, Patricia Callahan, Ellen Haude,
Mike Heid, Clyde Ostler, Tim Sloan, John
G. Stumpf, Peter J. Wissinger, and John
Does 1-20,
Defendants.
CLASS ACTION SETTLEMENT AGREEMENT
This CLASS ACTION SETTLEMENT AGREEMENT (“Settlement Agreement”)
is entered into by and between Named Plaintiff (as defined below) in the above-captioned
action for herself and on behalf of the Settlement Class (as defined below) and the Plan
(as defined below), on the one hand, and the Defendants (as defined below) on the other,
in consideration of the promises, covenants and agreements herein described and for
other good and valuable consideration acknowledged by each of them to be satisfactory
and adequate.
NOW, THEREFORE, without any admission or concession on the part of the
Named Plaintiff of any lack of merit of the action whatsoever, and without any admission
or concession on the part of Defendants as to the merits of the action, it is hereby
STIPULATED AND AGREED, by and among the Parties (as defined below) to this
Settlement Agreement, through their respective attorneys, subject to approval of the Court
pursuant to the Federal Rules of Civil Procedure, in consideration of the benefits flowing
to the Parties hereto from the Settlement Agreement, that all Released Claims (as defined
below) as against the Released Parties (as defined below) shall be compromised, settled,
released and dismissed with prejudice, upon and subject to the following terms and
conditions:
1.
Definitions.
As used in this Settlement Agreement, italicized and capitalized terms and phrases
not otherwise defined have the meanings provided below:
1
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1.1. “Action” shall mean: Figas v. Wells Fargo & Company, et al., Civil Action
No. 06-cv-02237 (JMR/FLN), United States District Court for the District of Minnesota
(Hon. Paul A. Magnuson), and any and all cases now or hereafter consolidated therewith.
1.2. “Agreement Execution Date” shall mean: the date on which this Settlement
Agreement is fully executed, as provided in Section 11.12 below.
1.3. “Appointed Counsel” shall mean: Lead Counsel and any other attorney or
law firm which has been authorized by the Court to render, and has rendered, services for
the Settlement Class in the Action.
1.4.
1.5.
“Claims” shall have the meaning set forth in Section 3.3.
“Settlement Administrator” shall have the meaning set forth in Section
1.37.
1.6.
“Class Notice” shall mean: the form(s) of notice, appended as Exhibit 1 to
the form of Preliminary Approval Order, attached hereto as Exhibit A.
1.7.
“Class Period” shall mean: November 2, 2001 through and including
October 8, 2009.
1.8.
“Class Settlement Amount” shall have the meaning set forth in Section 7.2
below.
1.9.
“Company” or “Wells Fargo” shall mean: Wells Fargo & Company and
each Person that controls, is controlled by, or is under common control with Wells Fargo,
including Wells Fargo Bank and its Institutional Trust Services Division, and any of their
direct and indirect parents, subsidiaries, affiliates and Representatives, as well as each of
their predecessors and Successors-In-Interest.
1.10. “Complaint” shall mean: the Third Amended Class Action Complaint,
filed on June 7, 2010.
1.11.
Minnesota.
“Court” shall mean: the United States District Court for the District of
1.12. “Defendants” shall mean the following persons and/or entities: Wells
Fargo & Company, Employee Benefit Review Committee, Howard I. Atkins, Patricia
Callahan, Ellen Haude, Mike Heid, Clyde Ostler, Tim Sloan, John G. Stumpf, and Peter
J. Wissinger.
2
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1.13. “ERISA” shall mean: the Employee Retirement Income Security Act of
1974, as amended, including all regulations promulgated thereunder, and court decisions
interpreting ERISA, as amended or regulations promulgated thereunder.
1.14.
“Fairness Hearing” shall have the meaning set forth in Section 2.2.3.
1.15. “Final” shall mean: with respect to any judicial ruling or order, that the
period for any appeals, petitions, motions for reconsideration, rehearing, or certiorari or
any other proceedings for review (“Review Proceeding”) has expired without the
initiation of a Review Proceeding, or, if a Review Proceeding has been timely initiated,
that there has occurred a full and final disposition of any such Review Proceeding
without a reversal or any material modification, including the exhaustion of proceedings
in any remand and/or subsequent appeal after remand.
1.16.
“Final List” shall have the meaning set forth in Section 8.3.
1.17.
“Financial Institution” shall have the meaning set forth in Section 7.1.1.
1.18. “Independent Fiduciary” shall mean the entity retained for the purposes
set forth in Section 2.6, but shall not be Fiduciary Counselors or anyone employed or
retained by it.
1.19. “Judgment” shall mean the entry of the Court’s order approving this
Settlement pursuant to Federal Rule of Civil Procedure 23(e) in substantially the form
attached hereto as Exhibit B.
1.20.
“Lead Counsel” shall mean Bailey & Glasser LLP and McTigue and Veis
1.21.
“Named Plaintiff” shall mean: Robin E. Figas.
1.22.
“Net Proceeds” shall have the meaning set forth in Section 8.2.4.
1.23.
“Parties” shall mean: the Plaintiffs and the Defendants.
LLP.
1.24. “Person” shall mean:
an individual, partnership,
governmental entity or any other form of entity or organization.
1.25. “Plaintiffs” shall mean:
Settlement Class.
1.26.
corporation,
Named Plaintiff and each member of the
This number is reserved.
3
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1.27. “Plan” shall mean: the Wells Fargo & Company 401(k) Plan, and all
predecessor plans or successor plans, individually and collectively, and any trust created
under such Plan.
1.28. “Plan of Allocation” shall mean: the method of allocating settlement
funds to members of the Class. The Plan of Allocation shall be determined on the basis of
participants’ investments in the respective Wells Funds during the Class Period. It shall
also provide for members of the Settlement Class who, as of the Agreement Execution
Date, no longer have an account with a positive balance and are not current employees of
the Company, as well as the beneficiary of a Plan participant who, according to the
records of the Recordkeeper, received a distribution of an account of a Settlement Class
member that died while a participant in the Plan (“Former Participants”), to receive
Settlement payments from the Settlement Administrator.
1.29. “Preliminary Approval Order” shall mean the order of the Court in
substantially the form attached hereto as Exhibit A, whereby the Court preliminary
approves this Settlement.
1.30. “Preliminary Approval Motion” shall have the meaning set forth in
Section 2.3.1.
1.31. “Recordkeeper” shall mean the entity or entities, including the Company,
its affiliates and divisions serving as the trustee for the Plan (“Plan Trustee”), and thirdparties that maintain electronic records of Plan participants and their individual accounts.
1.32.
“Released Claims” shall have the meaning set forth in Section 3.3.
1.33. “Released Parties” shall mean: the Defendants (including the Company)
and any Person who served as a trustee or fiduciary of any kind of the Plan (including
functional fiduciaries), together with, for each of the foregoing: any predecessors,
Successors-In-Interest, present and former Representatives, direct or indirect parents,
subsidiaries and affiliates, and any Person that controls, is controlled by, or is under
common control with any of the foregoing.
1.34.
“Releases” shall mean the releases set forth in Section 3.
1.35. “Representatives” shall mean:
directors, officers, or employees.
representatives, attorneys, agents,
1.36. “Settlement” shall mean: the settlement to be consummated under this
Settlement Agreement.
1.37. “Settlement Administrator” shall be the entity selected by Lead Counsel,
subject to approval by Defense Counsel as provided in Section 8.1.1.
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1.38. “Settlement Class” shall mean all current and former participants in the
Plan whose Plan accounts had a balance in any one of the Wells Funds at any time
during the Class Period.
1.39.
“Settlement Fund” shall have the meaning set forth in Section 7.1.
1.40. “Successor-In-Interest” shall mean:
a Person’s estate, legal
representatives, heirs, successors or assigns, including successors or assigns that result
from corporate mergers or other structural changes.
1.41. “Wells Funds” shall mean the Wells Fargo Diversified Small Cap Fund;
Wells Fargo Diversified Equity Fund; Wells Fargo Large Company Growth Fund; Wells
Fargo Growth Balanced Fund; Wells Fargo Moderate Balanced Fund; Wells Fargo
Aggressive Allocation Fund (formerly Wells Fargo Strategic Growth Allocation Fund);
Wells Fargo Conservative Allocation Fund (formerly Wells Fargo Strategic Income
Fund); Wells Asset Allocation Collective Trust, and Wells Fargo Capital Growth Fund.
2.
Conditions to Finality of the Settlement.
This Settlement shall be contingent upon each of the following conditions in
Sections 2.1 through 2.6 being satisfied. The Parties agree that if any of these conditions
is not satisfied, then this Settlement Agreement is terminated and the class certified in this
matter will be deemed not to have been modified, and the Action will for all purposes
with respect to the Parties revert to its status as of October 18, 2010, prior to the
Settlement. In such event the Defendants will not be deemed to have consented to the
modification of the class certification order in Section 2.2, the agreements and
stipulations in this Settlement Agreement concerning class definition or class certification
shall not be used as evidence or argument to support a modification of the class
certification order, and the Defendants will retain all rights with respect to class
certification.
2.1.
The Court shall approve the Settlement Class as provided for in Section
2.2.
Modification of Class Certification Solely for Purposes of Settlement.
1.38.
2.2.1. At the time of this Settlement, the Court has certified a class
pursuant to Fed. R. Civ. P. 23(b)(3), with the Named Plaintiff representing the class and
acting on behalf of the Plan. The Plaintiffs shall move the Court, for settlement purposes
only, to modify the class certification order to maintain the Settlement Class as a non-opt
out class under Fed. R. Civ. P. 23(b)(1), with the Named Plaintiff representing the
Settlement Class and acting on behalf of the Plan. The Defendants shall stipulate to such
modification. If the Court does not certify the Settlement Class as a non-opt out class
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under Fed. R. Civ. P. 23(b)(1), the Settlement shall not terminate unless the provisions of
Section 9.1 herein have been met.
2.3.
Court Approval. The Settlement shall have been approved by the Court,
as provided for in this Section 2.3, and the Court shall have entered the Judgment
substantially in the form attached as Exhibit B hereto. The Parties shall cooperate in
good faith to obtain Court approval, including with respect to the following:
2.3.1. Motion for Preliminary Approval of Settlement and of Notice. As
soon as reasonably possible upon the full execution of this Settlement Agreement by the
Parties, Lead Counsel will file a Preliminary Approval Motion with the Court seeking
entry of the Preliminary Approval Order substantially in the form attached hereto as
Exhibit A, including the exhibits thereto. Defendants will not object to such motion.
2.3.2. Issuance of Class Notice. The Plaintiffs shall cause notice to be
provided on the date and in the manner set by the Court in its Preliminary Approval
Order. Defendants shall have no responsibility for transmittal or distribution of the Class
Notice, except with respect to the cooperation required by Section 4.2.
2.3.3. The Fairness Hearing. On or after the date set by the Court for the
final hearing pursuant to Federal Rule of Civil Procedure 23(e)(2) (the “Fairness
Hearing”) the Court will determine: (i) whether to enter judgment finally approving the
Settlement; and (ii) what, if any, legal fees, compensation, and expenses should be
awarded to Lead Counsel and Appointed Counsel, and to the Named Plaintiff as
contemplated by Section 10 of this Settlement Agreement.
2.4.
Finality of Judgment. The Judgment shall have become Final.
2.5.
Funding of Class Settlement Amount. The Company shall have caused the
Class Settlement Amount to be deposited at the time prescribed by and otherwise as
provided for in Section 7.2.
2.6.
Settlement Authorized by Independent Fiduciary. At least twenty (20)
days prior to the Fairness Hearing, the Independent Fiduciary shall have approved and
authorized in writing the Settlement, and given a release in its capacity as fiduciary of the
Plan for and on behalf of the Plan, on the terms set forth in Section 3, in accordance with
Prohibited Transaction Class Exemption 2003-39. If the Independent Fiduciary
disapproves or otherwise does not authorize the Settlement or refuses to execute the
release on behalf of the Plan, then the Company shall have the option to waive this
condition if so stipulated by the Parties. Such option is to be exercised in writing within
the earlier of (i) ten (10) days after the Parties’ receipt of the Independent Fiduciary’s
written determination or (ii) three (3) days prior to the date set for the Fairness Hearing,
unless otherwise agreed by the Parties. The Parties shall comply with reasonable
requests made by the Independent Fiduciary.
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Releases.
3.1. Releases of the Released Parties. Subject to Section 9 herein, effective
upon the date that Judgment is Final, Named Plaintiff, each member of the Settlement
Class (on behalf of themselves and the Plan), and the Plan (by and through the
Independent Fiduciary pursuant to section 2.6) absolutely and unconditionally release
and forever discharge the Released Parties from Released Claims that the Named
Plaintiff, the Settlement Class or the Plan directly, indirectly, derivatively, or in any other
capacity ever had, now have or hereafter may have, except that the release under this
Section 3.1 shall not include claims relating to the covenants or obligations set forth in
this Settlement Agreement, nor do they include, and this Settlement Agreement does not in
any way bar, limit, waive, or release, any individual claim by the Named Plaintiff or a
member of the Settlement Class to vested benefits that are otherwise due under the terms
of the Plan. Also, the form of the Judgment attached at Exhibit B to this agreement shall
provide that, effective upon entry of the Judgment by the Court, Named Plaintiff and all
other members of the Settlement Class and the Plan shall be permanently and finally
enjoined, without the necessity of Defendants posting a bond, from commencing or
prosecuting any actions or other proceedings asserting any of the Released Claims either
directly, indirectly, derivatively, or in any other capacity, against any of the Released
Parties.
3.2. Releases of the Named Plaintiff, the Plan, the Settlement Class, and
Appointed Counsel. Upon the date that Judgment is Final, the Company shall be deemed
to have, and by operation of the Final Order, shall have, fully, finally, and forever
released, relinquished, and discharged, and shall forever be enjoined from prosecution of
the Named Plaintiff, the Plan, the Settlement Class, and Appointed Counsel from any and
all actual or potential claims, actions, causes of action, demands, obligations, liabilities,
attorneys’ fees and costs, whether arising under local, state, or federal law, whether by
statute, contract, common law, or equity, whether brought in an individual,
representative, or any other capacity, whether known or unknown, suspected or
unsuspected, asserted or unasserted, foreseen or unforeseen, actual or contingent,
liquidated or unliquidated, that arise out of or are related in any way to the acts,
omissions, facts, matters, transactions, or occurrences alleged or referred to in the Action.
3.3. Released Claims. The Released Claims shall be: any and all claims of any
nature whatsoever (including claims for any and all losses, damages, unjust enrichment,
attorneys’ fees, disgorgement, litigation costs, injunction, declaration, contribution,
indemnification or any other type or nature of legal or equitable relief), whether accrued
or not, whether known, unknown, or unsuspected, in law or equity, as well as any claim
or right obtained by assignment, brought by way of demand, complaint, cross-claim,
counterclaim, third-party claim or otherwise (collectively, “Claims”), arising out of or in
any way related to, directly or indirectly, any or all of the acts, omissions, facts, matters,
transactions or occurrences (including derivative claims), (i) during the Class Period that
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are alleged, or were alleged, asserted, or set forth in the Complaint or the complaints in
the Action that preceded it, including claims regarding the selection, retention, and
monitoring of investments, products, or services for the Plan managed by the Company;
(ii) barred by principles of res judicata, or (iii) that relate to, arise out of, or in any way
involve the selection, monitoring and retention of the Wells Funds. With respect to the
Released Claims, it is the intention of the Parties and all other members of the Settlement
Class and the Plan expressly to waive to the fullest extent of the law: (a) the provisions,
rights and benefits of Section 1542 of the California Civil Code, which provides that “A
general release does not extend to claims which the creditor does not know or suspect to
exist in his favor at the time of executing the release, which if known by him must have
materially affected his settlement with the debtor”; and (b) the provisions, rights and
benefits of any similar statute or common law of any other jurisdiction that may be, or
may be asserted to be, applicable.
3.4.
Dismissal With Prejudice. The Action and all Released Claims shall be
dismissed with prejudice.
4.
Covenants.
The Parties covenant and agree as follows:
4.1. Taxation of Class Settlement Amount. Plaintiffs acknowledge that the
Released Parties have no responsibility for any taxes due on funds deposited in or
distributed from the Settlement Fund or that the Plaintiffs or Appointed Counsel receive
from the Class Settlement Amount. Plaintiffs further acknowledge that any such tax
payments, and any professional, administrative or other expenses associated with such
tax payments, shall be paid out of the Settlement Fund, as set forth more fully in Section
7.1.2 below. Nothing herein shall constitute an admission or representation that any such
taxes will or will not be due.
4.2. Cooperation. The Company shall cooperate with Lead Counsel by using
reasonable efforts to provide, to the extent reasonably accessible, in electronic format and
form reasonably agreed upon by the Company and the Lead Counsel, information to
identify members of the Settlement Class and to implement the Plan of Allocation.
Within ten (10) days of the Preliminary Approval Order, the Company shall direct the
Recordkeeper to provide to the Settlement Administrator:
4.2.1. The names and last known addresses of members of the Settlement
Class, as compiled from reasonably accessible electronic records maintained by the
Recordkeeper, and
4.2.2. The names and last known addresses of participants in the Plan
during the Class Period as compiled from reasonably accessible electronic 1099R forms
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maintained by the Company pertaining to participants whose records are no longer
maintained by the Recordkeeper.
4.2.3. Reasonably accessible electronic data of the Recordkeeper reflecting
investments of the members of the Settlement Class in the Wells Fargo Funds during the
Class Period.
4.3.
Appointed Counsel shall use the information provided through this section
to compile a “Preliminary List” of members of the Settlement Class with the assistance of
the Settlement Administrator for purposes of sending the Class Notice and calculating
payments pursuant to the Plan of Allocation.
4.4.
Appointed Counsel and their agents will use any information provided by
the Company pursuant to the Section 4.2 solely for the purpose of providing notice and
administering this Settlement and for no other purpose, and will take all reasonable and
necessary steps as required by law to maintain the security and confidentiality of this
information.
4.5.
The Parties shall reasonably cooperate with each other to effectuate this
Settlement, including with respect to the Plan of Allocation, and shall not do anything or
take any position inconsistent with obtaining a prompt Judgment approving the
Settlement unless expressly permitted by this Settlement Agreement. The Parties shall
suspend any and all efforts to prosecute and to defend the Action pending entry of the
Judgment or, if earlier, termination of the Settlement Agreement.
4.6.
Any costs, fees, and expenses incurred by third parties, including the
reasonable costs, fees, and expenses incurred by any third-party Recordkeeper in
providing the cooperation as set forth herein, including in Section 4.2, shall be paid out of
the Settlement Fund.
4.7.
Covenant Not to Sue. Subject to Section 9 herein, Plaintiff, the members
of the Settlement Class and the Plan covenant and agree on their own behalf: (i) not to
file against any Released Party any Claim based on, relating to, or arising from any
Released Claim; and (ii) that the foregoing covenants and agreements shall be a complete
defense to any such Claims against any of the respective Released Parties. These Parties
acknowledge that any Class Member who violates this Covenant will be liable for all
costs and fees, including attorneys’ fees, the Released Parties may incur in defending
against any action subject to this Covenant.
5.
Representations and Warranties.
5.1. Parties’ Representations and Warranties. The Parties, and each of them,
represent and warrant as follows, and each Party acknowledges that each other Party is
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relying on these representations and warranties in entering into this Settlement
Agreement:
5.1.1. That they have conducted voluminous discovery and have diligently
prepared for trial pursuant to the Court’s orders; that they are voluntarily entering into
this Settlement Agreement as a result of arm’s-length negotiations among their counsel,
with the assistance and recommendation of an experienced former federal district court
judge; that in executing this Settlement Agreement they are relying solely upon their own
judgment, belief and knowledge, and the advice and recommendations of their own
independently selected counsel, concerning the nature, extent and duration of their rights
and claims hereunder and regarding all matters which relate in any way to the subject
matter hereof; and that, except as provided herein, they have not been influenced to any
extent whatsoever in executing this Settlement Agreement by any representations,
statements, or omissions pertaining to any of the foregoing matters by any Party or by
any Person representing any Party to this Settlement Agreement. Each Party assumes the
risk of mistake as to facts or law.
5.1.2. That they have carefully read the contents of this Settlement
Agreement, and this Settlement Agreement is signed freely by each Person executing this
Settlement Agreement on behalf of each of the Parties. The Parties, and each of them,
further represent and warrant to each other that he, she, or it has made such investigation
of the facts pertaining to the Settlement, this Settlement Agreement, and all of the matters
pertaining thereto, as he, she, or it deems necessary.
5.2. Signatories’ Representations and Warranties. Each Person executing this
Settlement Agreement on behalf of any other Person does hereby personally represent and
warrant to the other Parties that he or she has the authority to execute this Settlement
Agreement on behalf of, and fully bind, each principal whom such individual represents
or purports to represent.
6.
No Admission of Liability.
The Parties understand and agree that this Settlement Agreement embodies a
compromise settlement of disputed claims, and that nothing in this Settlement Agreement,
including the furnishing of consideration for this Settlement Agreement, shall be deemed
to constitute any finding that any party had a fiduciary status under ERISA, or any
wrongdoing by any of the Defendants, or give rise to any inference of fiduciary status
under ERISA or wrongdoing or admission of wrongdoing or liability in this or any other
proceeding. This Settlement Agreement and the payments made hereunder are made in
compromise of disputed claims and are not admissions of any liability of any kind,
whether legal or factual. The Defendants specifically deny any such liability or
wrongdoing and state that they are entering into this Settlement Agreement to eliminate
the burden and expense of further litigation. Further, the Named Plaintiff, while
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believing that all Claims brought in the Action have merit, has concluded that the terms of
this Settlement Agreement are fair, reasonable and adequate to the Plan, herself and
members of the Settlement Class given, among other things, the inherent risks,
difficulties and delays in complex ERISA litigation such as this. Neither the fact nor the
terms of this Settlement Agreement shall be used or offered or received in evidence in any
action or proceeding for any purpose, except in an action or proceeding to enforce this
Settlement Agreement or arising out of or relating to the Judgment.
7.
The Settlement Fund, Deliveries into the Settlement Fund.
7.1.
The Settlement Fund.
7.1.1. Within ten (10) business days after entry of the Preliminary
Approval Order, Lead Counsel shall establish at a financial institution (the “Financial
Institution”) identified to and agreed on by counsel for the Defendants, a settlement fund
account (the “Settlement Fund”) which shall be considered a common fund created as a
result of the Action. Lead Counsel shall designate at least one person with signature
authority over this account (the “Signer”), and shall direct the Financial Institution to
make distributions from the Settlement Fund only in accordance with this Settlement
Agreement upon written direction from the Signer. For the avoidance of doubt, the
Financial Institution shall be instructed that, absent a Court order, no funds are to be paid
or withdrawn from the Settlement Fund except pursuant to Section 8 and Section 9 of this
Settlement Agreement (and the Sections of this Settlement Agreement explicitly crossreferenced therein) or, upon termination of this Settlement Agreement, pursuant to
Section 9 of this Settlement Agreement. Lead Counsel shall promptly notify the other
Parties of the date of the establishment of the Settlement Fund, and shall confirm that
withdrawals and distributions from the Settlement Fund are subject to the restrictions set
forth in the preceding sentence. Counsel for Plaintiffs and Defendants shall agree on the
form and terms of an escrow agreement consistent with this Settlement Agreement. Lead
Counsel shall take appropriate steps to ensure that the Settlement Fund and all assets
within the Settlement Fund are protected against loss due to the failure of the Financial
Institution or other similar event.
7.1.2. The Settlement Fund shall bear interest and shall be invested only in
United States Treasury securities and/or securities of United States agencies backed by
the full faith and credit of the United States Treasury, repurchase agreements
collateralized by such securities, and mutual funds or money market accounts that invest
exclusively in the foregoing securities. The Settlement Fund shall be structured and
managed to qualify as a Qualified Settlement Fund under Section 468B of the Internal
Revenue Code and Treasury regulations promulgated thereunder and shall make tax
filings and provide reports to Lead Counsel for tax purposes. The Parties shall not take a
position in any filing or before any tax authority inconsistent with such treatment. The
Settlement Fund will pay any federal, state, and local taxes that may apply to the income
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of the Settlement Fund. The Financial Institution or the Settlement Administrator shall
arrange for the preparation and filing of all tax reports and tax returns required to be filed
by the Settlement Fund and for the payment from the Settlement Fund of any taxes owed,
and will send Lead Counsel copies of all such filings and receipts of payment in a timely
manner. The Financial Institution or the Settlement Administrator shall be authorized to
retain a certified public accounting firm for those purposes. All taxes on the income of
the Settlement Fund and tax-related expenses incurred in connection with the taxation of
the Settlement Fund shall be paid solely out of the Settlement Fund, shall be considered a
cost of administration of the Settlement, and shall be timely paid without further order of
the Court. The Financial Institution or the Settlement Administrator shall arrange for the
preparation and issuance of any required Forms 1099 to Persons receiving payments
from the Settlement Fund for administrative services, and costs incurred in connection
therewith also shall be paid solely out of the Settlement Fund, shall be considered a cost
of administration of the Settlement, and shall be timely paid by the Settlement Fund
without further order of the Court. Costs or expenses of opening or closing the
Settlement Fund, and all fees and expenses of the Financial Institution, and of the
professional advisors specified above in this section who are engaged by the Financial
Institution in connection with the Settlement Fund, shall be funded solely from the
Settlement Fund, and Plaintiffs expressly acknowledge that Defendants have no
responsibility for any such fees or expenses.
7.2.
The Class Settlement Amount. In consideration of all of the promises and
agreements set forth in this Settlement Agreement, the Company will cause to be
deposited into the Settlement Fund $17.5 million, which shall be the Class Settlement
Amount as follows: (a) Within fourteen (14) days after the entry of the Preliminary
Approval Order, One Million Dollars ($1,000,000.00) in United States currency; within
two (2) days after the entry of Judgment becomes Final, the Company will cause to be
deposited into the Settlement Fund the remaining $16.5 million ($16,500,000.00) in
United States currency. In no event shall the Settlement Fund be required to exceed the
Class Settlement Amount, and in no event shall the Company or any of the Defendants be
required to make payments or incur any expenses in excess of this amount. In no event
shall any Defendant other than the Company be required to make payments or incur any
expenses under this Settlement Agreement. The Class Settlement Amount shall be the only
amount paid by Defendants under this agreement, and the Defendants shall not be
obligated to make any other payments under this agreement or in connection with this
settlement including, but not limited to any payments that any of the Plaintiffs may claim
they are entitled to under the current, former, or future Plan as a result of this settlement
or any Plaintiffs’ recovery under this settlement.
7.3.
All funds held in the Settlement Fund shall be deemed to be in the custody
of the Court and shall remain subject to the jurisdiction of the Court until such time as
the funds are distributed or are returned to the persons paying the same pursuant to the
Final Judgment and Settlement Agreement.
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Payments From The Settlement Fund.
8.1.
Disbursements from Settlement Fund prior to Settlement becoming Final.
Lead Counsel, subject to the approval of the Company, which approval shall not be
unreasonably withheld, direct the Financial Institution to disburse money from the Class
Settlement Fund as follows:
8.1.1. Expenses of Class Notice. After the entry of the Preliminary
Approval Order, the Financial Institution shall be directed in writing to disburse from the
Settlement Fund an amount sufficient for the payment of costs of the Class Notice. If the
Settlement Agreement is terminated for any reason, Lead Counsel shall have no
obligation to reimburse the Settlement Fund for the costs incurred for the Class Notice, or
other costs or expenses of the Settlement Fund then incurred by the Settlement Fund
under this Settlement Agreement. Lead Counsel may select a Settlement Administrator to
assist with Class Notice and administration of the Settlement; the Company shall agree to
the selection, which agreement shall not unreasonably be withheld. The Settlement
Administrator shall enter into a confidentiality agreement and information security
agreement, both of which shall be satisfactory to the Company, as well as the Protective
Order entered in this case, to adequately protect information provided to the Settlement
Administrator relating to the Settlement. Lead Counsel shall, with the assistance of the
Settlement Administrator, make reasonable and customary efforts to locate and provide
notice to all Settlement Class members. Any costs, expenses, or fees incurred in
connection with the administration of this Settlement shall be paid out of the Settlement
Fund.
8.1.2. For taxes and expenses of the Settlement Fund. As provided in
Section 7.1.2 herein.
8.1.3. For fees and expenses of the Independent Fiduciary. The Financial
Institution shall be directed to disburse money from the Settlement Fund to pay the
reasonable fees and expenses of the Independent Fiduciary (which shall include any
attorneys’ fees of the Independent Fiduciary) retained pursuant to Section 2.5 in an
amount not to exceed seventy-five thousand dollars in United States currency
($75,000.00). To the extent the Company pays any costs, fees or expenses to the
Independent Fiduciary before proceeds from the Settlement Fund are available for
distribution, the Financial Institution shall be directed to reimburse the Company for such
amounts, but in no case shall such reimbursement be more than $75,000.00
8.1.4. For costs and expenses of the Settlement Administrator in
implementing the Plan of Allocation and otherwise administering the Settlement. The
Financial Institution shall be directed to disburse money from the Settlement Fund to pay
these expenses..
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8.2.
Upon the Settlement becoming Final, Lead Counsel shall direct the
Financial Institution to disburse money from the Class Settlement Fund as follows:
8.2.1. For Attorneys’ Fees and Expenses. As provided in Section 10.2
herein.
8.2.2. For Named Plaintiff compensation. As provided in Section 10.2
herein.
8.2.3. Implementation of the Plan of Allocation. The Plan of Allocation
shall provide for the allocation of the Settlement Fund net of the disbursements called for
in Sections 8.1 and 8.2 (“Net Proceeds”). Upon the Judgment becoming Final as
provided in Section 2.4, and after the amounts payable pursuant to Sections 8.1 and 8.2
have been disbursed, or, in the case of future expenses such as those set forth in 7.1.2, set
aside and withheld, Lead Counsel shall direct the Financial Institution to disburse the Net
Proceeds as provided by this Settlement Agreement and the Plan of Allocation. The
Recordkeeper or any other entity with appropriate authority under the Plan (an
“Authorized Administrator”), shall allocate to members of the Settlement Class who are
not Former Participants any Net Proceeds received by the Trust as calculated by the
Settlement Administrator according to the Plan of Allocation, documentation of which
Lead Counsel shall direct the Settlement Administrator to provide to the Authorized
Administrator pursuant to the Plan of Allocation no later than the distribution of the Net
Proceeds. The Authorized Administrator shall promptly notify Lead Counsel as to the
date(s) and amounts(s) of said allocation(s) made to members of the Settlement Class
who are not Former Participants. The Settlement Administrator shall be responsible for
distributing Net Proceeds allocated to the Former Participants as provided by the Plan of
Allocation, as well as well as to comply with all tax laws, rules, and regulations and
withholding obligations with respect to Former Participants. Defendants shall have no
liability related to the structure or taxability of such payments. In the event that the
Company or Recordkeeper incurs obligations for the implementation of the Plan of
Allocation with respect to Former Participants in connection with distributions,
calculations, tax withholdings, tax reporting or notifications, or reopening former
participant accounts in order for the Net Proceeds to be distributed to Former
Participants, because the Settlement Administrator is not able to distribute the settlement
proceeds to Former Participants as provided herein, the Company or Recordkeeper shall
be entitled to reimbursement from the Settlement Fund for the reasonable costs and
expenses, including from the retention of a third-party vendor, of implementing the Plan
of Allocation with respect to Former Participants.
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8.2.4. The Net Proceeds distributed to the Plan’s trust pursuant to the Plan
of Allocation shall constitute “restorative payments” within the meaning of Revenue
Ruling 2002-45 for all purposes.
8.3.
Final List of Settlement Class Members. Prior to the disbursement of Net
Proceeds to the Plan, Lead Counsel shall provide to the Trustee and Company a Final
List of members of the Settlement Class, in electronic format, to whom the Net Proceeds
will be distributed in accordance with the Plan of Allocation. The Final List shall be
final, and only persons on the list, or beneficiaries as provided in Section 1.28, shall be
eligible to receive any recovery from this Settlement.
8.4.
After the distribution of Net Proceeds to the Plan’s trust and allocation of
the Net Proceeds pursuant to the Plan of Allocation, amounts allocable to members of the
Settlement Class who cannot be located or otherwise receive their Settlement payment
shall be forwarded to the Plan’s Trust and then be subject to the Plan’s forfeiture
provisions, if any, at the time of receipt by the Trust.
8.5.
Payments in the Event of Termination. If the Settlement Agreement is
terminated for any reason, Lead Counsel shall have no obligation to reimburse the
Settlement Fund for costs incurred for the Class Notice, or other costs or expenses of the
Settlement Fund incurred by the Settlement Fund under this Settlement Agreement before
termination.
9.
Termination of the Settlement Agreement.
9.1.
Termination. This Settlement Agreement shall terminate if (a) if and when
any of the conditions specified in Section 2 of this Settlement Agreement is not satisfied,
or (b) the Judgment does not become Final, or (c) at the option of the Defendants, if the
Court does not modify the Settlement Class to be a non opt-out class as provided in
section 2.2.1 above, and if more than 5% of the notified class members in the Wells
Funds choose to opt-out of the Settlement. Notwithstanding the foregoing, this
Settlement Agreement shall not terminate because a court of competent jurisdiction
modifies, reverses, or refuses to enter any order relating to the award of attorneys fees
and expenses or compensation for the Named Plaintiff. If within thirty-one (31) days
after the date when any reversal or modification which would cause this Settlement
Agreement to terminate becomes Final the Parties have not agreed in writing to proceed
with all or part of the Settlement Agreement in light of such ruling, then this Settlement
Agreement shall automatically terminate and thereupon become null and void, except as
otherwise provided herein. Nothing in this Section 9.1 shall be construed as setting forth
the only situations pursuant to which this Settlement Agreement may terminate.
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9.2.
Consequences of Termination of the Settlement Agreement.
Settlement Agreement is terminated, the following shall occur:
If the
9.2.1. Lead Counsel and Defendants’ Counsel shall within ten (l0) days
after the date of termination of the Settlement Agreement jointly notify the Financial
Institution in writing to return to Wells Fargo & Company, or its designee, the full
amount contained in the Settlement Fund, with all net income earned thereon, after
deduction of any amounts earlier disbursed and/or incurred on the Settlement as of the
termination, and direct the Financial Institution to effect such return within fourteen (14)
days after such notification. Prior to the return of amounts contemplated by this Section
9.2.1, the Financial Institution shall fully and finally fulfill and set aside for any and all
tax obligations of the Settlement Fund as set forth in Section 7.1.2 and the Company shall
have no past, present, or future liability whatsoever for any such tax obligations.
9.2.2. The Action shall for all purposes with respect to the Parties revert to
its status as of October 18, 2010, prior to the Settlement. Any and all statutes of
limitations, statutes of repose and/or other defenses based upon the passage of time
applicable to the Claims asserted in this Action shall be tolled from October 18, 2010 to
the termination of this Settlement Agreement.
9.2.3. All provisions of this Settlement Agreement shall be null and void
except as otherwise provided herein.
10.
Attorneys’ Fees and Expenses.
10.1. Application for Attorneys’ Fees and Expenses. As provided in Section
2.2, and pursuant to the common fund doctrine and/or any applicable statutory fee
provision, Lead Counsel may apply to the Court for an award to Lead Counsel and
Appointed Counsel, of attorneys’ fees, and for reimbursement of expenses, to be paid
solely from the Settlement Fund. Lead Counsel also may apply to the Court for
compensation to Named Plaintiff, payable solely from the Settlement Fund, and Named
Plaintiff shall be entitled to receive such compensation from the Settlement Fund to the
extent awarded by the Court. Defendants agree to take no position with respect to any
such application for attorneys fees amounting to 30% or less of the Class Settlement
Amount and compensation for the Named Plaintiff of $20,000 or less.
10.2. Disbursement of Attorneys’ Fees and Expenses and Named Plaintiff
Compensation. Following (a) the entry of an order allowing payment of attorneys'’ fees
and expenses and Named Plaintiff Compensation, and (b) Judgment becoming Final, the
Signer shall instruct the Financial Institution in writing to disburse the payments set forth
in clause (a) from the Settlement Fund, which the Financial Institution shall do within
five (5) business days of receiving such direction.
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Miscellaneous Provisions.
11.1. Governing Law. This Settlement Agreement shall be governed by the laws
of the State of Minnesota without giving effect to the conflict of laws or choice of law
provisions thereof, except to the extent that the law of the United States governs any
matter set forth herein, in which case such federal law shall govern.
11.2. Amendment. Before entry of the Judgment, the Settlement Agreement
may be modified or amended only by written agreement signed by or on behalf of all
Parties. Following entry of the Judgment, the Settlement Agreement may be modified or
amended only by written agreement signed by or on behalf of all Parties and approved by
the Court.
11.3. Waiver. The provisions of this Settlement Agreement may be waived only
by an instrument in writing executed by the waiving party. The waiver by any party of
any breach of this Settlement Agreement shall not be deemed to be or construed as a
waiver of any other breach, whether prior, subsequent, or contemporaneous, of this
Settlement Agreement.
11.4. Construction. None of the Parties hereto shall be considered to be the
drafter of this Settlement Agreement or any provision hereof for the purpose of any
statute, case law, or rule of interpretation or construction that would or might cause any
provision to be construed against the drafter hereof.
11.5. Principles of Interpretation. The following principles of interpretation
apply to this Settlement Agreement:
11.5.1. Headings. The headings of this Settlement Agreement are for
reference purposes only and do not affect in any way the meaning or interpretation of this
Settlement Agreement.
11.5.2. Singular and Plural. Definitions apply to the singular and plural
forms of each term defined.
11.5.3. Gender. Definitions apply to the masculine, feminine, and neuter
genders of each term defined.
11.5.4. References to a Person. References to a Person are also to the
Person’s permitted successors and assigns.
11.5.5. Terms of Inclusion. Whenever the words “include,” “includes,” or
“including” are used in this Settlement Agreement, they shall not be limiting but rather
shall be deemed to be followed by the words “without limitation.”
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11.6. Further Assurances.
Each of the Parties agrees, without further
consideration, and as part of finalizing the Settlement hereunder, that they will in good
faith execute and deliver such other documents and take such other actions as may be
necessary to consummate and effectuate the subject matter and purpose of this Settlement
Agreement.
11.7. Survival. All representations, warranties and covenants set forth in this
Settlement Agreement shall be deemed continuing and shall survive the termination or
expiration of this Settlement Agreement.
11.8. Notices. Any notice, demand, or other communication under this
Settlement Agreement (other than the Class Notice, or other notice given at the direction
of the Court) shall be in writing and shall be deemed duly given upon receipt if it is
addressed to each of the intended recipients as set forth below and personally delivered,
sent by registered or certified mail (postage prepaid), sent by confirmed facsimile, or
delivered by reputable express overnight courier:
IF TO NAMED PLAINTIFFS:
J. Brian McTigue
MCTIGUE & VEIS, LLP
4530 Wisconsin Ave NW, Suite 300
Washington, DC 20016
Gregory Y. Porter
BAILEY & GLASSER LLP
910 17th Street, Suite 800
Washington, DC 20006
IF TO DEFENDANTS:
Stephen P. Lucke
Thomas P. Swigert
DORSEY & WHITNEY LLP
50 South Sixth Street, Suite 1500
Minneapolis, MN 55402
Any Party may change the address at which it is to receive notice by written
notice delivered to the other Parties in the manner described above.
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11.9. Entire Agreement. This Settlement Agreement contains the entire
agreement among the Parties relating to this Settlement. It specifically supersedes any
settlement terms or settlement agreements relating to the Defendants that were previously
agreed upon orally or in writing by any of the Parties.
11.10. Counterparts. This Settlement Agreement may be executed by exchange
of faxed executed signature pages, and any signature transmitted by facsimile for the
purpose of executing this Settlement Agreement shall be deemed an original signature for
purposes of this Settlement Agreement. This Settlement Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and the same instrument.
11.11. Binding Effect. This Settlement Agreement binds and inures to the benefit
of the Parties hereto, their assigns, heirs, administrators, executors, and successors.
11.12. Agreement Execution Date. The date on which the final signature is
affixed below shall be the Agreement Execution Date.
11.13. Confidentiality and Communications Regarding Settlement and this
Action. The Settlement shall remain confidential until the Preliminary Approval Motion
is filed. Any public communication that Plaintiff or Lead or Appointed Counsel wish to
make about the Settlement, including the payments of Net Proceeds pursuant to Section
8.2.3, or the underlying Claims, shall require joint approval of the Parties. Any disputes
shall be decided by the mediator, the Honorable James M. Rosenbaum (Ret.).
11.14. Return of Discovery Documents. Within sixty (60) days after the
Judgment becomes Final, Plaintiffs shall fully comply with paragraph 12 of the
Stipulated Protective Order entered in this case. Further, the Parties agree that
documents and information provided in connection with the administration of settlement
of this matter, including the Preliminary List, are deemed Confidential pursuant to the
Protective Order and shall be subject to the terms thereof.
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EXHIBITS TO THE SETTLEMENT AGREEMENT
Exhibits
A.
Preliminary Approval Order, with form of Class Notice attached as
Exhibit 1 thereto.
B.
Judgment.
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EXHIBIT A
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UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil File No. 08-cv-4546 (PAM/FLN)
Robin E. Figas, and all others similarly
situated,
Plaintiffs,
v.
Wells Fargo & Company, Employee
Benefit Review Committee, Howard I.
Atkins, Patricia Callahan, Ellen Haude,
Mike Heid, Clyde Ostler, Tim Sloan, John
G. Stumpf, Peter J. Wissinger, and John
Does 1-20,
Defendants.
FINDINGS AND ORDER CONDITIONALLY MODIFYING CLASS CERTIFICATION
ORDER, PRELIMINARILY APPROVING PROPOSED SETTLEMENT, APPROVING
FORM AND DISSEMINATION OF CLASS NOTICE, AND SETTING DATE FOR
HEARING ON FINAL APPROVAL OF SETTLEMENT
Plaintiffs and Defendants have reached a Settlement of this class action litigation,
which involves claims for alleged violations of the Employee Retirement Income
Security Act of 1974, as amended, 29 U.S.C. §§ 1001, et seq. (“ERISA”), with respect to
the Wells Fargo & Company 401(k) Plan (the “Plan”).1 Plaintiffs have moved the Court
pursuant to Fed. R. Civ. P. 23(e) to preliminarily approve the terms of the Class Action
Settlement Agreement dated _________, 2011 (“Settlement Agreement”), including the
procedures for Class Notice and the Plan of Allocation. Pursuant to the terms of the
Settlement Agreement, Plaintiffs have also moved the Court to modify its Order granting
class certification and to certify conditionally, for purposes of the Settlement, a non-opt
1
Capitalized and italicized terms not otherwise defined in this Order shall have the same
meaning as ascribed to them in the Settlement Agreement.
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out Settlement Class pursuant to Fed. R. Civ. P. 23(b)(1).
Upon consideration of the Settlement Agreement and motion papers relating to the
request for preliminary approval of the Settlement, and the matter having come before the
Court at the March 31, 2011 hearing, the Court hereby GRANTS Plaintiffs’ motion and
ORDERS as follows:
1.
Conditional Settlement Class. Solely for the purposes of Settlement, the
Court modifies the class certified in its May 6, 2010 and September 1, 2010 Orders
(together, “Class Certification Order”), to allow for a non-opt out Settlement Class
certified pursuant to Fed. R. Civ. P. 23(b)(1), to modify the class period, and to include
participants who invested in the Wells Fargo Capital Growth Fund.
A.
In its Class Certification Order, the Court found that Named Plaintiff
Robin E. Figas met the numerosity, commonality, typicality, and adequacy requirements
imposed by Fed. R. Civ. P. 23(a), and found further that (1) questions of law or fact
common to the members of the class predominate over any questions affecting individual
members; and (2) a class action is the superior method of adjudicating the controversy,
pursuant to Fed. R. Civ. P. 23(b)(3).
B.
The Court certified the class under Fed. R. Civ. P. 23(b)(3) as an
opt-out class consisting of:
Participants in the Wells Fargo & Company 401(k) Plan (the
“Plan”) whose Plan accounts had a balance in any one of the
following funds from November 2, 2001, to September 30,
2009: Wells Fargo Diversified Small Cap Fund; Wells Fargo
Diversified Equity Fund; Wells Fargo Large Company Stock
[sic] Fund; Wells Fargo Growth Balanced Fund; Wells Fargo
Moderate Balanced Fund; Wells Fargo Aggressive Allocation
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Fund (formerly Wells Fargo Strategic Growth Allocation
Fund); Wells Fargo Conservative Allocation Fund (formerly
Wells Fargo Strategic Income Fund); and Wells Fargo Asset
Allocation Collective Trust.
C.
Pursuant to the Settlement Agreement, and for the purposes of the
Settlement only, the Court conditionally modifies its Class Certification Order to certify
the Settlement Class as a non-opt out class pursuant to Fed. R. Civ. P. 23(b)(1) with the
Named Plaintiff representing the Class. The Court also certifies the Settlement Class to
include the Wells Fargo Capital Growth Fund and the period of time beginning on
November 2, 2001 through (and including) October 8, 2009. The conditional Settlement
Class will consist of:
Individuals who were participants in the Wells Fargo &
Company 401(k) Plan (the “Plan”) whose Plan accounts had a
balance in any one of the following funds from November 2,
2001, to October 8, 2009: Wells Fargo Diversified Small Cap
Fund; Wells Fargo Diversified Equity Fund; Wells Fargo Large
Company Stock Fund; Wells Fargo Growth Balanced Fund;
Wells Fargo Moderate Balanced Fund; Wells Fargo Aggressive
Allocation Fund (formerly Wells Fargo Strategic Growth
Allocation Fund); Wells Fargo Conservative Allocation Fund
(formerly Wells Fargo Strategic Income Fund); Wells Asset
Allocation Collective Trust; and Wells Capital Growth Fund.
D.
Robin E. Figas (the “Named Plaintiff”) has been appointed as the
Class representative, and McTigue & Veis LLP and Bailey & Glasser LLP (“Lead
Counsel”) have been appointed Class counsel, and Sprenger & Lang PLLC have been
appointed liaison counsel pursuant to Fed. R. Civ. P. 23(g).
E.
As provided in the Settlement Agreement, participants who were
invested in one of the Wells Funds during the Class Period will receive notice of this
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Settlement and payment according to the Plan of Allocation. In addition, participants for
whom records are insufficient to determine whether they are mermbers of the Settlement
Class will receive a claim form and be given an opportunity to submit documents to
support membership in the Settlement Class.
F.
In the event that the Settlement does not become Final, or is
terminated pursuant to the Settlement Agreement, the Settlement Class will be deemed not
to have been modified, and the Action will for all purposes with respect to the Parties
revert to its status as of October 18, 2010, prior to the Settlement. In such event the
Parties will not be deemed to have consented to the modification of the Class
Certification Order; the agreements and stipulations in this Settlement Agreement
concerning class definition or class certification shall not be used as evidence or
argument to support a modification of the Class Certification Order; and the Parties will
retain all rights with respect to class certification.
2.
Preliminary Findings Regarding Proposed Settlement. The Court
preliminarily finds that (i) the proposed Settlement resulted from extensive arm’s-length
negotiations among counsel, including with the assistance and recommendation of an
experienced, retired federal judge, (ii) the Settlement Agreement was executed only after
Lead Counsel had conducted extensive pre-settlement motion practice and discovery, (iii)
counsel for the Named Plaintiff has concluded that the Settlement Agreement is fair,
reasonable and adequate, and (iv) the Settlement evidenced by the Settlement Agreement
is sufficiently fair, reasonable, and adequate to warrant sending notice of the Settlement
to the Settlement Class.
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Fairness Hearing. A hearing is scheduled for _________, _______ (the
“Fairness Hearing”) to determine, among other things:
-
Whether the Settlement should be finally approved as fair, reasonable and
adequate;
-
Whether the litigation should be dismissed with prejudice as to the
Defendants pursuant to the terms of the Settlement;
-
Whether the notice, summary notice and notice methodology implemented
pursuant to the Settlement Agreement (i) constituted the best practicable notice, (ii)
constituted notice that was reasonably calculated, under the circumstances, to apprise
members of the Settlement Class of the pendency of the litigation, their right to object to
the Settlement, and their right to appear at the Fairness Hearing, (iii) were reasonable and
constituted due, adequate, and sufficient notice to all persons entitled to notice and (iv)
met all applicable requirements of the Federal Rules of Civil Procedure, and any other
applicable law;
-
Whether the Plan of Allocation should be approved;
-
Whether the motion for attorneys' fees and expenses filed by Lead Counsel
should be approved; and
-
Whether the motion for a case contribution award for the Named Plaintiff
should be approved.
4.
Class Notice. The Parties have presented to the Court the proposed form
of Class Notice, which is appended hereto as Exhibit 1. With respect to such form of
Class Notice, the Court finds that such form fairly and adequately (a) describes the terms
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and effect of the Settlement Agreement and of the Settlement, (b) notifies the Settlement
Class concerning the proposed Plan of Allocation, (c) notifies the Settlement Class that
Lead Counsel will seek a case contribution award from the Settlement Fund for the
Named Plaintiff, and for attorneys’ fees not to exceed 30% of the Settlement Amount and
for reimbursement of expenses, (d) gives notice to the Settlement Class of the time and
place of the Fairness Hearing, and (e) describes how the recipients of the Class Notice
may object to any of the relief requested. The parties have also presented to the Court a
proposed Claim Documentation Form, which is appended hereto as Exhibit 2. The
Court finds that such form fairly and adequately (a) notifies certain individuals of their
potential membership in the Settlement Class, and (b) describes how the recipients of the
Claim Documentation Form may verify and document membership in the Settlement
Class and receive payment under the Settlement.
The Parties have proposed the following manner of communicating the notice to
members of the Settlement Class, and the Court finds that such proposed manner is the
best notice practicable under the circumstances, and directs that Lead Counsel shall:
-
By no later than 45 days before the Fairness Hearing, Lead Counsel shall
cause the Class Notice, with such non-substantive modifications thereto as may be agreed
upon by the Parties, to be mailed, by first-class mail, postage prepaid, to the last known
address of each Person within the Settlement Class who can be identified by reasonable
effort.
-
By no later than 45 days before the Fairness Hearing, Lead Counsel shall
cause the Claim Documentation Form, with such non-substantive modifications thereto
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as may be agreed upon by the Parties, to be mailed, along with the Class Notice, to the
Participants who are identified from the Company’s records pursuant to the Settlement
Agreement. The Claim and Documentation Form shall inform the recipients of the
Claims Deadline by which they must file a signed, completed Claim Documentation
Form with accompanying 401(k) Plan account statement(s) in order to be eligible for
inclusion in the Settlement Class.
-
The Company shall cooperate with Lead Counsel by using reasonable
efforts to provide, to the extent reasonably accessible, in electronic format and form
reasonably agreed upon by the Company and the Class Counsel, the following:
- The names and last known addresses of Participants during the Class
Period , as compiled from reasonably accessible electronic records maintained by the
Recordkeeper and 1099R forms maintained by the Company.
- Reasonably accessible electronic data reflecting the Settlement Class
Individual Account Information.
-
At or before the Fairness Hearing, Lead Counsel shall file with the Court a
proof of timely compliance with the foregoing requirements.
5.
Objections to Settlement. Any member of the Settlement Class who
wishes to object to the fairness, reasonableness or adequacy of the Settlement, to the Plan
of Allocation, to any term of the Settlement Agreement, to the proposed award of
attorneys’ fees and expenses, or to any request for a case contribution award for the
Named Plaintiff, (“Objector”), may file an Objection. An Objector who chooses to file an
Objection must file with the Court a statement of objection(s), specifying the reason(s), if
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any, for each such objection made, including any legal support and/or evidence that such
Objector wishes to bring to the Court's attention or introduce in support of such
objection. The Objector must also mail copies of the objection and all supporting law
and/or evidence to Lead Counsel and to counsel for the Defendants. The addresses for
filing objections with the Court and service of a copy of the objection on counsel are as
follows:
Clerk of the Court
United States District Court
for the District of Minnesota
316 North Robert Street
100 Federal Building
St. Paul, MN 55101
Re: Case No. 06-CV-2237
To Lead Counsel:
Gregory Y. Porter
BAILEY & GLASSER LLP
910 17th Street, NW, Suite 800
Washington, DC 20006
J. Brian McTigue
McTIGUE & VEIS LLP
4530 Wisconsin Avenue, NW, Suite 300
Washington, DC 20016
To Defendants’ Counsel:
Stephen P. Lucke
Thomas J. Swigert
DORSEY & WHITNEY LLP
50 South Sixth Street, Suite 1500
Minneapolis, MN 55402
An Objector, or Objector’s counsel (if any), must file an objection with the Court
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and effect service of copies of the objection on counsel at their address listed above by no
later than seven (10) business days before the date of the Fairness Hearing. Any member
of the Settlement Class or other Person who does not timely file and serve a written
objection complying with the terms of this paragraph shall be deemed to have waived,
and shall be foreclosed from raising, any objection to the Settlement, and any untimely
objection shall be barred.
6.
Appearance at Fairness Hearing. Any Objector who files and serves a
timely, written objection in accordance with paragraph 5 above may also appear at the
Fairness Hearing either in person or through counsel retained at the Objector's expense.
An Objector, or Objector’s counsel (if any), intending to appear at the Fairness Hearing
must effect service of a notice of intention to appear setting forth, among other things, the
name, address, and telephone number of the Objector (and, if applicable, the name,
address, and telephone number of the objector's attorney) on Lead Counsel and
Defendants’ counsel (at the addresses set out above) and file it with the Court by no later
than seven (7) days before the date of the Fairness Hearing. Any Objector who does not
timely file and serve a notice of intention to appear in accordance with this paragraph
shall not be permitted to appear at the Fairness Hearing, except for good cause shown.
7.
Service of Papers. Defendants’ counsel and Lead Counsel shall promptly
furnish each other with copies of any and all objections that come into their possession.
8.
Notice Expenses. The expenses of printing and mailing all notices
required hereby shall be paid from the Settlement Fund as provided in Section 8.1 of the
Settlement Agreement.
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Termination of Settlement. This Order shall become null and void, and
shall be without prejudice to the rights of the Parties, all of whom shall be restored to
their respective positions existing immediately before this Court entered this Order, if the
Settlement is terminated in accordance with the Settlement Agreement. In such event,
Section 9 of the Settlement Agreement shall govern the rights of the Parties.
10.
Use of Order. This Order shall not be construed or used as an admission,
concession, or declaration by or against Defendants of any fault, wrongdoing, breach, or
liability. This Order shall not be construed or used as an admission, concession, or
declaration by or against Named Plaintiff or the Settlement Class that their claims lack
merit or that the relief requested in the Action is inappropriate, improper or unavailable,
or as a waiver by any party of any arguments, defenses, or claims he, she, or it may have,
including, but not limited to, any objections by Defendants to class certification in the
event that the Settlement Agreement is terminated.
11.
Jurisdiction. The Court hereby retains jurisdiction for purposes of
implementing the Settlement Agreement, and reserves the power to enter additional orders
to effectuate the fair and orderly administration and consummation of the Settlement
Agreement as may from time to time be appropriate and to resolve any and all disputes
arising thereunder.
12.
Continuance of Hearing. The Court reserves the right to continue the
Fairness Hearing without further written notice.
SO ORDERED this _________ day of _____________________, 2011.
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_______________________________
HON. PAUL MAGNUSON
United States District Judge
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EXHIBIT 1
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UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Robin E. Figas,
and all others similarly situated,
Civ. No. 08-CV-4546
(PAM/FLN)
Plaintiffs,
v.
Wells Fargo & Company, Employee Benefit Review
Committee, Howard I. Atkins, Patricia Callahan, Ellen
Haude, Mike Heid, Clyde Ostler, Tim Sloan, John G.
Stumpf, Peter J. Wissinger, and John Does 1-20,
Defendants.
NOTICE OF CLASS ACTION SETTLEMENT
Your legal rights might be affected
if you are a member of the following class:
Individuals who were participants in the Wells Fargo & Company 401(k) Plan (the “Plan”) whose
Plan accounts had a balance in any one of the following funds from November 2, 2001, to October
8, 2009: Wells Fargo Diversified Small Cap Fund; Wells Fargo Diversified Equity Fund; Wells
Fargo Large Company Stock Fund; Wells Fargo Growth Balanced Fund; Wells Fargo Moderate
Balanced Fund; Wells Fargo Aggressive Allocation Fund (formerly Wells Fargo Strategic Growth
Allocation Fund); Wells Fargo Conservative Allocation Fund (formerly Wells Fargo Strategic
Income Fund); Wells Asset Allocation Collective Trust; and Wells Capital Growth Fund.
A FEDERAL COURT AUTHORIZED THIS NOTICE.
THIS IS NOT A SOLICITATION FROM A LAWYER.
YOU HAVE NOT BEEN SUED.

Judge Paul A. Magnuson of the United States District Court for the District of Minnesota has approved a proposed
settlement (the “Settlement”) of a class action lawsuit brought on behalf of participants in the Wells Fargo &
Company 401(k) Plan (the “Plan”). The Settlement will provide for payments to the Plan and for allocation of those
payments to the accounts of members of the Settlement Class who had portions of their Plan accounts invested in one
or more of the nine Wells Fargo Funds listed above. It is summarized below.

The Court has scheduled a hearing on final approval of the Settlement and on the Named Plaintiff’s motion for
attorneys’ fees and expenses and for a case contribution award to the Named Plaintiff. That hearing before United
States District Judge Paul A. Magnuson has been scheduled for __________, 2011, at ___.m. in Courtroom _______
of the United States District Court for the District of Minnesota, 316 North Robert Street, 100 Federal Building, St.
Paul, MN 55101.

Any objections to the Settlement or the motion for attorneys’ fees and expenses and case contribution award to the
Named Plaintiff must be filed with the Court and served in writing on the attorneys in this case, whose addresses are
provided below. The procedure for objecting is described below.

This Notice contains summary information with respect to the Settlement. The terms and conditions of the Settlement
are set forth in a Class Action Settlement Agreement (the “Settlement Agreement”). Capitalized and italicized terms
used in this Notice but not defined in this Notice have the meanings assigned to them in the Settlement Agreement.
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The Settlement Agreement, and additional information with respect to this lawsuit and the Settlement, are available at
www.wf401ksettlement.com, or from Lead Counsel listed below.
PLEASE READ THIS NOTICE CAREFULLY AND COMPLETELY. IF YOU ARE A MEMBER OF
THE SETTLEMENT CLASS TO WHOM THIS NOTICE IS ADDRESSED, THE SETTLEMENT WILL AFFECT
YOUR RIGHTS. YOU ARE NOT BEING SUED IN THIS MATTER. YOU DO NOT HAVE TO APPEAR IN
COURT, AND YOU DO NOT HAVE TO HIRE AN ATTORNEY IN THIS CASE. IF YOU DO NOT OBJECT
TO THE SETTLEMENT, YOU NEED NOT DO ANYTHING. IF YOU DISAPPROVE, YOU MAY OBJECT TO
THE SETTLEMENT PURSUANT TO THE PROCEDURES DESCRIBED BELOW.
YOUR LEGAL RIGHTS AND OPTIONS UNDER THE SETTLEMENT:
FOR MOST SETTLEMENT
CLASS MEMBERS, NO
ACTION IS NECESSARY
TO RECEIVE PAYMENT.
If you currently participate in the Plan:
If the Settlement is approved by the Court, you have a Plan account,
and you are a member of the Settlement Class, you will not need to do
anything to receive a payment. The portion, if any, of the Settlement
Fund to be allocated to your Plan account will be calculated as part of
the implementation of the Settlement. This payment will be deposited
into your Plan account.
If you no longer participate in the Plan:
If you no longer have a Plan account and YOU DID NOT receive a
Claim Documentation Form with this Notice:
If the Settlement is approved by the Court and you are a member of the
Settlement Class, you do not need to do anything to receive a payment.
The portion, if any, of the Settlement Fund to be allocated to you will
be calculated as part of the implementation of the Settlement. You will
receive any payment by check.
IF YOU RECEIVED A “CLAIM
DOCUMENTATION” FORM,
ACTION IS NECESSARY TO
RECEIVE A PAYMENT.
I received a Claim Documentation Form with this Notice:
OBJECT
If you wish to object to any part of the Settlement, you must (as
discussed below) write to the Court, with a copy to plaintiffs’ and
defendants’ counsel, about why you object to the Settlement.
(BY ______, 2011)
GO TO A HEARING
(TO BE HELD ON ______,
2011)
You must complete, sign, and send the Claim Documentation Form
with accompanying account statement(s) to the Claims Administrator
by the Claims Deadline in order to be eligible to participate in the
Settlement. The portion, if any, of the Settlement Fund to be allocated
to you will be calculated as part of the implementation of the
Settlement. You will receive any payment by check.
If you submit a written objection to the Settlement to the Court and
send a copy to Plaintiffs’ and Defendants’ counsel before the Courtapproved deadline, you may (but do not have to) attend the Court
hearing about the Settlement and present your objections to the Court.
You may attend the Hearing even if you do not file a written objection,
but you will only be allowed to speak at the Hearing if you file a timely
written objection in advance of the Hearing.

These rights and options – and the deadlines to exercise them – are explained in this Notice.

The Court in charge of this case still has to decide whether to approve the Settlement. Payments will be made only if
the Court approves the Settlement and that approval is upheld in the event of any appeals.
For more information visit: www.wf401ksettlement.com
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Further information regarding the litigation and this Notice may be obtained by contacting Plaintiffs’ Lead
Counsel:
J. Brian McTigue
McTIGUE & VEIS LLP
4530 Wisconsin Ave., NW, Suite 300
Washington, DC 20016
Gregory Y. Porter
BAILEY & GLASSER LLP
910 17th Street, NW, Suite 800
Washington, DC 20006
Plaintiffs’ Lead Counsel has established a toll-free phone number to receive your comments and questions:
. Plaintiffs’ Lead Counsel has established a website where additional information, including the
Settlement Agreement, and filings in the lawsuit are available: www.wf401ksettlement.com.
For more information visit: www.wf401ksettlement.com
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WHAT THIS NOTICE CONTAINS
SUMMARY OF SETTLEMENT
5
BASIC INFORMATION
6
1.
Why did I get this Notice package? ..........................................................................................................6
2.
What is the lawsuit about? ........................................................................................................................6
3.
Why Is This Case a Class Action? ............................................................................................................7
4.
Why is there a Settlement?........................................................................................................................7
5.
How do I know whether I am part of the Settlement? ...........................................................................7
6.
Are there exceptions to being included in the Settlement Class? ..ERROR! BOOKMARK NOT DEFINED.
The Settlement Benefits - What You Get
8
7.
What does the Settlement provide?..........................................................................................................8
8.
How much will my payment be?...............................................................................................................8
9.
How can I get a payment? .........................................................................................................................9
10. When will I get my payment? ..................................................................................................................9
11. Can I get out of the Settlement? ...............................................................................................................9
THE LAWYERS REPRESENTING YOU
9
12. Do I have a lawyer in the case?.................................................................................................................9
13. How will the lawyers be paid? ................................................................................................................10
14. How will the Named Plaintiff be paid? ..................................................................................................10
15. How may I object to the Settlement or the Attorneys' Fees or expenses or the Named Plaintiff's
Compensation?.................................................................................................................................................10
16. How do I tell the Court that I don’t like the Settlement?.....................................................................10
THE COURT’S FAIRNESS HEARING
11
17. When and where will the Court decide whether to approve the Settlement?....................................11
18. Do I have to come to the hearing? ..........................................................................................................11
19. May I speak at the hearing?....................................................................................................................11
IF YOU DO NOTHING
11
20. What happens if I do nothing at all?......................................................................................................11
GETTING MORE INFORMATION
12
21. Are there more details about the Settlement?.......................................................................................12
For more information visit: www.wf401ksettlement.com
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This litigation (the “Action”) is a class action in which Plaintiffs allege that the Defendants breached fiduciary
duties owed to the participants and beneficiaries of the Plan. The lawsuit claims that Defendants violated federal pension
law, the Employee Retirement Income Security Act (“ERISA”), by allowing the Plan to continue to invest in various
investment funds offered and managed by Wells Fargo affiliates and subsidiaries. Copies of the most recent Complaint
and other documents filed in the Action are available at www.wf401ksettlement.com.
SUMMARY OF SETTLEMENT
1. A Settlement Fund consisting of $17.5 million in cash is being established in the Action.
2. The net amount in the Settlement Fund, including interest, and after payment of any taxes, expenses, approved
attorneys’ fees and costs, and case contribution award to the Named Plaintiff, will be paid to the Plan and be allocated to
Settlement Class members according to a Plan of Allocation described herein.
Potential Outcome of the Action
As with any litigated case, Plaintiffs would face an uncertain outcome if the Action were to continue against the
Defendants. Continued litigation of the Action against these Defendants could result in a judgment or verdict in favor of
the Defendants, a judgment or verdict greater or less than the recovery under the Settlement Agreement, or in no recovery
at all.
Throughout this Action, the Named Plaintiff and the Defendants have disagreed on both liability and damages,
and they do not agree on the amount that would be recoverable even if the Plaintiffs were to prevail at trial. The
Defendants have denied and continue to deny the claims and contentions alleged by the Named Plaintiff, that they are
liable at all to the Settlement Class, and that the Settlement Class or the Plan have suffered any damages for which the
Defendants could be legally responsible. Nevertheless, the Parties have taken into account the cost, uncertainty, and risks
inherent in any litigation, particularly in a complex case such as this, and have concluded that it is desirable that the Action
be fully and finally settled as to them on the terms and conditions set forth in the Settlement Agreement.
Attorneys’ Fees and Costs Sought in the Action
Lead Counsel in the Action, who have litigated this case for over three years, will apply to the Court for an order
awarding to counsel for the Named Plaintiff attorneys’ fees not in excess of thirty percent (30%) of the amount recovered
in the Settlement, plus reimbursement of any expenses. Any amount awarded will be paid from the proceeds of the
Settlement Fund.
What Will the Named Plaintiff Receive?
The Named Plaintiff will share in the allocation of the money paid to the Plan on the same basis and to the same
extent as all other members of the Settlement Class, except that, in addition, the Named Plaintiff may apply to the Court
for a case contribution award of up to $20,000, relating to the time and effort involved in her representation of the
Settlement Class over more than three years of litigation. Any award to the Named Plaintiff by the Court will be paid
from the proceeds of the Settlement Fund.
Further Information
Further information regarding the Action and this Notice may be obtained by contacting:
J. Brian McTigue
McTIGUE & VEIS LLP
4530 Wisconsin Ave., NW, Suite 300
Washington, DC 20016
Gregory Y. Porter
BAILEY & GLASSER LLP
910 17th Street, NW, Suite 800
Washington, DC 20006
For more information visit: www.wf401ksettlement.com
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BASIC INFORMATION
1.
Why did I get this Notice package?
You are likely getting this court-approved notice because the Plan records show that you had a balance in your
Plan account in one or more of the nine Wells Funds listed above during the Class Period (November 2, 2001 – October
8, 2009). If, however, you receive a Claim Documentation Form with this Notice, you are receiving this Notice because
you were a Plan participant during the Class Period and may have had a Plan account invested in one or more Wells
Funds.
The Court caused this Notice to be sent to you because, should you be a member of the Settlement Class, you
have a right to know about the Settlement and your options, before the Court decides whether to approve the Settlement.
If the Court approves the Settlement, and after any objections and appeals are resolved, the net amount of the Settlement
Fund will be allocated among Settlement Class members according to a Plan of Allocation described herein. This Notice
package describes the litigation, the Settlement, your legal rights, what benefits are available, who is eligible for them, and
how to obtain them.
The Court overseeing this litigation is the United States District Court for the District of Minnesota. The person
who sued is called the “Named Plaintiff,” and the people she sued are called “Defendants.” The court-appointed Named
Plaintiff in the Action is Robin E. Figas. The Defendants are: Wells Fargo & Company, the Employee Benefit Review
Committee, Howard I. Atkins, Patricia Callahan, Ellen Haude, Mike Heid, Clyde Ostler, Tim Sloan, John G. Stumpf, and
Peter J. Wissinger. The legal action that is the subject of this Notice and the Settlement is known as Figas v. Wells Fargo
& Company, et al, Civil File No. 08-CV-4546.
2.
What is the Action about?
The Named Plaintiff sued Wells Fargo & Company (“Wells Fargo”), the Plan’s Employee Benefit Review
Committee, and individuals who served as members of the Committee during the Class Period, including Howard J.
Atkins, Patricia Callahan, Ellen Haude, Mike Heid, Clyde Ostler, Tim Sloan, John G. Stumpf, and Peter J. Wissinger
(collectively, “Defendants”). The lawsuit claims that Defendants violated federal pension law, the Employee Retirement
Income Security Act (“ERISA”), by allowing the Plan to continue to invest in various investment funds listed above (the
“Wells Funds”) offered and managed by Wells Fargo affiliates and subsidiaries. These funds were offered to participants
in the Plan as investment options during some or all of the Class Period. At the end of the Class Period (October 8,
2009), the Plan merged with the Wachovia 401(k) Plan and the funds were eliminated as investment options. The Named
Plaintiff alleges that Defendants violated certain fiduciary duties by not eliminating these Wells Funds as investment
options for the Plan when better-performing, lower cost alternatives were available, and that Defendants were motivated
to choose Wells Funds for the purpose of generating investment management and other fees for Wells Fargo and Wells
Fargo’s investment management business. and the Plan and the members of the Class suffered millions of dollars in
losses as a result of Defendants’ decisions.
The Defenses in the Action
Defendants contend that they acted at all times in compliance with their duties, that the Wells Funds were prudent
and appropriate investment options, and that during substantial periods the Wells Funds outperformed benchmarks and
other funds that the Class alleges are comparable. Defendants claim that they all acted in the best interests of participants
and that Wells Fargo provided participants substantial subsidies that lowered investment management fees and costs of
plan administration.
The Action Has Been Aggressively Litigated
Counsel for the Named Plaintiff have conducted an extensive investigation of the allegations in the Action and of
the losses allegedly suffered by the Plan. In addition, through that investigation and through discovery of information in
the Action, counsel for the Named Plaintiff has obtained and reviewed hundreds of thousands of pages of documents,
For more information visit: www.wf401ksettlement.com
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including Plan governing documents and materials, communications with Plan participants, internal Wells Fargo
documents regarding the Plan, and other documents.
Lead Counsel successfully opposed a motion by the Defendants to dismiss the Class claims. The Court granted
Lead Counsel’s motion for certification of the Action as a class action. Lead Counsel have drafted and served on
Defendants numerous discovery requests, reviewed the documents produced by Defendants, and participated in
depositions relating to the merits and class certification issues. Lead Counsel hired experts to investigate the facts,
develop opinions, and prepare formal reports concerning the merits of the Action and the amount of recoverable damages.
In addition, Lead Counsel reviewed expert reports submitted by Defendants.
Settlement Discussions
This Settlement is the product of extensive negotiations between Lead Counsel and the Defendants’ counsel.
Throughout the settlement negotiations, the Named Plaintiff was advised by various consultants and experts. The
mediation was conducted by a retired federal judge who was successful in enabling the Parties to reach the Settlement
described herein.
3.
Why Is This Case a Class Action?
In a class action, one or more plaintiffs, called the Named Plaintiff, sue on behalf of people who have similar
claims. All of the individuals on whose behalf the Named Plaintiff is suing are “Class Members.” In a class action a court
resolves the issues for all Class Members. U.S. District Judge Paul A. Magnuson is presiding over this case. In its Order
setting the Fairness Hearing, the Court conditionally certified the Settlement Class in the Action.
4.
Why is there a Settlement?
The Court has not reached a final decisions in connection with Plaintiffs’ claims against the Defendants. Instead,
the Plaintiffs and the Defendants have agreed to a settlement. In reaching the Settlement, they have avoided the cost,
risks, and time of a trial.
As with any litigated case, the Plaintiffs would face an uncertain outcome if this case went to trial. On the one
hand, continuation of the case against the Defendants could result in a verdict greater than this Settlement. On the other
hand, continuing the case against the Defendants could result in a judgment or verdict for less money than Plaintiffs have
obtained in this Settlement, or no recovery at all. Based on these factors, the Plaintiffs and their attorneys in this case
believe the Settlement is best for all Settlement Class members.
5.
How do I know whether I am part of the Settlement?
The net proceeds of this Settlement will be allocated only to members of the Settlement Class and only according
to a Plan of Allocation described herein.
You are a member of the Settlement Class if you fall within the definition of the Settlement Class approved by
United States District Judge Paul A. Magnuson:
Individuals who were participants in the Wells Fargo & Company 401(k) Plan (the “Plan”) whose Plan
accounts had a balance in any one of the following funds from November 2, 2001, to October 8, 2009:
Wells Fargo Diversified Small Cap Fund; Wells Fargo Diversified Equity Fund; Wells Fargo Large
Company Stock Fund; Wells Fargo Growth Balanced Fund; Wells Fargo Moderate Balanced Fund; Wells
Fargo Aggressive Allocation Fund (formerly Wells Fargo Strategic Growth Allocation Fund); Wells
Fargo Conservative Allocation Fund (formerly Wells Fargo Strategic Income Fund); Wells Asset
Allocation Collective Trust; and Wells Capital Growth Fund.
For more information visit: www.wf401ksettlement.com
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THE SETTLEMENT BENEFITS - WHAT YOU GET
6.
What does the Settlement provide?
A Settlement Fund consisting of $17.5 million is being established in the Action. The net amount in the
Settlement Fund, including interest, and after payment of, and establishment of reserves for, any taxes and Courtapproved costs, attorneys’ fees, and expenses, including any Court-approved compensation to be paid to the Named
Plaintiff, and expenses for Class Notice, and settlement administration, will be allocated to Plan accounts maintained for
members of the Settlement Class or paid directly to members of the Settlement Class who do not have an account in the
Plan according to the Plan of Allocation described herein.
All Settlement Class members are deemed to fully release the Releasees from Released Claims. The Releasees
include the Defendants and their officers, directors, employees, attorneys, and agents. The Released Claims generally
include all claims asserted in the Action and similar or related claims. This means that Settlement Class members will not
have the right to sue the Releasees for anything related to Defendants’ selection, retention and monitoring of the Wells
Funds for the Plan.
The above description of the operation of the Settlement is only a summary. The governing provisions are set
forth in the Settlement Agreement (including its exhibits), which may be obtained at www.wf401ksettlement.com, or by
contacting Lead Counsel identified in this Notice.
7.
How much will my payment be?
Your share of the Net Proceeds will depend on your investments in the various Wells Funds as compared to other
Settlement Class members’ investments during the Class Period. Each Settlement Class member’s share of the Net
Proceeds will be determined using the Plan of Allocation described herein.
You are not responsible for calculating the amount you may be entitled to receive under the Settlement. This
calculation will be done for you as part of the implementation of the Settlement.
If you have received a Claim Documentation Form with this Notice, you must complete, sign and submit that
form accompanied by account statement(s) to the Settlement Administrator by the Claims Deadline in order to be eligible
to participate in the settlement. The portion, if any, of the Settlement Fund to be allocated to you will be calculated for
you as part of the implementation of the Settlement.
Under the Plan of Allocation your proportionate share of the Net Proceeds will be calculated as follows:
Your payment will be the greater of $5 or your share of the Net Proceeds. Your share of the Net Proceeds will be
calculated as follows. First, the Settlement Administrator will calculate the allocation of Net Proceeds to each quarter of
the Class Period. The Net Proceeds will be allocated to each quarter of the Class Period (32 quarters in all) based on all
Class Members’ quarterly account balances in the Wells Funds for a quarter as a percent of the total Class Members’
quarterly account balances in the Wells Funds for all 32 quarters in the Class Period. For example, if the total Class
Members’ quarterly account balances in the Wells Funds for all 32 quarters in the Class Period is $1 billion and the total
Class Members’ account balances in the Wells Funds for the third quarter of 2004 is $50 million, 5% of the Net Proceeds
would be allocated to those Class Members who had an account balance in the Wells Funds in the third quarter of 2004.
Second, your share of the Net Proceeds allocated to a given quarter of the Class Period will be determined by
your quarterly account balances in the Wells Funds as a percentage of all Class Members’ quarterly account balances in
the Wells Funds in the given quarter. For example, if the dollar value of your account balance in the Wells Funds at the
close of the third quarter of 2004 was .10% of all Class Members’ account balances in the Wells Funds for the third
quarter of 2004, you will receive .10% of the Net Proceeds allocated to that quarter. Your total share of the Net Proceeds
will be the sum of your share of the Net Proceeds in every quarter in which you invested in Wells Funds.
For more information visit: www.wf401ksettlement.com
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How do I obtain a payment?
If you are a Plan participant with a current account balance, you do not need to file a claim to receive a payment.
If you are also a Settlement Class member entitled to a share of the Net Proceeds, your share will be deposited to your
Plan account and reflected on your Plan account statement.
If you formerly had but do not now have an account under the Plan, you may need to file a claim in order to
receive a payment. If you received a Claim Documentation Form with this Notice, you must complete, sign and submit
that form with accompanying account statement(s) in order to be eligible to be a member of the Settlement Class and
possible payment. If you did not receive a Claim Documentation Form with this Notice, you do not need to file a
claim to receive payment. All Plan participants who no longer have a Plan account, but are Settlement Class members
entitled to a share of the Net Proceeds will receive payment distributed by check.
9.
When will I receive my payment?
Payment is conditioned on several matters, including the Court’s approval of the Settlement and such approval
becoming final and no longer subject to any appeals to any court. Upon satisfaction of various conditions, the Net
Proceeds will be allocated pursuant to the Plan of Allocation (described in the Answer to Question No. 8, above) as soon
as possible after final approval has been obtained for the Settlement (which includes exhaustion of any appeals). Any
appeal of the final approval could take years. Any accrued interest on the Settlement Fund will be included in the amount
paid to the Plan and allocated to the Settlement Class members.
There Will Be No Payments If The Settlement Agreement Is Terminated.
The Settlement Agreement may be terminated on several grounds, including if (1) the Court does not approve or
materially modifies the Settlement or (2) either as modified by the Court or as a result of reversal or modification on
appeal, the Court’s Final Order in the case does not satisfy certain terms of the Settlement. Should the Settlement
Agreement be terminated, the Settlement will be terminated, the modification of the certification of the Class for
settlement purposes will be vacated, and the Action will proceed as if the Settlement Agreement had not been entered into.
10.
Can I be excluded from the Settlement?
You do not have the right to exclude yourself from the Settlement. The Class Certification was certified, for the
purposes of Settlement only, under Federal Rule of Civil Procedure 23(b)(1) as a non “opt-out” class action. Class
members may not exclude themselves from the terms of the Settlement. If you are a Settlement Class member, you will be
bound by any judgments or orders that are entered in the Action for all claims asserted in the Action, all related claims,
and claims otherwise included in the release under the Settlement.
Although you cannot opt out of the Settlement, you can object to the Settlement and ask the Court not to approve
it. See Answer to Question No. 14, below.
THE LAWYERS REPRESENTING YOU
11.
Do I have a lawyer in the case?
The Court has appointed the law firms of McTigue & Veis LLP and Bailey & Glasser LLP as Lead Counsel for
Named Plaintiff in the Action. These lawyers are called “Class Counsel.” You will not be charged directly by these
lawyers. If you want to be represented by your own lawyer, you may hire one at your own expense.
For more information visit: www.wf401ksettlement.com
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How will the lawyers be paid?
Lead Counsel will file a motion for the award of attorneys’ fees and expenses. Lead Counsel have spent more
than three years litigating this case. This motion will be considered at the Fairness Hearing. As previously described,
Lead Counsel has agreed to limit their motion for an award of attorneys’ fees to not more than thirty percent (30%) of the
recovery, plus reimbursement of expenses incurred in connection with the prosecution of the Action.
13.
How will the Named Plaintiff be paid?
Lead Counsel may file a motion asking that the Court award the Named Plaintiff, Robin E. Figas, twenty
thousand dollars ($20,000) for her services in the Action during over three years of litigation. Her contributions to this
lawsuit and Settlement include agreeing to be the Named Plaintiff in the action, reviewing court filings, traveling to the
forum (Minneapolis) from California to have her deposition taken by Defendants’ Counsel, and producing her personal
records in discovery. The Court will decide the amount, if any, of the Named Plaintiff’s compensation. Any Named
Plaintiff's compensation as awarded by the Court will be paid out of the Settlement Fund.
14.
Objecting to the Settlement or the Attorneys’ fees or expenses or the Named Plaintiff’s
compensation?
You can tell the Court that you do not agree with the Settlement or some part of it, including the attorneys’ fees
and expenses the attorneys intend to seek and/or the Named Plaintiffs’ case contribution award.
15.
How do I tell the Court if I don’t like the Settlement?
If you are a Settlement Class member, you can object to the Settlement if you do not like any part of it. You can
give reasons why you think the Court should not approve it. The Court has directed that members of the Settlement Class
may object by filing in connection with the Court and serving it on the attorneys in this lawsuit.
The addresses for filing objections with the Court and required service on counsel are as follows:
Clerk of the Court
United States District Court
for the District of Minnesota
316 North Robert Street
100 Federal Building
St. Paul, MN 55101
Re: Case No. 06-CV-2237
To Lead Counsel:
Gregory Y. Porter
BAILEY & GLASSER LLP
910 17th Street, NW, Suite 800
Washington, DC 20006
J. Brian McTigue
Bryan T. Veis
McTIGUE & VEIS LLP
4530 Wisconsin Avenue, NW, Suite 200
Washington, DC 20016
For more information visit: www.wf401ksettlement.com
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To Defendants’ Counsel:
Stephen P. Lucke
Thomas J. Swigert
DORSEY & WHITNEY LLP
50 South Sixth Street, Suite 1500
Minneapolis, MN 55402
All objections must be both served upon the counsel identified above and filed with the Court no later than
_____, 2011.
THE COURT’S FAIRNESS HEARING
The Court will hold a hearing to decide whether to approve the Settlement as fair, reasonable and adequate (the
“Fairness Hearing”). You may attend the Fairness Hearing, and you may ask to speak, but you do not have to attend.
16.
When and where will the Court decide whether to approve the Settlement?
The Court will hold a Fairness Hearing at ____.m. on ______, 2011, at the United States District Court for the
District of Minnesota, 316 North Robert Street, 100 Federal Building, St. Paul, MN 55101, in Courtroom _____ or in the
Courtroom then occupied by United States District Judge Paul A. Magnuson. At that hearing, the Court will consider
whether the Settlement is fair, reasonable, and adequate. If there are objections, the Court will consider them. After the
Fairness Hearing, the Court will decide whether to approve the Settlement. The Court will also rule on the motions for
attorneys’ fees and expenses. It is not known how long these decisions will take.
17.
Do I have to come to the hearing?
No. Lead Counsel will be present to answer questions Judge Magnuson might have for them. But you are
welcome to come at your own expense. If you send an objection, you do not have to come to Court to talk about it. As
long as you filed your written objection with the Court and served a copy on Lead Counsel and Defendants’ Counsel on
time, it will be before the Court when the Court considers whether to approve the Settlement. You also may pay your
own lawyer to attend the Fairness Hearing, but such attendance is not necessary.
18.
May I speak at the hearing?
If you are a Settlement Class member, you may ask the Court for permission to speak at the Fairness Hearing.
To do so, you must send a letter or other paper entitled a “Notice of Intention to Appear at Fairness Hearing in Figas v.
Wells Fargo & Co., No. 08-CV-4546.” Be sure to include your name, address, telephone number, and your signature.
Your “Notice of Intention to Appear” must be served on the attorneys listed in the Answer to Question No. 16, above,
postmarked no later than _______, 2011, and must be filed with the Clerk of the Court at the address listed in the Answer
to Question No. 16, postmarked no later than _______, 2011.
IF YOU DO NOTHING
19.
What happens if I do nothing at all?
If you do nothing and you are a Settlement Class member, you will participate in the settlement of the Action as
described above in this Notice if the Settlement is approved.
For more information visit: www.wf401ksettlement.com
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GETTING MORE INFORMATION
20.
Are more details about the Settlement available?
This Notice summarizes the proposed Settlement. The complete settlement is set forth in the Settlement
Agreement. You may obtain a copy of the Settlement Agreement by making a written request to the Lead Counsel
identified in this Notice. Copies may also be obtained at www.wf401ksettlement.com.
For more information visit: www.wf401ksettlement.com
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EXHIBIT 2
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Figas, et al. v. Wells Fargo & Company, et al.
Case No. 08-cv-4546 (PAM/FLN)
CLAIM DOCUMENTATION FORM
YOU ARE REQUIRED TO TAKE ACTION IN ORDER TO PARTICIPATE IN THIS SETTLEMENT.
You have received this form because Wells Fargo records indicate only that you are a former participant/received
a total distribution of your account with the Wells Fargo 401(k) Plan (“Plan”). Even if you no longer have an
account in the Plan, you may be entitled to receive money from the Settlement if you can provide evidence that
you invested in any of the following Wells Fargo funds (“Wells Funds”) at any time in the period November 2,
2001 through October 8, 2009 (the “Class Period”):

Wells Fargo Diversified Small Cap Fund

Wells Fargo Diversified Equity Fund

Wells Fargo Large Company Growth Fund

Wells Fargo Growth Balanced Fund

Wells Fargo Moderate Balanced Fund

Wells Fargo Aggressive Allocation Fund (formerly Wells Fargo Strategic Growth
Allocation Fund)

Wells Fargo Conservative Allocation Fund (formerly Wells Fargo Strategic Income
Fund)

Wells Asset Allocation Collective Trust

Wells Fargo Capital Growth Fund
Please send any copies of your 401(k) Plan account statement(s) showing your investment(s) in the Wells Funds
in the Class Period, along with a completed, signed copy of this form, to the Settlement Administrator at the
address below. The form and accompanying statement(s) must be postmarked no later than ___________, 2011
(the “Claims Deadline”).
IF YOU DO NOT SEND COPIES OF YOUR ACCOUNT STATEMENT(S) SHOWING YOUR INVESTMENT IN
THE WELLS FUNDS IN THE CLASS PERIOD, ALONG WITH A COMPLETED, SIGNED COPY OF THIS
FORM, YOU WILL NOT BE ELIGIBLE TO PARTICIPATE IN THE SETTLEMENT. You need to send a
completed, signed copy of this form and the accompanying account statement(s) to be eligible. Please send all
pages that you have of any account statement in the Class Period. Please carefully review the instructions below.
If you have questions regarding this form, you may call the Settlement Administrator at
_____________________.
INSTRUCTIONS FOR COMPLETING THIS FORM
1.
Complete and sign this form.
2.
Mail the completed, signed form accompanied with a copy of all pages of any 401(k) Plan account
statement(s) that you have showing your investment in the Wells Funds in the Class Period; it must
be postmarked no later than __________, 2011 to:
Settlement Administrator, __________________________________.
It is your responsibility to ensure the Settlement Administrator has timely received your form and
accompanying account statement(s). Keep a copy for your records of all pages of the completed,
signed form and account statement(s) which you send.
3.
Other Reminders:

If you change your address after sending the form and accompanying account statement(s), please send
your new address to the Settlement Administrator, along with you social security number.

Settlement payments will not be made unless and until the Settlement Agreement has received final
Court approval. Even if the Settlement Agreement has received final court approval, payment may be
delayed if an appeal is filed.
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Questions?
If you have any questions about this form, please call the Settlement Administrator at ___________. The
Settlement Administrator will only provide information about completing this form and will not provide
financial, tax or other advice concerning the Settlement. You may want to consult with your financial or tax
advisor. Information about the Settlement is available on the lawsuit website,
_____________________________.
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CLAIM & DOCUMENTATION FORM
SETTLEMENT
ADMINISTRATOR
_______________________
_______________________
FOR OFFICIAL USE ONLY
MUST BE POSTMARKED
NO LATER THAN ________, 2011
PART I – CONTACT INFORMATION
If the pre-printed information to the left is incorrect or if there is no
pre-printed information, please check the box and complete the
information below:
Your Name:
___________________________________________________
Your Address:
___________________________________________________
City:
___________________________________________________
State: ____________ Zip Code: _______________________
Your Email Address: _________________________________________________________________________
Your Daytime Tel: ( __ __ __ ) __ __ __ - __ __ __ __
Your Evening Tel: ( __ __ __ ) __ __ __ - __ __ __ __
PART II – FORMER PARTICIPANT INFORMATION
Provide the following information about the individual who invested under the Wells Fargo 401(k) Plan:
 Full name: __________________________________________________________________________
 Date of birth:

___ ___ / ___ ___ / ___ ___ ___ ___
Social Security Number: ___ ___ ___ - ___ ___ - ___ ___ ___ ___
PART III – PROVIDE DOCUMENTATION IF AVAILABLE
Check the line below if you have account statements or other documentation showing your investment in any of
the Wells Funds during the Class Period. You may be eligible for a payment in excess of the base settlement
amount, which will be calculated according to the Plan of Allocation. You need to complete Part IV of this form.
___ YES, I have documentation showing that I was invested in at least one of the Wells Funds at some
point between (and including) November 2, 2001 and October 8, 2009.
Please attach and submit account statements that show your investments in the Wells Funds
during the Class Period. Make sure to include documents for each quarter you were invested in any
Wells Fund. If you fail to submit account statement(s) you will not be eligible to participate in the
settlement.
PART IV – SIGNATURE
UNDER PENALTIES OF PERJURY UNDER THE LAWS OF THE UNITED STATES OF AMERICA, I CERTIFY
THAT ALL OF THE INFORMATION PROVIDED ON THIS FORMER PARTICIPANT CLAIM AND
DOCUMENTATION FORM AND THE ATTACHED DOCUMENTATION IS TRUE, CORRECT AND COMPLETE
AND THAT I SIGNED THIS FORMER PARTICIPANT DOCUMENTATION FORM:
A.
Signature of Former Participant whose Social Security number is written above:
_________________________________________________________________
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B.
Date: ___ ___ / ___ ___ / ___ ___ ___ ___
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EXHIBIT B
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UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Robin E. Figas, and all others similarly Civil File No. 08-cv-4546 (PAM/FLN)
situated,
Plaintiffs,
v.
Wells Fargo & Company, Employee
Benefit Review Committee, Howard I.
Atkins, Patricia Callahan, Ellen
Haude, Mike Heid, Clyde Ostler, Tim
Sloan, John G. Stumpf, Peter J.
Wissinger, and John Does 1-20,
Defendants.
ORDER AND FINAL JUDGMENT
Plaintiffs and Defendants have reached a Settlement of this class action
litigation, which involves claims for violations of the Employee Retirement
Income Security Act of 1974, as amended, 29 U.S.C. §§ 1001, et seq. (“ERISA”),
with respect to the Wells Fargo & Company 401(k) Plan (the “Plan”).1 This Court
issued an Order preliminarily approving the terms of the Class Action Settlement
Agreement dated _________, 2011 (“Settlement Agreement”), including the
procedures for class notice and the plan of allocation, and conditionally modifying
the Order certifying the class to allow for a non-opt out class under Fed. R. Civ. P.
1
Capitalized and italicized terms not otherwise defined in this Order shall have the same
meaning as ascribed to them in the Settlement Agreement.
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23(b)(1). This Court, having conducted a Fairness Hearing on the Settlement, the
issues having been duly heard and a decision having been duly reached,
HEREBY ORDERS, ADJUDGES, AND DECREES:
1.
The Court has jurisdiction over the subject matter of the Action and
over all parties to the Action, including all members of the Settlement Class.
2.
Pursuant to Fed. R. Civ. P. 23(e)(2), the Court hereby approves and
confirms the Settlement embodied in the Settlement Agreement as being a fair,
reasonable, and adequate settlement and compromise of the claims asserted in the
Action.
3.
The Court hereby approves the Settlement Agreement and orders that
the Settlement Agreement shall be consummated and implemented in accordance
with its terms and conditions.
4.
Subject only to the provisions of paragraph 5 below and for Settlement
purposes only, the Court hereby modifies the Class set forth in its Class
Certification Orders of May 6, 2010 and September 1, 2010 to include:
Individuals who were participants in the Wells Fargo &
Company 401(k) Plan (the “Plan”) whose Plan accounts had a
balance in any one of the following funds from November 2,
2001, to October 8, 2009: Wells Fargo Diversified Small Cap
Fund; Wells Fargo Diversified Equity Fund; Wells Fargo Large
Company Stock Fund; Wells Fargo Growth Balanced Fund;
Wells Fargo Moderate Balanced Fund; Wells Fargo Aggressive
Allocation Fund (formerly Wells Fargo Strategic Growth
Allocation Fund); Wells Fargo Conservative Allocation Fund
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(formerly Wells Fargo Strategic Income Fund); Wells Asset
Allocation Collective Trust; and Wells Capital Growth Fund.
(The “Settlement Class”).
5.
For Settlement purposes only, the Court hereby modifies its Class
Certification Orders of May 6, 2010 and September 1, 2010, and finds that the
Settlement Class is properly certified under Fed. R. Civ. P. 23(b)(1), and makes the
following findings of fact, conclusions of law, and determinations of mixed
fact/law questions:
A.
Robin E. Figas (the “Named Plaintiff”) is appointed Class
representative, McTigue & Veis LLP and Bailey & Glasser LLP (“Lead Counsel”)
are appointed Class Counsel, and Sprenger & Lang PLLC are appointed liaison
counsel pursuant to Fed. R. Civ. P. 23(g).
B.
The Court finds that the Settlement Class satisfies the
numerosity, commonality, typicality, and adequacy requirements imposed by Fed.
R. Civ. P. 26(a).
C.
The Court finds that the Settlement Class satisfies the
requirements of Fed. R. Civ. P. 23(b)(1).The Settlement Class has been given
proper and adequate notice of the Settlement Agreement, the Fairness Hearing,
Lead Counsel’s motion for attorney’s fees and expenses and for Named Plaintiff
compensation, and the Plan of Allocation, such notice having been carried out in
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accordance with the Preliminary Approval Order. Such notice included notice to
all members of the Settlement Class who could be identified through reasonable
efforts and provided valid, due and sufficient notice of these proceedings and of
the matters set forth therein, and included information regarding the procedure for
the making of objections, as well as the availability of the Class Notice and other
information about the Action and Settlement at the website identified in the Class
Notice. Further, Former Participants who were invested in the Plan during the
Class Period for whom the Plan does not have records have received notice of this
Settlement and Claim Documentation Form and the opportunity to receive a
payment under the Settlement. Such notice fully satisfied the requirements of Fed.
R. Civ. P. 23 and the requirements of due process.
6.
In the event that the Settlement does not become Final, or is
terminated pursuant to the Settlement Agreement, the Settlement Class will be
deemed not to have been modified, and the Action will for all purposes with
respect to the Parties revert to its status as of October 18, 2010, prior to the
Settlement. In such event the Parties will not be deemed to have consented to the
modification of the Class Certification Order; the agreements and stipulations in
this Settlement Agreement concerning class definition or class certification shall
not be used as evidence or argument to support a modification of the Class
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Certification Order; and the Parties will retain all rights with respect to class
certification.
7.
The Court finds that the Settlement embodied in the Settlement
Agreement is fair, reasonable, and adequate, based on the following findings of
fact, conclusions of law, and determinations of mixed fact/law questions:
A.
The Settlement was negotiated vigorously and at arm’s-length
by Class Counsel on behalf of the Settlement Class seeking relief for the Plan.
B.
This Action settled at the end of the discovery period, after the
completion of significant document discovery, depositions of fact witnesses,
exchange of expert reports, and the depositions of two expert witnesses. The
Action settled after a mediation session conducted by a retired federal judge with
extensive experience in the settlement of class actions and other complex
litigations. Both Plaintiffs and Defendants were well-positioned to evaluate the
settlement value of the Action.
C.
If the Settlement had not been achieved, both Named Plaintiffs
and Defendants faced the expense, risk and uncertainty of extended litigation.
D.
The amount of the Settlement — $17,500,000 — is fair,
reasonable, and adequate. The Settlement amount is within the range of settlement
values obtained in similar cases and is within the range of reasonable settlements
appropriate in this case.
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E.
At all times, the Plaintiffs have acted independently of
F.
The Court has duly considered any objections to the Settlement
Defendants.
submitted, and the Court finds them without merit.
8.
The Action is hereby dismissed with prejudice, each party to bear his,
her or its own costs, except as expressly provided herein.
9.
By operation of this Judgment, and effective upon its entry by the
Court, Named Plaintiff, each member of the Settlement Class (on behalf of
themselves and the Plan), and the Plan (by and through the Independent
Fiduciary) absolutely and unconditionally release and forever discharge the
Released Parties from Released Claims that the Named Plaintiff, the Settlement
Class or the Plan directly, indirectly, derivatively, or in any other capacity ever
had, now have or hereafter may have, except that this release shall not include
claims relating to the covenants or obligations set forth in the Settlement
Agreement. This Judgment does not in any way bar, limit, waive, or release, any
individual claim by the Named Plaintiff or a member of the Settlement Class to
vested benefits that are otherwise due under the terms of the Plan. Named Plaintiff
and all other members of the Settlement Class and the Plan shall be permanently
and finally enjoined, without the necessity of Defendants posting a bond, from
commencing or prosecuting any actions or other proceedings asserting any of the
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Released Claims either directly, indirectly, derivatively, or in any other capacity,
against any of the Released Parties.
10.
By operation of this Judgment, and effective upon its entry by the
Court, the Company fully, finally, and forever releases, relinquishes, and
discharges, and shall forever be enjoined from prosecution of the Named Plaintiff,
the Plan, the Settlement Class, and Appointed Counsel from any and all actual or
potential claims, actions, causes of action, demands, obligations, liabilities,
attorneys’ fees and costs, whether arising under local, state or federal law, whether
by statute contract common law, or equity, whether brought in an individual,
representative, or any other capacity, whether known or unknown, suspected or
unsuspected, asserted or unasserted, foreseen or unforeseen, actual or contingent,
liquidated or unliquidated, that arise out of or are related in any way to the acts,
omissions, facts, matter, transactions, or occurrences that have been alleged or
referred to in the Action..
11.
The Court retains exclusive jurisdiction over the Settlement
Agreement and retains exclusive jurisdiction to resolve any disputes or challenges
that may arise as to the performance of the Settlement Agreement or any challenges
as to the performance, validity, interpretation, administration, enforcement, or
enforceability of the Class Notice, this Judgment, or the Settlement Agreement or
the termination of the Settlement Agreement. The Court shall also retain exclusive
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jurisdiction over and rule by separate order with respect to all motions for awards
of attorneys’ fees and to Named Plaintiffs and reimbursements of expenses made
pursuant to Section 10.1 of the Settlement Agreement.
12.
In the event that the Settlement Agreement is terminated in accordance
with its terms, (i) this Judgment shall be rendered null and void and shall be
vacated nunc pro tunc, and (ii) the Action shall proceed as provided in the
Settlement Agreement.
13.
This judgment shall not be construed or used as an admission,
concession, or declaration against Named Plaintiff, Settlement Class members, or
Defendants of any fault, wrongdoing, breach or liability or lack of merit of the
claims being settled.
SO ORDERED this __ day of ____________, 2011
_________________________________________
HON. PAUL A. MAGNUSON
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MINNESOTA
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EXHIBIT 2
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MINNESOTA
Robin E. Figas,
and all others similarly situated,
Plaintiffs,
v.
Civil File No. 08-CV-4546 (PAM/FLN)
Wells Fargo & Company, Employee
Benefit Review Committee, Howard I.
Atkins, Patricia Callahan, Ellen Haude,
Mike Heid, Clyde Ostler, Tim Sloan, John
G. Stumpf, Peter J. Wissinger, and Doe
Defendants 1-20.
Defendants.
PLAN OF ALLOCATION
The parties settled the lawsuit for a cash payment by Defendants to the Class
in the amount of $17.5 million, the Settlement Fund. This Plan of Allocation
describes how the Net Settlement Proceeds, that is, the Settlement Fund less
(1) attorneys’ fees, expenses, and costs, (2) the expense of Class Notice, and
(3) the expenses of Settlement Administration, are allocated to Class Members.
1.
Summary and Assumptions
The Plan of Allocation is based on quarterly balances in the Wells Funds.
There are 32 quarters in the Class Period.
The Class Period starts in November of 2001. The first quarter of the Class
Period is 4Q 2001. For purposes of the Plan of Allocation, the first two months of
1
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the Class Period are treated as a full quarter because end-of-year Class Member
balances are available for 2001, but no other data. In addition, treating the first two
months of the Class Period as a full quarter greatly simplifies and streamlines
administration and implementation of the Plan of Allocation. Because the year-end
balance as of December 31, 2001 is necessarily the same as the quarter-end
balance for the fourth quarter of 2001, the Plan of Allocation uses the 2001 yearend balance data for the fourth quarter of 2001.
For the year 2002, only year-end balance data is available. Accordingly, the
Plan of Allocation assumes the same balances for each of the four 2002 quarters.
For the quarters after 2002 through the end of the Class Period, actual
account balance data does not exist as such except as of September 30, 2009.
Accordingly, the claims administrator will calculate quarterly Class Member
balances using available data elements.
The last quarter will be 3Q 2009. For 3Q 2009 the Plan of Allocation
assumes the last 8 days of the class period (October 1-8) are included in 3Q 2009
quarter and does not make separate calculations for the trailing 8 days.
2.
Allocation Method
Each Class Member shall receive the greater of A or B, where A is $5.00
and B is the Class Member Distribution determined under the method described
below.
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(a)
Net Settlement Proceeds: the $17.5 million Settlement Fund less
attorneys’ fees, expenses, and costs, the expense of Class
Notice, and the expenses of Settlement Administration.
(b)
Quarterly Class Member Plan Balance: a Class Member’s
balance, where the balance is the dollar value of the Class
Member’s investment in the Wells Funds at the close of the
given quarter.
(c)
Quarterly Plan Balance: the sum of all Quarterly Class
Member Plan Balances during a given quarter.
(d)
Aggregate Plan Balance: the sum of all Quarterly Plan
Balances during the Class Period.
(e)
Quarterly Plan Settlement Allocation: (1) the Quarterly Plan
Balance divided by the Aggregate Plan Balance, (2) multiplied
by the Net Settlement Proceeds.
(f)
Quarterly Class Member Distribution: (1) the Quarterly Class
Member Balance for the respective quarter divided by the
Quarterly Plan Balance for the same quarter, (2) multiplied by
the Quarterly Plan Settlement Allocation.
(g)
Class Member Distribution: the sum of a Class Member’s
Quarterly Class Member Distributions.
Allocation Administration
After the Settlement becomes Final, the Settlement Administrator will cause
Net Proceeds to be disbursed to Class Members who are Former Participants as
that term is defined in the Settlement Agreement and to the Plan’s trust for
allocation to the Class Members who are not Former Participants as of the date of
the Settlement Agreement (“Current Participants”) in accordance with this Plan of
Allocation.
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In order to be eligible for a distribution from the Net Proceeds, a person
must be a Settlement Class Member. Current Participants will receive their
settlement payments in their Plan accounts. Former Participants will receive their
settlement payments in the form of a check.
After the Settlement Administrator has completed payment calculations for
Class Members, the Settlement Administrator will provide to the Company and
Lead Counsel a Plan Distribution Allocation File providing the name,
identification number, Current or Former Participant status, and amount of the
Class Member Distribution calculated pursuant to the Allocation Method for each
of the Class Members.
After the Settlement Administrator has completed payment calculations for
Class Members, Lead Counsel will direct the Financial Institution to transfer from
the Settlement Fund to the Plan’s trust the aggregate amount of all settlement
payments to Current Participants (the “Current Participant Plan Distribution
Allocation File”). The Company shall direct the Recordkeeper to credit the
individual account(s) of each Current Participant in an amount equal to that stated
on the Current Participant Plan Distribution Allocation File. The settlement
payment will be invested in accordance with such Current Participants’
investment elections then on file with the Plan recordkeeper. If there is no
investment election on file for any Current Participant, then such Current
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Participant shall be deemed to have directed such payment to be invested in the
Plan’s “Qualified Default Investment Alternative,” as defined in 29 C.F.R. §
2550.404c-5.
If a Current Participant receives a full distribution of his or her account after
the date of the Settlement Agreement, the Company will direct the Recordkeeper to
re-open the account for any such participant for the limited purpose of receiving
the Settlement payment.
For each Former Participant, the Settlement Administrator will issue a
check from the Settlement Fund and mail it to the address of such Former
Participant as determined by the Settlement Administrator. The Plaintiffs shall
direct the Settlement Administrator to: (i) calculate and withhold applicable tax
withholdings from settlement payments to Former Participants; (ii) report such
payments and remit such tax withholdings to the Internal Revenue Service and
applicable state revenue agents; and (iii) issue appropriate tax forms to the Former
Participants; the manner and procedure that the Settlement Administrator shall
employ in making such distributions, calculations, withholdings, and reports shall
be reported to the Company at least fourteen (14) days before the Independent
Fiduciary files its report. The Company shall have no responsibility for
distributions, calculations, tax withholdings or tax reporting or notifications with
respect to Former Participants. To the extent that any portion of any settlement
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payment is subject to income or other tax, the Class Member, including any
beneficiary or successor in interest of any Class Member, shall be ultimately
responsible for such tax.
After completing all aspects of this Plan of Allocation, the Settlement
Administrator shall send to the Lead Counsel and Defendants’ counsel one or more
affidavits stating or identifying the name of each Former Participant to whom the
Settlement Administrator made a distribution from the Net Proceeds, together with
the amount of the distribution, the name of the payee, the date of distribution, the
amount of tax withholdings, if applicable, and the date of remittance of tax
withholdings to the appropriate tax authority, if applicable.
Any Net Proceeds remaining in the Qualified Settlement Fund after the Plan
of Allocation has been fully and completely implemented shall be disbursed to the
Plan’s trust. In no event shall any portion of the Net Proceeds be paid to
Defendants or be used to offset expenses otherwise paid by Defendants.
6
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EXHIBIT 3
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MINNESOTA
Robin E. Figas,
and all others similarly situated,
Plaintiffs,
v.
Civil File No. 08-CV-4546 (PAM/FLN)
Wells Fargo & Company, Employee
Benefit Review Committee, Howard I.
Atkins, Patricia Callahan, Ellen Haude,
Mike Heid, Clyde Ostler, Tim Sloan, John
G. Stumpf, Peter J. Wissinger, and Doe
Defendants 1-20.
Defendants.
PLAINTIFFS’ MEMORANDUM IN SUPPORT OF UNOPPOSED MOTION
FOR PRELIMINARY APPROVAL OF SETTLEMENT, MODIFICATION
OF CLASS CERTIFICATION ORDER, APPROVAL OF SETTLEMENT
NOTICE AND SETTING A DATE FOR FINAL FAIRNESS HEARING
I.
INTRODUCTION
Plaintiff Robin E. Figas and the Class respectfully submit this brief in
support of their motion for the entry of an order (1) granting preliminary approval
of the proposed Settlement in this class action case, (2) amending the Court’s
certification order, (3) approving the manner of giving notice of the Settlement to
the Class (“Notice Plan”), (4) approving the Plan of Allocation, and (5) setting a
date for a Final Fairness Hearing.
The Parties have reached a proposed Settlement of this case for
$17,500,000.00 in cash, which will provide substantial benefits to members of the
Class and resolve all claims asserted by Plaintiffs in this Action. The settlement
was mediated by the Hon. James H. Rosenbaum (Ret.). This is an excellent result
for the Class. Based on an evaluation of the facts, governing law, settlements in
cases similar to this, and the recognition of the substantial risks of continued
litigation of claims of this sort, Plaintiffs and Co-Lead Counsel submit that the
proposed Settlement is fair, reasonable and adequate, and in the best interests of
the proposed Class by providing a meaningful recovery now. Resolution of this
case allows the Parties to avoid additional litigation and trial. Moreover, continued
litigation of this Action could result in no recovery at all or a judgment or verdict
less than the recovery under the Settlement Agreement.
2
Lawsuits of this type brought pursuant to the Employee Retirement Income
Security Act of 1974 (“ERISA”) face significant risks. Co-Lead Counsel Bailey &
Glasser LLP and McTigue & Veis LLP have litigated many ERISA class actions,
including Presley v. CHH, 97-cv-04316 (SC) (N.D. Cal.), Sherrill v. Federal
Mogul Corp. Ret. Programs Committee, 04-072949 (E.D. Mich.), Koch v. Dwyer,
98-cv-5519 (RPP) (S.D.N.Y.), In re CMS Energy ERISA Litig., 02-cv-72834
(GCS) (E.D. Mich.), Blyler v. Agee, CV97-0332-(BLW) (D. Idaho). Plaintiffs’
local counsel, Sprenger & Lang, have also litigated numerous class actions,
including the first and second cases involving proprietary investment funds,
Franklin v. First Union Corp., Nos. 3:99cv344 and 610 (E.D. Va.) and Mehling v.
New York Life Ins. Co., No. 99-5417 (E.D. Pa.), each of which was settled for
material amounts. Thus Plaintiffs’ Counsel and are thus in a position to
realistically evaluate the risks of proceeding to trial. Moreover, the Parties agreed
to the proposed Settlement only after vigorous, arm’s length negotiations by
experienced counsel and mediated by the Hon. James H. Rosenbaum (Ret.).
Further, the Parties agree that amending the class certification order, for
settlement purposes only, to certify a non-opt out class is appropriate here. It will
not only facilitate the settlement process, but it is appropriate now because the
investment funds at issue in this lawsuit are no longer offered as investment
options in the Plan and, therefore, there is no actual or potential conflict between
3
members of the Class who may have wanted to maintain the funds and members of
the Class who want to remove the funds. Moreover, under the terms of the
Settlement, if the lawsuit is maintained as a Class under Fed R. Civ. P. 23(b)(3)
and more than 5% of Class members “opt-out”, the Defendants have the right to
rescind the Settlement.
The proposed Notice Plan exceeds the requirements of due process. Indeed,
the proposed individualized direct-mail and settlement information website
described herein are consistent with the forms of notice approved in analogous
actions. Such notice will inform Class members of the Settlement terms, how to
object, and the date of the Fairness Hearing.
The Plan of Allocation established the best practicable method for
distributing the Net Settlement Proceeds, that is, $17.5 million less attorney’s fees
and expenses, and the cost of settlement administration. The Plan of Allocation is
based on available data and distributes the Net Settlement Proceeds to Class
members in proportion to their investments in the Wells Funds during the Class
Period.
As set forth below, all prerequisites for preliminary approval of the
Settlement have been met. The proposed Settlement is fair, reasonable, and
adequate, and should be preliminarily approved, allowing Plaintiffs to begin
notifying the Class.
4
II.
FACTUAL AND PROCEDURAL BACKGROUND
A.
The Plan, and the Parties
Class Representative Robin E. Figas is a current Wells Fargo employee and
a participant in the Plan. (Third Amended Complaint (“TAC”) ¶15). She invested
in the Wells Fargo Large Company Growth Fund during the Class Period. Id. She
also invested in the Wells Fargo Asset Allocation fund during the Class Period;
this fund is a Collective Trust, rather than a mutual fund. Id.
The Plan is a defined contribution plan under ERISA. (Id. ¶27). Wells
Fargo & Company (“Wells Fargo”) is the Plan sponsor and, by definition, a party
in interest to the Plan. (Id. ¶¶16, 29). Wells Fargo was also a fiduciary for the Plan
for much of the Class Period, through July 31, 2005. (Id. ¶16).
The Wells Fargo Employee Benefit Review Committee (“Benefit
Committee”) and its members (collectively the “Committee Defendants”) are
fiduciaries to the Plan. (Id. ¶¶17-25, 36-37). All the members of the Benefit
Committee are officers or employees of Wells Fargo. (Id. ¶38). Among other
things, the Committee Defendants are selecting Plan investments. (Id. ¶37). Wells
Fargo Bank, N.A. (“Wells Bank”) is the trustee of the Plan, and holds and invests
the Plan’s assets. (Id ¶39).
5
B.
Plaintiffs’ Fact Allegations
Plaintiffs allege that during the Class Period, the Committee Defendants
caused the Plan to invest in certain investment funds offered and advised by Wells
Fargo Funds Management, LLC, (“Wells Funds”1), an affiliate or subsidiary of
Wells Fargo. (TAC ¶2). The Plaintiffs allege the Committee Defendants did not
conduct an objective review of the available investment options in selecting Wells
Funds, but instead selected Wells Funds because those funds generated substantial
revenues for Wells Fargo and because Plan assets provided essential “seed money”
to those funds that would allow them to be financially viable and attract other
investment dollars from other investors. (Id. ¶¶3, 51). Plaintiffs alleged that the
Plan was by far the largest investor in many Wells Funds. (Id. ¶¶51-52). Plaintiffs
further alleged that better performing, lower cost, comparable investment funds
were available from unaffiliated companies, and that the Committee Defendants,
by virtue of their positions at a large financial services company, knew or should
have known this. (Id. ¶¶43-46).
Furthermore, Plaintiffs allege that the Committee Defendants caused the
Plan to invest in the Administrator rather than the Institutional share classes of
1
The “Wells Funds” referenced in the complaint are the Wells Fargo Diversified Small Cap
Fund, Wells Fargo Diversified Equity Fund, Wells Fargo Large Company Growth Fund, Wells
Fargo Growth Balanced Fund, Wells Fargo Moderate Balanced Fund, Wells Fargo Aggressive
Allocation Fund (formerly Wells Fargo Strategic Growth Allocation Fund), Wells Fargo
Conservative Allocation Fund (formerly Wells Fargo Strategic Income Fund), and the Wells
Fargo Asset Allocation Fund. (TAC ¶2).
6
many of the Wells Funds. (Id. ¶¶47-50).2 The Administrator share class for each
Wells Fund charges higher expense ratios than the Institutional share for each fund.
(Id. ¶49). This occurred even though the Plan was clearly eligible for Institutional
class shares because of the large amount of funds the Plan had to invest. (Id. ¶48).
This decision to invest in the Administrator share class enriched Wells Funds at the
expense of the Plan, and caused the Plan to pay millions of dollars in excess fees.
(Id. ¶50).
Plaintiffs allege that Defendant Wells Fargo knew or should have known
that the Committee Defendants were breaching their ERISA fiduciary duties, but
took no steps to protect the Plan. (Id. ¶62). Instead, they argue, Wells Fargo
welcomed and participated in the breaches. Id.
Defendants deny Plaintiffs’ allegations. They contend, among other things,
that the returns of the funds were competitive, the fees charged, net of rebates,
were reasonable and lower than the fees charged for Institutional share class, and
that they acted appropriately and prudently in selecting and monitoring the Plan’s
investment offerings. Defendants also raised various affirmative and procedural
defenses that, if accepted by the Court, could have been dispositive of some or all
of Plaintiffs’ claims. Defendants vigorously defended this case and were prepared
2
Many mutual funds offer several share classes. The expense ratios, sales charges, and
redemption charges vary by share class. Institutional shares generally have the lowest expense
ratios, do not pay sales or redemption charges, and carry no 12b-1 distribution fees. See John
Downes et al., Barron's Finance & Investment Handbook 51 (7th ed. 2007).
7
to contest the case through summary judgment and trial had the parties not settled
the lawsuit.
C.
Claims for Relief
Plaintiffs sued Defendants under 29 U.S.C. §§1132(a)(2) & 1109(a).
Plaintiffs allege in Count I that the Committee Defendants engaged in prohibited
transactions in violation of 29 U.S.C. §1106(a)(1)(A), (C), & (b) by causing the
Plan to invest in Wells Fargo affiliated investment products provided by Wells
Fargo subsidiaries and affiliates. (TAC, Count I). In Count II, Plaintiffs allege that
the Committee Defendants breached the ERISA fiduciary duties of loyalty and
prudence specified in 29 U.S.C. §1104(a)(1)(A), (B) by causing the Plan to invest
in Wells Fargo affiliated funds. (TAC, Count II).
Count III alleges that Wells Fargo breached its co-fiduciary duties under
ERISA, 29 U.S.C. §1105, by participating in the breaches of the Committee
Defendants, and failing to take steps to remedy those breaches. (TAC, Count III).
Count IV alleges that Wells Fargo violated ERISA by knowingly
participating in the fiduciary breaches and prohibited transactions of the
Committee Defendants. (TAC, Count IV).
And Count V alleges that Wells Fargo itself breached its duties of loyalty
and prudence by causing the Plan to invest in Wells Funds. (TAC, Count V).
8
D.
Procedural History
This suit was filed on November 1, 2007. The action was subsequently
transferred to this Court on July 8, 2008. (Dkt. No. 19). Defendants moved to
dismiss the complaint. After oral argument on Defendants’ motion to dismiss,
Judge Doty recused himself. (Dkt. No. 54). This Court subsequently granted in part
and denied in part Defendants’ motion dismiss. (Dkt. No. 57). Specifically, the
Court dismissed plaintiff Yvonne W. Gipson from the lawsuit on the grounds that
she lacked standing under ERISA, but denied Defendants’ motion to dismiss the
claims against them. Plaintiffs subsequently amended their complaint on
September 17, 2009. (Dkt. No. 89). Shortly thereafter, Plaintiffs moved to certify
the lawsuit as a class action and Defendants moved for summary judgment on
Count I, arguing that Plaintiffs’ prohibited transaction claim was not timely. On
April 6, 2010, the Court granted Plaintiffs’ motion for class certification and
Defendants’ motion for summary judgment on Count I. (Dkt. No. 150).
Thereafter, Plaintiffs moved to amend their complaint in light of evidence
adduced in discovery. The Court granted that motion in part and denied it in part
on June 4, 2010. (Dkt. No. 175.) The Third Amended Complaint (“TAC”) was
filed on June 7, 2010. Subsequently, Plaintiffs moved to amend the class
certification order to conform to the TAC. The Court granted that motion on
September 1, 2010. (Dkt. No. 233.)
9
The Parties met and conferred multiple times on various discovery disputes.
(Porter Decl. ¶3). Plaintiffs filed and prevailed on several discovery motions. (Id.
¶4).
The Parties also conducted extensive discovery. Defendants produced and
Plaintiffs reviewed more than 211,000 pages of documents. (Porter Decl. ¶5). The
Parties submitted expert reports and took two expert depositions on class
certification. (Porter Decl. ¶6). Defendants took the deposition of Ms. Figas.
Plaintiffs took the deposition of eight current and former Wells Fargo employees
and took discovery and depositions of two non-party witnesses. (Porter Decl. ¶7).
Plaintiffs served two principal and two rebuttal reports from two expert witnesses
on the merits and the amount of losses. (Porter Decl. ¶8). Defendants served four
expert witness reports. (Porter Decl. ¶9). Defendants took the depositions of
Plaintiffs’ experts on the merits. (Porter Decl. ¶10).
The Parties settled the lawsuit in principle before the depositions of
Defendants’ experts. (Porter Decl ¶11). In all, the Parties took sixteen depositions.
(Porter Decl. ¶12.) In sum, the extensive discovery taken by the parties assures that
the Parties have thoroughly investigated and evaluated the strengths and
weaknesses of their respective cases.
10
E.
Settlement Negotiations
On October 18, 2010, the Parties engaged in an all-day mediation supervised
the Hon. James H. Rosenbaum (Ret.), former Chief United States District Judge
for the District of Minnesota. In preparation for the mediation, Plaintiffs engaged
in detailed liability and loss analyses, consulted with their loss expert, and
analyzed the case in comparison to settlements in similar cases. (Porter Decl. ¶13).
In addition, the Parties prepared and submitted joint and separate mediation
statements. (Id.) During the course of the mediation, the Parties exchanged detailed
loss analyses. (Id.) The Parties reached a settlement in principle, after many hours
of intense and extensive negotiations. (Id.) The settlement negotiations were arm’s
length, wide-ranging, intense, and based on a thorough and complete discovery
record, expert reports, as well as an analysis of settlements in similar cases. (Id.)
F.
The Settlement
The Settlement, Exhibit A hereto, provides for a $17.5 million cash payment
to the Class, which will be allocated to members of the Class pursuant to the Plan
of Allocation, Exhibit B hereto. In exchange, the Plaintiffs and the Plan will
dismiss and release all claims in the TAC (and related claims).
G.
Reasons for the Settlement
Plaintiffs have entered into this Settlement with a full and comprehensive
understanding of the strengths and weaknesses of their claims, which are based on
11
Co-Lead Counsel’s extensive experience litigating ERISA class actions involving
investment funds and an extensive investigation of the facts during the prosecution
of this action. Co-Lead Counsel reviewed the expert proof, the facts, and consulted
with their loss expert. Co-Lead Counsel reviewed settlements and case law from
similar ERISA lawsuits. Plaintiffs reviewed over two hundred thousand pages of
documents and took the depositions of multiple witnesses.
Further, Co-Lead Counsel evaluated the value of the Settlement in light of
the risks of litigation, including statute of limitations and merits defenses,
prevailing trends in the case law, and the culpability of each of the Defendants.
Cases of this type, involving allegations of improper selection and/or retention of
imprudent high-cost, poor performing investment options, are especially risky
cases for plaintiffs to undertake because they are a relatively novel type of
litigation involving many unsettled issues of law. Only one case of this type has
proceeded to judgment on the merits partly in the favor of plaintiffs, Tibble v.
Edison Int’l, 2009 U.S. Dist. LEXIS 67845, at * 105 (C.D. Cal July 16, 2009),
while many others have been resolved on the merits against plaintiffs, as discussed
in more detail below. The uncertainty of the outcome, and in particular the statute
of limitations risk at summary judgment, as well as the risk of establishing liability
and damages at trial, and likely appeals, favors the Settlement, which provides a
certain benefit to the members of the Class.
12
H.
Proposed Timetable
The proposed Preliminary Approval Order (“Order”) includes a blank date
for the date of the Final Approval Hearing, which must be held by the Court in
order to properly effectuate the Settlement. In this regard, the Parties have
consented to the following schedule of events if the Court is inclined to
preliminarily approve the Settlement:
Event
Time for Compliance
Deadline for Mailing of Class
Notice (“Notice Date”)
45 days before Final Approval
Hearing
Motion for Counsel Fees,
Reimbursement of Expenses,
and for Case Contribution
Award to Named Plaintiff
30 days after entry of the Order
Independent Fiduciary Report
28 days prior to date of Fairness
Hearing
Deadline for filing Objections,
Appearance of Counsel for
Objectors, and Notice of Intent
to Appear at Final Fairness
Hearing
14 days prior to date of Fairness
Hearing
Filing of Motion in Support of
Final Approval of Settlement
7 days prior to date of Fairness
Hearing
Final Fairness Hearing
On or after 75 days after entry of
Order Preliminarily Approving
Settlement
13
III.
THE PROPOSED NOTICE PLAN SHOULD BE APPROVED
A.
The Proposed Form And Means of Notice Provide the
Information Necessary to Apprise Class Members of the Nature
of the Case and Their Rights.
The proposed Class Notice, Exhibit 1 to the Proposed Preliminary Approval
Order, Exhibit C, will fully inform Class members about the lawsuit, the reason for
receipt of the notice, the method for calculating distributions to Class members,
and, for certain participants, the process for submitting a claim to be included in
the lawsuit. The Class Notice includes multiple components designed to reach the
largest number of Class members possible. The Class Notice will be sent by firstclass mail to the last known address of the Class members which will be obtained
from the Plan or the Plan’s record keeper. It is anticipated that a first-class mailing
is very likely to reach substantially all of the members of the Class. Defendants
have agreed to cooperate in identifying Class members and providing mailing
addresses. Plaintiffs will also post the Class Notice on a website dedicated to
providing information about the case which will be established by Plaintiffs’
Counsel. The website will also include various pleadings and orders from the case.
Further, for those Class members for whom the Plan lacks data other than a
mailing address, the Class Notice will explain the need and means for submitting
documentation to support a claim under the Settlement.
14
The number and variations of these types of notices will help ensure the
dissemination of adequate and reasonable notice and information consistent with
standards employed in notification programs designed to reach unidentified
members of the Class. The Class Notice will provide potential Class members with
contact information for Counsel.
B.
The Proposed Notice Plan Meets The Requirements of Due
Process
In order to satisfy due process considerations, notice to Class members must
be “reasonably calculated under all the circumstances, to apprise interested parties
of the pendency of the action and afford them an opportunity to present their
objections.” Mullane v. Central Hanover Bank and Trust Co., 339 U.S. 306, 314
(1950); Crum v. Vincent, 493 F.3d 988, 993 (8th Cir. 2007); Baldwin v. Credit
Based Asset Servicing and Securitization, 516 F. 3d 734, 737 (8th Cir. 2008).
Courts in this Circuit have determined that direct mailings to class members’ last
known address provide class members with reasonable notice. Grunin v. Int'l
House of Pancakes, 513 F.2d 114 (8th Cir. 1975). Here, Plaintiffs’ proposed means
of class notice meet these standards and thus satisfy the mandates of due process.
Plaintiffs believe that the combination of direct mail and an Internet website will
result in a very high percentage of actual notice to affected participants and
beneficiaries.
15
Here, the form and method of Class Notice satisfies all due process
considerations and meets the requirements of Fed. R. Civ. P. 23(e)(1). The
proposed Class Notice describes in plain English (i) the nature of the lawsuit;
(ii) reason for notification; (iii) procedures to object; (iv) how to receive more
information regarding the case; and (v) how the settlement funds will be
distributed to Class members. As such, the proposed Class Notice satisfies the
requirements of due process.
IV.
THE PROPOSED SETTLEMENT IS FAIR, REASONABLE, AND
ADEQUATE AND SHOULD BE APPROVED BY THE COURT
A.
Standard for Preliminary Approval
Settlement is a strongly favored method for resolving litigation. Little Rock
Sch. Dist. v. Pulaski Co. Special Sch. Dist. No. 1, 921 F.2d 1371, 1383 (8th Cir.
1990). In class action lawsuits such as this, the policy of favoring voluntary
resolution of litigation through settlement is particularly strong. White v. NFL, 822
F. Supp. 1389, 1416 (D. Minn. 1993). Indeed, such agreements are presumptively
valid. See Petrovic v. Amoco Oil Co., 200 F.3d 1140, 1148 (8th Cir. 1999) (“‘[a]
strong public policy favors [settlement] agreements, and courts should approach
them with a presumption in their favor’”) (citation omitted); First Nat. Bank v. Am.
Lenders Facilities, Inc., No. CT 00-269 JRT/RLE, 2002 WL 1835646, at *1 (D.
16
Minn. July 16, 2002) (granting preliminary approval of class settlement where
proposed settlement was within the “range of reasonableness”).
Federal Rule of Civil Procedure 23(e) requires judicial approval for the
compromise of claims brought on a class basis. Approval of a class action
settlement under Rule 23(e) involves a two-step process: first, a “preliminary
approval” order; and second, after notice of the proposed settlement has been
provided to the class and a hearing has been held to consider the fairness,
reasonableness and adequacy of the proposed settlement, a “final approval” order
or judgment. See Manual for Complex Litigation §13.14 (4th ed. 2004). At the
final approval hearing, the Court will have before it more detailed papers submitted
in support of the proposed Settlement and only then will it be asked to make a
determination as to whether the Settlement is fair, reasonable and adequate, under
all the circumstances. For now, however, Plaintiffs request that this Court take the
first step in the approval process and grant preliminary approval of the proposed
Settlement.
B.
The Court Should Grant Preliminary Approval
The Eighth Circuit Court of Appeals has identified four factors in
determining whether a settlement is fair, reasonable, and adequate:
(1) the merits of the plaintiff’s case, weighed against the terms of the
settlement; (2) the defendant's financial condition; (3) the complexity
and expense of further litigation; and (4) the amount of opposition to
17
the settlement.
In re Wireless Tel. Fed. Cost Recovery Fees Litig., 396 F.3d 922, 932 (8th Cir.
2005). At the preliminary approval phase, the last of these factors is not relevant.
Of the remaining factors, the most important is “the strength of the case for
plaintiffs on the merits, balanced against the amount offered in settlement.” Id. at
933.
Other factors may be considered to ensure the settlement is “not the product
of fraud or collusion.” Id. at 934. Such factors include the experience and opinion
of counsel on both sides, DeBoer v. Mellon Mortgage Co., 64 F. 3d 1171, 1178 (
8th Cir. 1995), the settlement’s timing, including whether discovery proceeded to
the point where all parties were fully aware of the merits, City P'ship Co. v. Atl.
Acquisition Ltd. P'ship, 100 F.3d 1041, 1043 (1st Cir.1996), whether the settlement
resulted from arms length negotiations, and whether a skilled mediator was
involved, DeBoer, 64 F. 3d at 1178.
The proposed Settlement here satisfies all of these criteria, thereby
warranting notice apprising Class Members of the Settlement and establishing a
hearing date for final approval.
18
1.
The Merits of Plaintiffs’ Case Weighed Against the
Settlement Terms and The Risk and Expense of Further
Litigation Support Approval
As noted above, “the most important consideration in deciding whether a
settlement is fair, reasonable, and adequate is ‘the strength of the case for plaintiffs
on the merits, balanced against the amount offered in settlement.’” In re Wireless,
396 F.3d at 933 (citation omitted).
Cases of this type are of recent origin and involve many unsettled questions
of law. Only one has been finally adjudicated on the merits partly in favor of
plaintiffs, Tibble v. Edison Int’l, 2010 WL 2757153 (C.D. Cal July 8, 2010), and
plaintiffs have lost many such cases without obtaining any recovery at all for the
class. See Hecker v. Deere & Co., 556 F.3d 575 (7th Cir. 2009); George v. Kraft
Foods Global, Inc., 684 F.Supp.2d 992, 1017 (N.D. Ill. 2010); Loomis v. Exelon
Corp., 2009 WL 4667092 (N.D. Ill. Dec. 9, 2009); Taylor v. United Technology,
2009 WL 535779 (D. Conn. March 3, 2009). In addition, in this case the Plaintiffs
faced statute of limitations risk at summary judgment and a vigorous defense on
the merits by Wells Fargo, one the largest financial services companies in the
world, who has abundant resources to vigorously defend this case through trial and
appeal. Even if Plaintiffs proved liability on the merits, the risk of appeal, and the
uncertainty of the method of computing losses (unresolved in the Eighth Circuit for
19
ERISA cases alleging imprudent investment selection and/or retention), make a
certain recovery of $17.5 million reasonable.
Moreover, the cash value of the settlement compares favorably to other
settlements involving similar claims, which have ranged from $14 million to $26
million. (Porter Decl. ¶14.)
Barring this Settlement, this case would require the expenditure of
substantial additional judicial and other resources, “all the while class members
would receive nothing.” In re Wireless, 396 F.3d at 933 (citation omitted).
Conversely, the proposed Settlement confers a reasonable and immediate benefit
on the Class.
The result in this case is valuable and immediate for class members, and thus
falls well within a range of what should be deemed fair, reasonable and adequate.
See, e.g., Holden, 665 F. Supp. at 1402. The members of the Class will receive
$17.5 million in cash, less the cost of notice, settlement administration, attorneys’
fees and expenses, and the cost for an independent fiduciary. The cash received by
the members of the Class is a concrete monetary benefit that will be paid to Class
members within a few months of Final Approval and allow them to enhance their
retirement savings and provide them with the opportunity to receive additional
investment returns through retirement. Injunctive relief is not warranted here
because the following a corporate merger, the Wells Funds challenged in the
20
Complaint were no longer available as investment options in the Plan. Further, the
Settlement is within the range of settlements of similar cases involving allegations
of imprudent selection and/or retention of investment options. (Porter Decl. ¶14).
Thus, the Settlement is fair, reasonable, and adequate.
The financial condition of Wells Fargo is strong, so its ability to pay the
settlement amount is not at issue.
In sum, the most important considerations, the value of the settlement
compared to the merits of plaintiffs claim and the risk and expense of additional
litigation strongly support approval here.
2.
The Proposed Settlement Is the Product of Arm’s-Length
Negotiations Between Experienced Counsel Supervised by a
Skilled Mediator After Fact Discovery And Expert Reports
The proposed Settlement is the product of extensive, arm’s-length
negotiations conducted by experienced counsel and mediated by the Hon. James H.
Rosenbaum (Ret.). The Settlement occurred after fact discovery was completed
and Plaintiffs’ and Defendants’ expert reports were served. The Parties engaged in
extensive negotiations and shared detailed liability and loss analyses. Accordingly,
the fairness, adequacy and reasonableness of the proposed Settlement may be
presumed.
Where, as here, settlement is reached through arms-length negotiations
between experienced counsel, and there is no evidence of collusion or bad faith,
21
“the judgment of the litigants and their counsel” concerning the adequacy of the
settlement is entitled to deference. See, e.g., Petrovic v. Amoco Oil Co., 200 F. 3d
1140, 1149 (8th Cir. 1999); DeBoer, 64 F. 3d at 1178. “The Court is entitled to rely
on the judgment of experienced counsel in its evaluation of the merits of a class
action settlement.” In re Employee Ben. Plans Sec. Litig., Civ. No. 3-92-708, 1993
WL 330595, at *5 (D .Minn. June 2, 1993); DeBoer, 64 F.3d at 1178. Here,
counsel for Plaintiffs have extensive experience and success in complex ERISA
class actions. Similarly, Defendants are represented by skilled counsel with
considerable experience in class action and other types of complex litigation.
Further, the Settlement will be reviewed by an Independent Fiduciary whose
sole responsibility and duty will be to ensure that the Settlement is fair and
reasonable for the members of the Class. The Independent Fiduciary’s report will
be submitted 28 days before the Final Approval Hearing.
Because the proposed Settlement is the product of serious, informed and
noncollusive negotiations among experienced counsel, it is deserving of
preliminary approval. See DeBoer, 64 F.3d at 1178.
22
V.
THE COURT SHOULD MODIFY ITS CLASS CERTIFICATION
ORDER
A.
The Court Should Amend the Class Definition
The Court twice held that the Class satisfied the elements of Fed. R. Civ. P.
23(a) and 23(b)(3). In its second class certification order, the Court certified the
following Class:
Participants in the Wells Fargo & Company 401(k) Plan (the “Plan”)
whose Plan accounts had a balance in any one of the following funds
from November 2, 2001, to September 30, 2009: Wells Fargo
Diversified Small Cap Fund; Wells Fargo Diversified Equity Fund;
Wells Fargo Large Company Stock Fund; Wells Fargo Growth
Balanced Fund; Wells Fargo Moderate Balanced Fund; Wells Fargo
Aggressive Allocation Fund (formerly Wells Fargo Strategic Growth
Allocation Fund); Wells Fargo Conservative Allocation Fund
(formerly Wells Fargo Strategic Income Fund); and Wells Asset
Allocation Collective Trust.
(Dkt. No. 233).
In light of certain factual developments adduced in fact and expert
discovery, Plaintiffs move (and Defendants stipulate for settlement purposes only),
the Court to amend the Class definition in two ways:
 First, to add the Wells Capital Growth Fund as a subject fund. Plaintiffs
did not complain about the Capital Growth Fund in the TAC. Plaintiffs
did challenge the manner and method by which the fund was selected,
however. Therefore, in the interests of closure and efficiency, it is
appropriate to include the fund in the Class definition;
 Second, to extend the Class Period to October 8, 2009, the effective date
the Wells Funds were no longer offered as investment options in the
Plan, which adds only eight days to the Class Period.
23
The proposed amended class definition is as follows:
Individuals who were participants in the Wells Fargo & Company
401(k) Plan (the “Plan”) whose Plan accounts had a balance in any
one of the following funds from November 2, 2001, to October 8,
2009: Wells Fargo Diversified Small Cap Fund; Wells Fargo
Diversified Equity Fund; Wells Fargo Large Company Stock Fund;
Wells Fargo Growth Balanced Fund; Wells Fargo Moderate Balanced
Fund; Wells Fargo Aggressive Allocation Fund (formerly Wells Fargo
Strategic Growth Allocation Fund); Wells Fargo Conservative
Allocation Fund (formerly Wells Fargo Strategic Income Fund);
Wells Asset Allocation Collective Trust; and Wells Capital Growth
Fund.3
B.
The Court Should Certify a Class Under Fed. R. Civ. P. 23(b)(1).
Plaintiffs also move, per the terms of the Settlement Agreement, for the
Court to amend its Class Certification Order and certify this action under Fed. R.
Civ. P. 23(b)(1). There are several reasons for this proposal.
3
The Settlement treats as Class members any person who was a participant in the Plan and who
invested in the Wells Funds during the Class Period, including persons who left the Plan before
the original complaint was filed in this action. Indeed, it is a term of the Settlement and
Defendants may terminate the Settlement if the Class does not include all persons who were a
participant in the Plan and who invested in the Wells Funds during the Class Period. Settlement
§2.1. Thus, for example, the original named plaintiff in this action, Yvonne Gipson, is a member
of the Class even though the Court dismissed her individual claim on the ground that, as a former
participant, she lacked statutory standing. Indeed, courts recognize that a settlement class can
include those whose claims are barred. E.g., In re Holocaust Victim Assets Litig., 105 F. Supp. 2d
139, 142 (E.D.N.Y. 2000) (recognizing that a settlement class may include those who claims
fail). Plaintiffs do not believe the Eighth Circuit’s decision in Avritt v. Reliastar Life Ins. Co.,
615 F.3d 1023 (8th Cir. 2010), holding that persons who lacked Article III standing for lack of
injury cannot be members of the class, applies here to persons who may lack statutory standing.
Ms. Gipson and others like her suffered the same injury as current Plan participants. Ms. Gipson
and others like her have a live controversy because she has a right of appeal on the dismissal of
her claim, and chooses to settle that claim in this forum. Former participants in the Plan could
file and prosecute the same lawsuit outside the Eighth Circuit, thus depriving Defendants of the
finality of judgment they seek here. Therefore, the claims of former participants can and should
be settled here.
24
First, in opposition to class certification, Defendants presented evidence that
some members of the Class had earned positive investment returns in the Wells
Funds, which investment experience depended on when a given Class member
invested in a given Wells Fund. Defendants argued, among other things, that there
were some members of the Class who would not want the Wells Funds removed as
investment options from the Plan. Although the Court rejected Defendants’
argument as a ground for denying class certification, the Court did certify a class
under Fed. R. Civ. P. 23(b)(3), thereby permitting Class members who did not
want the Wells Funds to be removed to opt-out of the lawsuit. The subject Wells
Funds are no longer available as investment options in the Plan, however.
Therefore, Class members who enjoyed better returns from these funds than the
rest of the Class no longer have an incentive to opt-out.
Second, because the Parties settled this lawsuit while Plaintiffs’ motion for
approval of the form and method for Class notice was pending, which motion was
subsequently withdrawn, no Class members have yet received notice, so amending
the class certification order will not result in confusion for the Class members
caused by receipt of a prior notice.
Third, administration of an opt-out class, and the additional notice, would be
more expensive than administering a non-opt-out class. The costs of this
25
administration will be deducted from the settlement fund, thus reducing the amount
class members receive.
Lastly, under the terms of the Settlement, if more than 5% of the Class
members opt-out, then Defendants have the option to rescind the Settlement. Thus,
certification of a class under Fed. R. Civ. P. 23(b)(1) serves the Parties’ and the
Court’s interest in finality, facilitating settlement and efficient allocation of judicial
resources.
VI.
THE COURT SHOULD APPROVE THE PLAN OF ALLOCATION
The proposed Plan of Allocation, Exhibit B hereto, provides for the most
equitable, practical, and reasonable allocation under the circumstances. Limitations
in the available data rendered certain allocation methods impractical. First, no data
other than address information is available for approximately 30,000 Class
Members. (Porter Decl. ¶15). These Class Members will be required to submit
proof of investment in the Wells Funds to receive a distribution under the Plan of
Allocation. Second, only end-of-year account balance data, that is, no transactional
data, is available for the years ending 2001 and 2002. (Porter Decl. ¶16).
Therefore, although we know the Plan invested hundreds of millions of dollars in
the Wells Fund in those years, it is impossible to accurately determine whether any
given Plan participant’s invested in any given Wells Fund except on the last day of
the calendar year.
26
The Plan of Allocation was developed after extensive dialogue about the
available data elements with an experienced claims administrator and Defendants.
(Porter Decl. ¶17). Plaintiffs’ counsel and the experienced claims administrator
reviewed numerous documents detailing the data elements and reviewed the data
files. (Id.) The Plan of Allocation allocates settlement funds to participants based
on the amount a given participant invested in the Wells Funds during the Class
Period on a quarterly basis. Plaintiffs submit that this method fairly and reasonably
allocates settlement funds to those participants who invested in the Wells Funds
during the Class Period. (Id.)
27
VII. CONCLUSION
For all the foregoing reasons, the Court should preliminarily approve the
proposed class settlement and form and means of notice, and modify its order
certifying the class.
Respectfully submitted,
By: /s/Gregory Y. Porter
Gregory Y. Porter (admitted pro hac vice)
BAILEY & GLASSER LLP
910 17th Street, NW
Suite 800
Washington, DC 20006
Dated: March 18, 2011
J. Brian McTigue (admitted pro hac vice)
Bryan T. Veis (admitted pro hac vice)
James A. Moore (admitted pro hac vice)
McTIGUE & VEIS LLP
4530 Wisconsin Avenue, NW
Suite 300
Washington, DC 20016
Mara R. Thompson (MN Bar No. 196125)
SPRENGER & LANG PLLC
4585 Weston Ln. N.
Minneapolis , MN 55446
Michael D. Lieder(admitted pro hac vice)
Bryce M. Miller (MN Bar No. 386901)
SPRENGER & LANG PLLC
1400 Eye St Ste 500
Washington , DC 20005
Joel A. Mintzer
Robins, Kaplan, Miller & Ciresi LLP
800 LaSalle Avenue
2800 LaSalle Plaza
Minneapolis, MN 55402
Attorneys for Plaintiff
28
CASE
CASE0:08-cv-04546-PAM-FLN
0:08-cv-04546-PAM-FLN Document
Document264-3
259 Filed
Filed03/18/11
07/05/11 Page
Page29
30ofof29
30
CERTIFICATE OF SERVICE
I hereby certify that on March 18, 2011, a copy of “Plaintiffs’
Memorandum in Support of Unopposed Motion for Preliminary Approval of
Settlement, Modification of Class Certification Order, Approval of Settlement
Notice and Setting a Date for Final Fairness Hearing” were filed electronically
via the Court’s ECF system. Notice of this filing will be sent by operation of the
Court’s electronic filing system to all parties indicated on the electronic filing
receipt. Parties may access this filing through the Court’s system.
By: /s/ Gregory Y. Porter
Gregory Y. Porter
29
EXHIBIT 4
Exhibit A
MCTIGUE & VEIS LLP
McTigue & Veis LLP represents
4530 Wisconsin Ave, NW
participants in traditional pension plans, 401(k)
Suite 300
salary deferral plans, savings plans, and
Washington, DC 20016
Employee Stock Ownership Plans (ESOPs).
The firm confines itself to the litigation of complex class actions, the majority of which are
brought pursuant to ERISA. The emphasis is on representing and protecting employees in
pension plans when the plans have lost a significant part of the plan’s assets because the plan’s
employer-fiduciaries and trustees, entrusted with management of the plan, failed to live up to
their obligations under applicable law.
We are likely the first law firm, years before the Enron, WorldCom, and Global Crossing
scandals, to recognize the need for lawyers to protect plan participants against the growing risks
of imprudently-invested 401(k) and Employee Stock Ownership Plans.
The Firm’s representative cases include the following in which the firm served as lead or
co-lead counsel and secured multimillion dollar awards for ERISA plans and their participants:
Presley v. CHH, et al., 97-cv-04316 (SC) (N.D. Cal.) (bankrupt plan sponsor). CHH,
was the Los Angeles holding company for the Broadway, Emporium, Capwells, and
Weinstocks department stores, with more than 24,000 employees in its 401(k) plan.
More than half of the plan’s assets were invested in CHH stock when the chain filed for
bankruptcy. Nearly $39 million was recovered for the plan from defendants.
Blyler v. Agee, et al., CV97-0332-(BLW) (D. Idaho) (bankrupt plan sponsor). This
litigation involved pension plans with 8,000 employees sponsored by Morrison Knudsen
Corporation which declared bankruptcy in 1996. A $21 million settlement was
recovered for the plan.
Koch v. Dwyer, et al., 98-cv-5519 (RPP) (S.D.N.Y.) (bankrupt plan sponsor). This
litigation involved JWP, Inc., a S&P 500 company that declared bankruptcy. A $6.4
million settlement was reached in 2002 on behalf of JWP’s pension plan.
In re CMS Energy ERISA Litig., 02-cv-72834 (GCS) (E.D. Mich.). This litigation, on
behalf of more than 10,000 pension plan participants, involves a former Detroit based
utility. A $28 million settlement was reached in this litigation.
In Re McKesson HBOC, Inc. ERISA Litig , C 00-20030 (RMW) (N.D. Cal.). Plan with
8,000 participants. $23 million settlement.
Sherrill v. Federal Mogul Corp. Ret. Programs Committee, et al., 04072949 (E.D. Mich.)
(plan sponsor bankruptcy with asbestos liability). Plan with 12,000 participants. $12.75
million settlement.
Overall, the firm has prosecuted cases on behalf of more than 130,000 pension plan
participants which have settled for more than $125 million. Many lawsuits involved allegations
of fiduciary breaches with respect to a pension plan sponsored by a S&P 500 or similar
company.
[1]
The firm currently litigates numerous
MCTIGUE & VEIS LLP
other cases throughout the United States on
behalf of thousands of other pension plan participants, in both public and private sector plans,
who have lost retirement assets due to a trustee’s or fiduciary’s breach of fiduciary duty. These
cases include the following ERISA class actions:
Leber v. CitiGroup, 07-09329 (S.D.N.Y.): Breach of fiduciary duty where defendants
invested retirement plan savings in proprietary mutual funds with high fees and poor
performance.
David v. Alphin, 07-00011 (W.D.N.C.) (Bank of America): Breach of fiduciary duty
where defendants invested retirement plan savings in proprietary mutual funds with high
fees and poor performance.
Gipson v. Wells Fargo, 08-04546 (D. Minn.): Breach of fiduciary duty where defendants
invested retirement plan savings in proprietary mutual funds with high fees and poor
performance.
Zang v. Paychex, 08-6046 (W.D.N.Y.): Breach of fiduciary duty in receiving kickbacks
to offer mutual funds to retirement plan clients.
Harris v. Koenig, 02-00618 (D.D.C.) (Waste Management, Inc.): Breach of fiduciary
duty where defendants invested retirement plan savings in company stock during period
when stock value was artificially inflated due to accounting fraud.
Brown v. Owens Corning Corp., 06-02125 (N.D. Ohio): Breach of fiduciary duty where
defendants invested retirement plan savings in company stock when company was on the
verge of bankruptcy.
McCullough v. AEGON USA, Inc., 06-00068 (N.D. Iowa): Breach of fiduciary duty
where defendants invested retirement plan assets in proprietary mutual funds with high
fees and poor performance.
In re Fremont General Corp. ERISA Litig., 07-02693 (C.D. Cal.): Breach of fiduciary
duty where defendants invested retirement plan savings in company stock when they
knew stock was overvalued.
In re National City Corp. Securities, Derivative & ERISA Litig., 08-07000 (N.D. Ohio):
Breach of fiduciary duty where defendants invested retirement plan savings in company
stock when they knew stock was overvalued.
Wentworth v. Sovereign Bancorp, 08-01991 (E.D. Pa.): Breach of fiduciary duty where
defendants invested retirement plan savings in company stock when they knew stock was
overvalued.
[2]
The Defendants in these cases
MCTIGUE & VEIS LLP
include some of the nation’s larger banks
and mutual funds as well as prominent individuals in the financial, corporate, and political world
who have served as fiduciaries of the plans. The lawsuits allege a variety of federal pension law
violations, including that fiduciaries of these plans failed to perform their fiduciary duties to the
funds and their pension plan members as required by federal law, participated in breaches of
fiduciary duty, including co-fiduciary breaches, and engaged in prohibited transactions, or
conflicts of interest, under federal pension law.
The events of late 2001 and the first half of 2002, including the financial collapse and
bankruptcy filings by ENRON, WorldCom, and Global Crossing confirm the risks that
participants in defined contribution pension plans are exposed to because of large portfolios of
Company Stock.
The nature of the risk to 401(k) plan participants was brought to the attention of the
United States Department of Labor in 1997 by Mr. McTigue when he was invited to testify
before the Department’s pension fund Advisory Council.
PRINCIPAL ATTORNEYS
J. Brian McTigue
Mr. McTigue is the founding partner of McTigue & Veis LLP. Prior to private practice,
Mr. McTigue was counsel to committees of the United States House of Representatives and
Senate. His legislative work included investigations and legislation pertaining to federal pension
law and pension fund investment.
As a Senate Legal Counsel for Special Projects, Mr. McTigue was responsible for
initiating the first legislative proposal, in 1996, to reduce the percentage of Company Stock
permitted in the portfolios of 401(k) and similar defined contribution pension plans. The bill
represented the first congressional recognition of problems with the typical pension plan of the
baby boom generation. Although opposed by many employers and employer groups, several of
the concepts embodied in the bill became law. Mr. McTigue has since assisted congressional
offices with draft legislation which would give ERISA fiduciary breach claims greater protection
when companies sponsoring plans file for bankruptcy.
Mr. McTigue’s congressional investigation of Michael Milken, Drexel Burnham Lambert
and the junk bond market was a basis for FDIC v. Milken, et al. brought by the Federal Deposit
Insurance Corporation which settled for $1.3 billion. His congressional investigations of the
funding of pension plans through annuities issued by the California-based Executive Life
Insurance Company identified issues giving rise, when Executive Life became insolvent several
years later, to a plethora of private class actions and United States Department of Labor litigation
alleging violations of federal pension law, the Labor Department’s adoption of new fiduciary
standards for pension plan termination annuities, and to the passage of the Pension Annuitants
Protection Act.
[3]
Prior to his legislative work, Mr.
MCTIGUE & VEIS LLP
McTigue was an investigative reporter and
television news producer for ABC and NBC
News. His investigative reporting was awarded Emmys and a George Polk Award. Mr.
McTigue is a graduate of Notre Dame and the Golden Gate University Law School, San
Francisco, California. Mr. McTigue is a member of the District of Columbia Bar and the State
Bar of California. He is also a member of the Bars of the United States District Courts for the
District of Columbia, Northern District of California, and the Eastern District of Michigan.
Bryan T. Veis
Mr. Veis has been a litigator for more than twenty-seven years. Prior to joining McTigue
& Veis LLP, he spent seventeen years as a Special Counsel in the Special Projects and
Enforcement Divisions of the Office of Chief Counsel, Office of Thrift Supervision. While at
OTS, Mr. Veis investigated and prosecuted violations of federal banking laws by officers,
directors, shareholders, auditors, and outside counsel of failed savings and loans associations.
The investigations Mr. Veis was involved in resulted in cease-and-desist orders against
firms and individuals, orders of prohibition against individuals, and monetary restitution in
excess of $1.2 billion. They included In the Matter of Kaye, Scholer, Fierman, Hays & Handler;
In the Matter of Ernst & Young I (1992); In the Matter of Arthur Andersen & Co.; In the Matter
of Deloitte & Touche; In the Matter of Grant Thornton L.L.P.; In the Matter of KPMG Peat
Marwick; In the Matter of CityFed Financial Corp.; In the Matter of Dollar Savings Bank &
Robert DeMane; In the Matter of Ernst & Young II (Superior Bank), and numerous consent
orders in smaller matters.
Prior to joining OTS, Mr. Veis was an associate with the Washington, D.C. law firm of
Steptoe & Johnson, where he was involved in complex business litigation and the representation
of major creditors, including pension funds, on official committees of unsecured creditors in
bankruptcy proceedings, as well as plaintiffs’ class action litigation in Federal and local courts.
Mr. Veis is a magna cum laude graduate of the Georgetown University Law Center.
While at Georgetown he was an Associate Editor of the Georgetown Law Journal. Prior to law
school, Mr. Veis served as a commissioned officer in the United States Navy. Mr. Veis attended
the University of Montana, where he earned a B.A. in history (with honors). He is the author of
Case Comment: Independent Oil and Gas Association of West Virginia, 60 Geo. L.J. 1233
(1980).
James A. Moore
Mr. Moore has been a litigator for fifteen years, and has focused on ERISA class action
litigation in both trial and appellate courts for almost a decade. Prior to joining McTigue & Veis
LLP, Mr. Moore was an attorney with the class action firm Malakoff, Doyle, & Finberg, P.C.,
which, together with McTigue & Veis LLP, pioneered the pursuit of ERISA class action suits on
[4]
behalf of employees who lost retirement
savings due to their plan fiduciary's
imprudent investment in their employer's stock.
MCTIGUE & VEIS LLP
Mr. Moore has played a major role in securing multimillion dollar awards for ERISA
retirement plan participants in numerous cases throughout the country, including Dickerson v.
Feldman (Solutia Corp. ERISA Litig.), No. 1:04-CIV-07935 (S.D.N.Y.); In re RCN Corp.
ERISA Litig., No. 04-5068 (D.N.J.); Koch v. Dwyer (EMCOR Corp. ERISA Litig.), No.
98CIV5519 (S.D.N.Y.); and Blyler v. Agee (Morrison Knudsen Corp. ERISA Litig.), No. 9700332 (D. Idaho).
Before turning his energies to class action and ERISA litigation, Mr. Moore gained broad
experience in a wide variety of general civil litigation, including insurance-related litigation, and
also worked for the United States Environmental Protection Agency and the National Audubon
Society.
Prior to his law career, Mr. Moore earned a Ph.D. in philosophy from the University of
Pittsburgh, which is internationally recognized for the excellence of its philosophy department.
He was awarded the prestigious Mellon Pre-Doctoral Fellowship in his first year of study, and
was awarded a Teaching Fellowship to teach logic and philosophy during the remainder of his
studies. He earned his Bachelor of Arts from Indiana University-Bloomington, graduating Phi
Beta Kappa and with honors.
Mr. Moore’s publications include Taking Legal Action to Protect Policyholders'
Ownership Rights in the Wake of the Continuing Trend Toward Insurance Company
Demutualization, ATLA Insurance Law Section Newsletter, Fall 2000 (co-author with Ellen M.
Doyle), and publications in scholarly journals including the Harvard International Law Journal.
Mr. Moore is a 1994 graduate of the University of Michigan Law School. He is admitted
to practice in Pennsylvania and the District of Columbia.
Matthew A. Olson
Mr. Olson has served as an employee benefits counsel for two major law firms and as inhouse senior counsel for one of the largest insurance companies in the world. Mr. Olson is
highly credentialed in the area of fiduciary law and tax aspects of employee benefits. In this
vein, Mr. Olson obtained his law degree with a certification in fiduciary related issues.
After obtaining his law degree, Mr. Olson obtained a Master of Laws in Taxation, with a
certification in employee benefits. Mr. Olson has advised clients on a broad range of ERISA
matters, including: plan and trust design, plan and trust administration, the correction of fiduciary
and plan qualification failures, fiduciary duties, investment selection and reviews, the
development and offering of investment advice, plan service provider agreements and fee
arrangements, ERISA prohibited transactions and related exemptions, employee benefits in
mergers and acquisitions, and the implications of COBRA, HIPAA, FMLA, USSERA and
Sarbanes-Oxley on employee benefit plans.
[5]
In addition, Mr. Olson has in-depth
MCTIGUE & VEIS LLP
experience representing clients in ERISA
stock-drop litigation, fee litigation, benefit
claim litigation and bankruptcy proceedings. Mr. Olson has also represented independent
fiduciaries charged with investigating and approving litigation settlements under ERISA. Mr.
Olson is a frequent speaker on retirement plans and related topics at industry conferences,
association seminars, and client-sponsored forums and authors articles on employee benefit
related issues.
Jason S. Luter
Mr. Luter has litigated cases in federal and state courts, as well as with the Securities and
Exchange Commission. His current practice focuses on litigating 401(k), ESOP, pension plan
and other employee benefit cases.
Mr. Luter joined McTigue & Veis after obtaining his LL.M. degree in Taxation,
Employee Benefits Certificate from the Georgetown University Law Center, where he graduated
with distinction.
Prior to joining McTigue & Veis, Mr. Luter was an attorney with the law firm of Jones
Day where he practiced securities and shareholder litigation and SEC enforcement, as well as
insurance litigation. Prior to that, he served as a Judicial Clerk for the Honorable John B. Peyton,
a Dallas County Judge in Dallas, Texas.
Mr. Luter obtained his law degree from the Southern Methodist University Dedman
School of Law where he served as an Articles Editor for the International Law Review. He also
studied law at the University of Oxford School of Law in Oxford, England. Mr. Luter has an
undergraduate degree in finance from Southern Methodist University, where he graduated magna
cum laude. He is passionate about corporate governance issues and has written two articles on
the topic.
Mr. Luter is admitted to practice in Texas. He is not a member of the D.C. bar and is
currently practicing under the supervision of Bryan Veis. Mr. Luter’s application for admission
to the D.C Bar is pending.
*
*
[6]
*
Exhibit D
BAILEY & GLASSER LLP
www.baileyglasser.com
DISTRICT OF COLUMBIA
ILLINOIS
MARYLAND
WEST VIRGINIA
SUMMARY OF QUALIFICATIONS
The law firm of Bailey & Glasser LLP brings a trial-focused litigation approach to its
wide-ranging and successful practice. The firm concentrates its practice in the areas of complex
commercial and class action litigation, with a particular emphasis on ERISA and employment
class actions, consumer protection, antitrust, insolvency litigation and bankruptcy, and corporate
and transactional matters in the energy and healthcare industries. The firm represents (or has
represented) the State of West Virginia, individual consumers, corporations, healthcare providers
in complex litigation and class actions throughout the United States. The firm does a significant
amount of work on a contingent fee basis.
As evident from the accompanying biographical histories, the lawyers at Bailey &
Glasser are accomplished and diverse with years of experience in complex commercial litigation.
Many of the firm’s lawyers are alumni of larger national and regional law firms. In light of the
firm’s strength and diversity, its attorneys have developed a strong reputation of being fair and
effective advocates. Bailey & Glasser and its attorneys have served as court-appointed lead
counsel and class counsel in many state and federal courts throughout the United States.
209 CAPITOL STREET
CHARLESTON, WV 25301
(304) 345-6555
2855 CRANBERRY SQUARE
MORGANTOWN, WV 26508
(304) 594-0087
1003 WESTERN AVENUE
JOLIET, IL 60435
(815) 740-4034
910 17TH STREET, NW
SUITE 800
WASHINGTON, DC 20006
(202) 543-0226
132 WEST STREET
ANNAPOLIS, MD 21401
(410) 216-7008
BAILEY & GLASSER PRACTICE AREAS
ERISA and Employee Benefits Litigation
Bailey & Glasser represents participants in traditional pension plans, 401(k) salary deferral plans,
savings plans, Employee Stock Ownership Plans (ESOPs) and health and disability plans.
Bailey & Glasser attorneys have extensive ERISA experience, including trial and appellate,
having served as class counsel for plaintiffs in cases that have recovered tens of millions of
dollars for participants, including In re CMS Energy ERISA Litigation, 02-CV-72834 (E.D.
Mich.) ($28 million recovered) and Sherrill v. Federal-Mogul Corp. Retirement Programs
Committee, 04-CV-72949 (E.D. Mich.) (over $14 million recovered).
Bailey & Glasser brings a unique perspective to representing employees in ERISA class actions
because its principal ERISA attorney represented defendants in several of the earliest cases
involving imprudent investments in plan sponsor stock, including Koch v. Dwyer, No. 98-CV5519 (S.D.N.Y.); Tittle v. Enron, No. 01-CV-3913 (S.D. Tex.); Rankin v. Rots, No. 02-CV71045 (E.D. Mich.); and Blyler v. Agee, No. CV 97-332 (D. Id.) Bailey & Glasser currently
represents employees in several complex ERISA class actions:
David v. Alphin, 07-00011 (W.D.N.C.) (Bank of America): Breach of fiduciary duty where
defendants invested retirement plan savings in proprietary mutual funds with high fees and poor
performance.
Leber v. CitiGroup, 07-09329 (S.D.N.Y.): Breach of fiduciary duty where defendants invested
retirement plan savings in proprietary mutual funds with high fees and poor performance.
Gipson v. Wells Fargo, 08-04546 (D. Minn.): Breach of fiduciary duty where defendants
invested retirement plan savings in proprietary mutual funds with high fees and poor
performance.
Zang v. Paychex, 08-6046 (W.D.N.Y.): Breach of fiduciary duty in receiving kickbacks to offer
mutual funds to retirement plan clients.
Brown v. Owens Corning, 06-02125 (N.D. Oh.): Breach of fiduciary duty where defendants
invested retirement plan savings in company stock when company was on the verge of
bankruptcy.
McCullough v. AEGON USA, Inc., 06-00068 (N.D. Ia.): Breach of fiduciary duty where
defendants invested retirement plan assets in proprietary mutual funds with high fees and poor
performance.
Justine Leonardp v. Health Care Servs. Corp., 09-1588 (N.D. Ill.): Conflicts of interest and
improper reimbursement of expenses for medical services provided out-of-network.
In re National City Corp. Securities, Derivative & ERISA Litig., 08-07000 (N.D. Oh.): Breach of
fiduciary duty where defendants invested retirement plan savings in company stock when they
knew stock was overvalued.
Shamblin v. Regions Fin. Corp., 08-cv-02259 (W.D. Tenn.): Breach of fiduciary duty where
defendants invested retirement plan savings in company stock when they knew stock was
overvalued.
CONSUMER CLASS ACTIONS
Bailey & Glasser has a successful history of prosecuting consumer class actions, including those
related to predatory mortgage lending, illegal loan servicing, antitrust violations, breaches of
warranty, employee-rights, and a host of other consumer-related matters. The firm has reached a
number of favorable results on behalf of a wide array of consumers:
Cummins v. H & R Block, Inc., Civil Action No. 03-C-134 (Circuit Court of Kanawha County,
W. Va.): Consumer class action $62.5 million multi-state settlement
State ex rel. Darrell V. McGraw v. Microsoft Corporation, Civil Action No. 01-C-197 (Circuit
Court of Boone County, W. Va.): Parens patriae antitrust and consumer protection action with a
total settlement value of $21 million
Anderson v. Provident Bank, Civil Action No. 04-C-199 (Circuit Court of Mercer County, W.
Va.): Predatory mortgage lending class action settled for $8.1 million on behalf of 140 class
members
Mey v. Herbalife International, Inc., Civil Action No. 01-C-263 (Circuit Court of Ohio County,
W. Va.): $7 million nationwide class action settlement alleging violations of the federal
Telephone Consumer Protection Act
Hardwick v. Rent-A-Center, Inc., Civil Action No. 3:06-0901 (S.D. W. Va.): Consumer class
action for rent-to-own consumers; pending final approval of settlement paying $3.5 million cash,
plus other relief and price reductions
Muhammad v. National City Mortgage Co., Civil Action No 2:07-423 (S.D. W. Va.): Illegal
mortgage loan servicing consumer class action; final approval of $700,000 settlement pending
Brailsford v. Jackson Hewitt, Inc., Case No. 06-00700 (N.D. Cal.): Consumer class action for
class of California consumers; settled for $672,000
Hackworth v. Telespectrum, Inc., Civil Action No. 3:04-1271 (S.D. W. Va.): WARN Act class
action settled for $185,000
The firm is current involved in a number of matters involving healthcare reimbursement, cable
box rental policies among the largest cable providers, and the municipal-bond market.
COMPLEX LITIGATION
Bailey & Glasser has six lawyers that have more than 10 trials to verdict and has the experience
and resources to bring complex cases to trial. Bailey & Glasser has recently been involved in the
following matters which demonstrate its ability to fully litigate complex matters:
FDIC, et al. v. Grant Thornton, LLP (S.D. W. Va.): Our firm represented co-plaintiffs in a five-week
trial against Grant Thornton arising out of the collapse of Keystone Bank. The parties conducted
over 100 depositions. The trial resulted in two judgments against Grant Thornton totaling $27.5
million. One judgment totaling $2.3 million was reversed on appeal.
Roger, Jr. & Ooten, et al. v. Massey Coal Services, Inc., et al. (Circuit Court of Mingo County,
W. Va.): Bailey & Glasser served as co-lead trial counsel in this water-loss case which yielded
cumulative verdicts of over $3.4 million in favor of our clients. This case involved over 100
depositions and two months of trial.
Last year, Bailey & Glasser was among the few firms selected to represent the Refco Litigation
Trust in the prosecution of the Trust’s numerous claims stemming from the multi-billion
bankruptcy involving Refco Inc. Other firms selected included Quinn Emanuel Urquhart
Oliver & Hedges LLP, a 350-lawyer firm headquartered in Los Angeles, and Milbank, Tweed,
Hadley & McCloy LLP, a 550-lawyer firm headquartered in New York City.
4
Charleston, WV • Morgantown, WV • Washington, DC • www.baileyglasser.com
Gregory Y. Porter
Greg is a partner at Bailey & Glasser. He has extensive experience litigating
complex pension, consumer fraud, insurance sales, and RICO class actions
in federal and state courts throughout the United States. Greg has sued and
represented many Fortune 500 companies in class actions under the federal
Employee Retirement Income Security Act (ERISA).
Washington, DC
[email protected]
Practice Areas
• Class Actions
• Litigation
• Employee Benefits
Education & Honors
J.D., 1996
University of Southern
California School of Law
- Order of the Coif
- Articles Editor, Southern
California Law Review
- Paralyzed Veterans of
America Scholarship
- Teaching and Research
Assistant
B.A., History, 1989
University of Massachusetts
at Amherst
- Winning History Department
Essay, 1988
- Co-Founder and Editor Five
College Symposium, a
Journal of International Affairs
- Intern, Office of the U.S.
Senate Historian
Greg currently represents employees in several class actions under ERISA,
including claims that health insurance companies have improperly reimbursed
employees for out-of-network services, large financial institutions have limited
employee 401(k) plan investment options to inferior in-house mutual funds, and
fiduciaries of 401(k) plans have imprudently invested employee retirement savings
in employer stock. He has played a leading role in several cases that, collectively,
recovered over $100 million in lost retirement savings for tens of thousands of
employees. Greg has also defended companies, trustees and individuals in
several landmark ERISA cases. Greg has argued ERISA appeals in the Second
and Eighth United States Circuit Court of Appeals, as well as numerous
dispositive motions in United States District Courts.
Greg is a member of the Employee Benefits Committee of the American Bar
Association’s Labor and Employment Section. He is a contributing author to
the Committee’s respected treatise on employee benefits law and a co-chair
of the Committee’s Preemption sub-committee. He is a regular speaker at
the Committee’s annual meeting and speaks at other conferences about
employee benefits litigation.
Gregory Y. Porter
BAR ADMISSIONS
District of Columbia, 1998
Commonwealth of Virginia, 1996
PRIOR EXPERIENCE
Prior to joining the firm in March 2009, Mr. Porter was a partner at McTigue
& Porter, LLP.
SELECTED CASES
In re CMS Energy ERISA Litig., 02-cv-72834 (E.D. Mich.), recovered $28 million
for employees in case alleging imprudent investment in employer stock.
Sherrill v. Federal Mogul Corp., 04-cv-72949 (E.D. Mich.), recovered over $14
million for employees in case alleging imprudent investment in employer stock.
Tittle v Enron Corp., 01-cv-3913 (S.D. Tex.), represented Jeffrey Skilling, Chief
Executive Officer of Enron Corp., in landmark ERISA case alleging imprudent
investment of 401(k) plan savings in Enron stock.
Dupree v. The Prudential Ins. Co. of Am., No. 99-8337 (S.D. Fla.), successfully
defended Prudential in trial of first impression involving claims that Prudential
breached its duties by causing its own employee retirement plan to purchase
investment products from Prudential.
COURT ADMISSIONS
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
Circuit Court of Appeals for the Second Circuit
Circuit Court of Appeals for the Fourth Circuit
Circuit Court of Appeals for the Eighth Circuit
District Court for the District of Columbia
District Court for the Northern District of Ohio
District Court for the Eastern District of Michigan
District Court for the Eastern District of Virginia
CASE 0:08-cv-04546-PAM-FLN Document 271
Filed 07/05/11 Page 1 of 9
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MINNESOTA
Robin E. Figas,
and all others similarly situated,
Plaintiffs,
v.
Civil File No. 08-CV-4546 (PAM/FLN)
Wells Fargo & Company, Employee
Benefit Review Committee, Howard I.
Atkins, Patricia Callahan, Ellen Haude,
Mike Heid, Clyde Ostler, Tim Sloan, John
G. Stumpf, Peter J. Wissinger, and Doe
Defendants 1-20.
Defendants.
DECLARATION OF GREGORY Y. PORTER
1.
I am an attorney and partner in Bailey & Glasser, which represents the
Plaintiffs in this action.
2.
I make this declaration based on personal knowledge and facts known
to me.
A.
Pre-Complaint Investigation
3.
Before filing the initial complaint, Co-Lead Counsel reviewed Plan
documents and filings with government agencies to evaluate the Plan’s
investments and assets under management. Co-Lead counsel compared the returns
of the Plan’s investments in the Wells Funds to appropriate benchmarks, examined
the percentage of assets within the Wells Funds represented by the Plan, and
1
CASE 0:08-cv-04546-PAM-FLN Document 271
Filed 07/05/11 Page 2 of 9
engaged consultants to examine various aspects of the Wells Funds. Co-Lead
counsel also reviewed pertinent cases, researched legal claims and reviewed
voluminous public records regarding Wells Fargo.
B.
Investigation and Discovery
4.
The Parties met and conferred multiple times on various discovery
disputes.
5.
Plaintiffs filed and prevailed on several discovery motions.
6.
Defendants produced and Plaintiffs reviewed more than 211,000
pages of documents. The document review included detailed coding and analysis
of all documents using an online document management database customized to fit
the case as discovery and document review proceeded.
7.
The Parties submitted expert reports and took two expert depositions
on class certification.
8.
Defendants took the deposition of Ms. Figas. Plaintiffs took the
deposition of eight current and former Wells Fargo employees and took discovery
and depositions of two non-party witnesses.
9.
Plaintiffs served two principal and two rebuttal reports from two
expert witnesses on the merits and the amount of losses.
10.
Defendants served four expert witness reports.
2
CASE 0:08-cv-04546-PAM-FLN Document 271
11.
Filed 07/05/11 Page 3 of 9
Defendants took the depositions of Plaintiffs’ two experts on the
merits.
12.
The Parties settled the lawsuit in principle before the depositions of
Defendants’ experts.
13.
C.
In all, the Parties took fourteen depositions.
Mediation and Settlement
14.
On October 18, 2010, the Parties engaged in an all-day mediation
supervised the Hon. James H. Rosenbaum (Ret.), former Chief United States
District Judge for the District of Minnesota. In preparation for the mediation,
Plaintiffs engaged in detailed liability and loss analyses, consulted with their loss
expert, and analyzed the case in comparison to settlements in similar cases. In
addition, the Parties prepared and submitted joint and separate mediation
statements. During the course of the mediation, the Parties exchanged detailed loss
analyses. The Parties reached a settlement in principle, after many hours of intense
and extensive negotiations. The settlement negotiations were arm’s length, wideranging, intense, and based on a thorough and complete discovery record, expert
reports, as well as an analysis of settlements in similar cases.
15.
Co-Lead Counsel assessed the probability of ultimate success on the
merits against the risks of establishing liability and maintaining a class action
through trial and appeal. Among other things, Co-Lead Counsel considered the
3
CASE 0:08-cv-04546-PAM-FLN Document 271
Filed 07/05/11 Page 4 of 9
strength of the evidence adduced by both sides, including the admissibility of such
evidence, the expert proof, the mixed success plaintiffs have achieved at trial in
similar cases, the applicable measure of damages, and defenses like statute of
limitations. Co-Lead Counsel’s assessment is based on extensive experience
litigating ERISA class actions involving investment funds and an extensive
investigation of the facts during the prosecution of this action. Co-Lead Counsel
reviewed the expert proof, the facts, and consulted with their loss expert. Co-Lead
Counsel reviewed settlements and case law from similar ERISA lawsuits. Plaintiffs
reviewed over two hundred thousand pages of documents and took the depositions
of multiple witnesses. Further, Co-Lead Counsel evaluated the value of the
Settlement in light of the risks of litigation, including statute of limitations and
merits defenses, prevailing trends in the case law, and the culpability of each of the
Defendants. Absent this Settlement, this case would likely continue to generate
disputed issues of law and fact.
16.
The cash value of the settlement compares favorably to other
settlements involving claims of imprudent and conflicted investment in high-cost
investment products, which have ranged from $1.72 million to $26 million. In the
one of the most recent of these cases, In re Nat. City Corp. Sec., Derivative &
ERISA Litig., No. 08-700000 (N.D. Ohio), in 2010 the plaintiffs settled proprietary
4
CASE 0:08-cv-04546-PAM-FLN Document 271
Filed 07/05/11 Page 5 of 9
mutual fund claims against National City Corp. for $1.72 million (4% of the total
settlement value of $43 million).
17.
Further, the $17.5 million recovery represents just over 19.5% of
claimed losses where performance of the subject funds was measured against the
performance of the Morningstar category for each subject fund, as calculated in the
rebuttal expert report of Plaintiffs’ expert Steve Pomerantz, PhD. Specifically, the
Morningstar benchmark consists of the performance of all mutual funds in the
relevant Morningstar peer group, i.e. the Morningstar mutual fund category (e.g.
domestic large company growth equity funds) in which Morningstar places each of
the subject funds. Morningstar’s database includes virtually every mutual fund
offered in the United States, so this benchmark is comprehensive. The performance
of each of the subject funds is compared to the average of the performance of the
funds in the Morningstar category, as Morningstar calculates this average.
18.
Defendants represented to me that no data other than address
information is available for approximately 30,000 potential Class Members.
Defendants represented to me that only end-of-year account balance data, that is,
no transactional data, is available for the years ending 2001 and 2002.
19.
The Plan of Allocation was developed after extensive dialogue about
the available data elements with an experienced claims administrator and
Defendants. Plaintiffs’ counsel and the experienced claims administrator reviewed
5
CASE 0:08-cv-04546-PAM-FLN Document 271
Filed 07/05/11 Page 6 of 9
numerous documents detailing the data elements and reviewed the data files. The
Plan of Allocation allocates settlement funds to participants based on the amount a
given participant invested in the Wells Funds during the Class Period on a
quarterly basis. Plaintiffs submit that this method fairly and reasonably allocates
settlement funds to those participants who invested in the Wells Funds during the
Class Period.
D.
Settlement Administration
20.
Since the Court preliminarily approved the Settlement, Co-Lead
counsel have worked closely with and monitored Gilardi & Co. LLC in:
(1) finalizing, formatting, and mailing the Class Notice; (2) establishing and
maintaining a website dedicated to the Settlement; (3) establishing and maintaining
and Interactive Voice Response system; (4) establishing and maintaining a live
Call Response Center; (5) and evaluating and testing the plan participant data to
confirm implementation of the Plan of Allocation.
F.
Work Performed by Bailey & Glasser LLP
21.
During the period from the inception of this case through May 31,
2011, Bailey & Glasser performed 2,792.30 hours of work in connection with the
litigation for which I seek payment. Based upon current hourly rates charged to my
firm’s clients in such matters, the total lodestar value of this time is $973,834.
Attached hereto as Exhibit A is a chart, which indicates the attorneys, paralegals
6
CASE 0:08-cv-04546-PAM-FLN Document 271
Filed 07/05/11 Page 7 of 9
and professional staff who worked on this litigation, their current hourly rates and
their respective lodestar values.
22.
The hourly rates utilized by my firm in computing its lodestar are at or
below its usual and customary hourly rates charged for such matters. No upward
adjustment in billing rates was made from similar matters, notwithstanding the
contingency and risk of the matters involved, the opposition encountered, the
preclusion of other employment, the delay in payment, or other factors present in
the case which would justify a higher rates of compensation.
23.
The time and services provided by my firm for which fees are sought
in the petition are reflected in contemporaneously maintained records of my firm.
All of the services performed by my firm in connection with this litigation were
reasonable and necessary in the prosecution of this case. No time is included in the
fee petition for work in connection with the fee and expense application or
accompanying documents, including this declaration.
24.
The time reported in Exhibit A hereto does not reflect work performed
since May 31, 2011, including work on: Plaintiffs’ Motion For Award Of
Attorneys’ Fees, Reimbursement Of Expenses, And Case Contribution Award For
Class Representative; Plaintiffs’ Motion For Final Approval Of Class Action
Settlement, Certification Of Settlement Class And Approval Of Plan Of
Allocation; and ongoing settlement implementation and administration.
7
CASE 0:08-cv-04546-PAM-FLN Document 271
25.
Filed 07/05/11 Page 8 of 9
My firm has expended or incurred costs and expenses totaling
$107,298.39 in connection with the prosecution of this litigation. All of the
expenses incurred by my firm for which reimbursement is sought were reasonable
and necessary in the prosecution of this case. Attached hereto as Exhibit B is a
chart which details the expenses incurred by my firm.
26.
The expenses paid by my firm for which reimbursement is sought are
reflected in the books and records of my firm. These books and records are
prepared from checks, bills and expense vouchers, which are regularly kept and
maintained by my firm and accurately reflect the expenses incurred.
27.
Attached as Exhibit C hereto is a true and correct of Theodore
Eisenberg & Geoffrey P. Miller, Attorneys Fees and Expenses in Class Action
Settlements: 1993-2008, 7 J. Emp. Leg. Studies 248 (2010).
28.
Attached as Exhibit D hereto is a table reflecting the aggregate
lodestar, expenses, and costs for all firms that worked on this matter and petition
for fees and reimbursement of such expenses and costs.
29.
Plaintiffs’ counsel moved the case expeditiously, and made every
effort to limit duplicative efforts and minimize the use of judicial resources. CoLead Counsel supervised the work of other Class Counsel and delegated work
where appropriate.
8
CASE 0:08-cv-04546-PAM-FLN Document 271
Filed 07/05/11 Page 9 of 9
CASE 0:08-cv-04546-PAM-FLN Document 271-1
Filed 07/05/11 Page 1 of 3
EXHIBIT A
CASE 0:08-cv-04546-PAM-FLN Document 271-1
Figas v. Wells Fargo Time Report
Bailey & Glasser, LLP
REPORTING PERIOD: 03/12/2009 - 05/31/2011
Attorney
Rate
Barrett, John W
Glasser, Brian A
Goldshaw, Leona Z
Hoard, Falnnery A.
Perrine, JB
Porter, Gregory Y
Robleto, Aurelius P
Williams, Natasha H
Williams, Shermela J
Hours
$550.00
$550.00
$375.00
$137.50
$550.00
$600.00
$215.00
$300.00
$215.00
1.80
1.50
50.50
126.80
56.30
966.00
0.50
679.70
92.50
$200.00
267.75
Attorney Totals:
2,243.35
Current
Lodestar
$990.00
$825.00
$18,937.50
$17,435.00
$30,965.00
$579,600.00
$107.50
$203,910.00
$19,887.50
$0.00
$53,550.00
$0.00
$0.00
$0.00
$926,207.50
Paralegal
Ford, Matthew J
Hatcher, Marc D
Lynch, Vicky L
Parsons, Karen L
Tanner, Tammie N
Wilson, Patricia A
$175.00
$65.00
$137.50
$125.00
$125.00
$125.00
Paralegal Totals:
2.80
345.75
12.70
0.80
19.50
23.00
404.55
$490.00
$22,473.75
$1,746.25
$100.00
$2,437.50
$2,875.00
$0.00
$30,122.50
128.10
$16,012.50
Professional Staff
Chapman, Melissa S
$125.00
Filed 07/05/11 Page 2 of 3
CASE 0:08-cv-04546-PAM-FLN Document 271-1
Clark, Patrick D
Gladwell, Matthew D
Kessinger, Michael E
Kiser, Lisa H
Lu, Jia Lucy
Professional Staff Totals:
TOTALS:
$50.00
$65.00
$50.00
$125.00
$125.00
3.00
1.60
3.00
8.30
0.40
$150.00
$104.00
$150.00
$1,037.50
$50.00
144.40
2,792.30
$17,504.00
$973,834.00
Filed 07/05/11 Page 3 of 3
CASE 0:08-cv-04546-PAM-FLN Document 271-2
Filed 07/05/11 Page 1 of 2
EXHIBIT B
CASE 0:08-cv-04546-PAM-FLN Document 271-2
Filed 07/05/11 Page 2 of 2
Figas v. Wells Fargo Expense Report
Bailey & Glasser, LLP
REPORTING PERIOD: 03/12/2009 - 05/31/2011
EXPENSE DESCRIPTION
Hotels, Meals, Transportation
Photocopying
Teleconferences
Postage, Courier & Overnight Mail
Filings, Depositions, and Service of Process
Research
Mediation
Experts & Consultants
Document Review Database User Fees
Electronic Discovery Services
TOTAL EXPENSES:
FINAL
$25,560.01
$12,224.46
$0.00
$3,582.36
$16,471.23
$1,651.19
$5,850.00
$29,075.83
$1,073.31
$11,810.00
$107,298.39
CASE 0:08-cv-04546-PAM-FLN Document 271-3
Filed 07/05/11 Page 1 of 35
EXHIBIT C
Journal of Empirical Legal Studies
Volume 7, Issue 2, 248–281, June 2010
Attorney Fees and Expenses in Class
Action Settlements: 1993–2008
jels_1178
248..281
Theodore Eisenberg and Geoffrey P. Miller*
We report on a comprehensive database of 18 years of available opinions (1993–2008,
inclusive) on settlements in class action and shareholder derivative cases in state and federal
courts. An earlier study, covering 1993–2002, revealed a remarkable relationship between
attorney fees and class recovery size: regardless of the methodology for calculating fees
ostensibly employed by the courts, the class recovery size was the overwhelmingly important
determinant of the fee. The present study, which nearly doubles the number of cases in the
database, confirms that relationship. Fees display the same relationship to class recoveries in
both data sets and neither fees nor recoveries materially increased over time. Although the
size of the class recovery dwarfs other influences, significant associations exist between the
fee amount and both the fee method used and the riskiness of the case. We found no robust
evidence of significant differences between federal and state courts. The strong association
between fee and class recovery persists in cases with recoveries of $100 million or more, as
do the significant associations between fee level and fee method and risk. Fees were not
significantly affected by the existence of a settlement class, the presence of objectors, or opt
outs from the class. Courts granted the requested fee in over 70 percent of the cases, with the
Second Circuit granting the requested amount least often. In cases denying the requested
fee, the mean fee was 68 percent of the requested amount. Fees and costs exhibit scale effects
with the percent of each decreasing as the class recovery amount increased. Costs are
strongly associated with hours expended on the case.
I. Introduction and Background
Class actions and their close cousins, shareholder derivative lawsuits, are vital mechanisms
by which the legal system copes with mass harms—similar injuries to a large number of
people. Long a feature of the U.S. landscape, class actions have recently begun to spread
across the world.1
*Address correspondence to Theodore Eisenberg, Cornell Law School, Myron Taylor Hall, Ithaca, NY 14853; email
[email protected]. Eisenberg is Henry Allen Mark Professor of Law & Adjunct Professor of
Statistical Sciences, Cornell Law School; Miller is Stuyvesant P. Comfort Professor of Law, New York University Law
School.
We have from time to time acted as expert witnesses or consultants on the issue of attorney fees in class action cases.
We thank participants at the International Conference on Empirical Legal Studies, Tel Aviv University and Kevin
Clermont for comments, and Thomas P. Eisenberg, Nicholas Germain, and Erica Miller for excellent research
assistance.
1
See, e.g., Samuel Issacharoff & Geoffrey Miller, Will Aggregate Litigation Come to Europe? 62 Vanderbilt L. Rev. 179
(2009).
248
Attorney Fees and Expenses in Class Action Settlements
249
A crucial issue for all class and derivative litigation is the matter of compensating
counsel. Unless class counsel are adequately compensated, class and derivative litigation
will be undersupplied in the legal market. On the other hand, if class action attorneys are
overcompensated they may bring too many of these lawsuits and receive an excessive share
of the settlement value in cases that are brought.
In normal litigation the attorney compensation can be set by private agreement
between lawyer and client, but private agreement does not work in the case of class action
and derivative litigation: in these contexts there is no client capable of negotiating with the
attorney. In class actions, the clients are disorganized and, prior to notice of certification,
usually do not even know that a lawsuit has been filed on their behalf. Except perhaps
in the case of private securities litigation, the representative plaintiff cannot effectively
negotiate with the attorneys over fees and costs: he or she has only a minority stake in the
matter (in consumer cases, often a miniscule one), is often unsophisticated, and may be
strongly influenced by the attorney’s advice. In derivative cases, the ostensible client—the
corporation—is usually managed by defendants in the lawsuits and therefore is unwilling to
pay any fee to incentivize an attorney to bring the lawsuit. In both settings, therefore, the
court must independently determine the appropriate attorney fee award.
Where can the court look for information on this question? No private stakeholder is
a reliable source of information. The class attorneys’ suggested fee is not impartial since, at
the time of the settlement, their interest is to seek the largest possible award. Nor can the
court rely on the defendant’s recommendations. Settlement agreements often contain
“clear-sailing” clauses under which defendants agree not to object to a fee request up to a
certain amount. However, clear-sailing agreements are of little value when the defendant is
not paying the fee—indeed, it is not clear that the defendant has any “skin in the game”
when the fee will be paid out of the class recovery. Even when the defendant does pay the
fee—as in the typical consumer class action—the clear-sailing agreement has limited probative value unless the parties have deferred fee negotiations until after achieving a definite
agreement on the merits. Otherwise, there is reason for concern that the defendant may
have agreed to pay class counsel a premium in exchange for reductions in the amount
going to the class. The reaction of the class to the settlement and proposed fee is also not
a reliable guide. Empirical research suggests that the vast majority of class members are
rationally indifferent to class action settlements; their failure to opt out of a settlement does
not indicate approval of the proposed fee.2 Nor can the court rely on objectors to the
settlement. Few objectors appear at class action fairness hearings,3 and those who show up
may not object to the fee. Even if objectors do complain about the fee, they have only a
small amount at stake and thus lack the incentive to thoroughly research the fee question.
Lacking reliable guidance from class counsel, the defendant, class members, or
objectors, the judge has no alternative but to make an independent investigation. Where,
however, should the judge look for information pertinent to the task of setting fees? Among
2
See Theodore Eisenberg & Geoffrey Miller, The Role of Opt-Outs and Objectors in Class Action Litigation:
Theoretical and Empirical Issues, 57 Vanderbilt L. Rev. 1529 (2004).
3
Id.
250
Eisenberg and Miller
the factors that judges typically examine in setting fees, the most important is probably that
of “awards in similar cases.”4 Precedents of fees awarded by other courts should, in theory,
be relatively reliable guides because the prior courts were presumably exercising the
requisite rigorous scrutiny and judicial independence when they set the fees, and because
class counsel will have presumably considered the relevant case law in calculating whether
to take on the litigation in the case at bar. But even this approach is not problem-free. In
the typical class action settlement, the fee is taken from the common fund generated on
behalf of the class. No party, in this case, has the right incentives to vigorously research the
precedents running contrary to counsel’s fee request. Unless the judge does his or her own
research, he or she may not have access to unbiased information about fees in similar cases.
The present empirical study is intended to assist courts in the task of fee setting—and
counsel in the task of identifying appropriate fees to request—by supplying an account of
compensation practices in courts across the country, studied over an extended period of
time, and conducted in an academic setting outside the fires of litigation. The information
provided in this article is the best data on “awards in similar cases” from cases with available
opinions. If used effectively, our study may be of material assistance in further rationalizing
the compensation of class counsel.
We find, regardless of the methodology for calculating fees ostensibly employed by
the courts, that the overwhelmingly important determinant of the fee is simply the size of
the recovery obtained by the class. Fees display the same relationship to class recoveries in
data sets spanning both 1993 to 2002 and 2003 to 2008. Neither fees nor recoveries
materially increased over time. Although the size of the class recovery dwarfs other influences, significant associations exist between the fee amount and both the fee method used
and the riskiness of the case. We found no robust evidence of significant differences
between federal and state courts. The strong association between fee and class recovery
persists in cases with recoveries of $100 million or more, as do the significant associations
between fee level and fee method and risk.
Courts granted the requested fee in over 70 percent of the cases, with courts in the
Second Circuit granting the requested amount least often. In cases in which the requested
fee was not awarded, the mean fee was 68 percent of the requested amount. Costs are
modest, with both means and median costs comprising less than 3 percent of the class
recovery. Fees and costs both exhibit scale effects, with the percent of each decreasing as
the class recovery amount increased. Costs are strongly associated with hours expended on
the case. Fees were not significantly affected by the existence of a settlement class, the
presence of objectors, or opt outs from the class.
Section II of this article describes the data gathering and coding. Section III presents
the relation between fee amount and class recovery and fee percent and class recovery over
time, and by locale (including state and federal courts), and by case category. It also explores
the relation between the fee and risk, settlement class, and the presence of opt outs and
objectors. Section IV assesses the relation between the fee and the method used to compute
4
See, e.g., Thompson v. Connick, 553 F.3d 836 (5th Cir. 2008); Gunter v. Ridgewood Energy Corp., 223 F.3d 190, 195
n.1 (3d Cir. 2000); Spell v. McDaniel, 824 F.2d 1380, 1402 n.18 (4th Cir. 1987).
Attorney Fees and Expenses in Class Action Settlements
251
the fee, as well as the pattern of multipliers used in connection with lodestar fees. Section V
reports on the pattern of costs and expenses. Section VI presents multivariate results that
confirm our core findings. Section VII discusses the results and Section VIII concludes.
II. Methodology
The results reported here were gathered in two segments. The first segment covered cases
reported from 1993 to 2002 and its results are reported in previous work.5 That study also
described the motivation for the variables used in this study. The basis for believing that the
variables studied might relate to fee awards is reasonably self-evident and need not be
repeated here.
As previously reported, we searched in the WESTLAW™ “AllCases” database using the
search “settlement & ‘class action’ & attorney! w/2 fee! & date(=[1993–2002])”. This search’s
results were checked against a search of the LEXIS™ “Mega” database using equivalent
search terms. We also compiled lists of citations in the cases found by these search requests
and included any additional cases meeting the basic search criteria. We further checked the
list against the CCH™ Federal Securities and Trade Regulation Reporters. Once cases had
been identified by this method, we sometimes gathered additional information about case
characteristics from other sources—for example, information on the Internet or docket
entries in the U.S. Courts PACER system. The second segment covered the period 2003 to
2008, inclusive. We replicated the WESTLAW search (expanded to include the term
“derivative” to make doubly sure we picked up all derivative settlements) and checked the
results, in many cases, against information available on the Internet or in PACER.
The present study focuses solely on common fund cases and does not assess cases in
which a court applied a statutory fee-shifting statute to assess fees. Our searches and
exclusion criteria yielded recovery and fee information for a total sample of 689 common
fund cases. Relatively more cases come from the later period (301 cases for six years from
2003 to 2008 compared with 388 cases for the preceding 10 years). This was principally due
to the significantly expanded coverage of the PACER system in the later period, and also to
our inclusion of cases in which fee-shifting statutes could have been applied but the fee was
not determined by formally applying the fee-shifting statute.
We used the following conventions for coding in both searches. If the court stated a
range of value (e.g., for the amount of class recovery), we used the midpoint. If there was
no better estimate available but a maximum recovery value could be ascertained, we used
the maximum possible recovery. If the court estimated the relief at “over” or “more than”
a sum, the sum that was the minimum was used. Where the settlement amount included
post- or prejudgment interest, we included that in the amount of the settlement. We
collected only the number of attorney hours, thus excluding, where possible, the (usually
minor) hours reported for paralegals or law clerks.
5
For our prior empirical study of class action attorney fees, see Theodore Eisenberg & Geoffrey P. Miller, Attorney
Fees in Class Action Settlements: An Empirical Study, 1 J. Empirical Legal Stud. 27 (2004).
252
Eisenberg and Miller
To code the court’s fee calculation method, we tracked whether the court engaged in
a lodestar calculation and, if so, the purity of the lodestar approach. This generated the
following fee method categories: (1) percentage method cases in which no lodestar calculation exists, (2) cases in which both the lodestar calculation and the percentage approach
were used (usually with the lodestar being employed as a “cross-check” on the percentage
fee), and (3) pure lodestar cases in which the lodestar method was the exclusive method
used. If the lodestar amount was not specified, but could be estimated with reasonable
accuracy, we included it. We used plaintiffs’ own estimates of their lodestar only when these
estimates were not contested by the court. In some cases, the court simply reported a fee
without explaining its methodology; these we recorded as missing or as “negotiated” if the
approved fee was the one negotiated by the parties.
The coding of variables related to fee shifting was somewhat subtle. Many class action
cases are brought under numerous claims for relief, some of which authorize the court to
award fees to the prevailing plaintiff or prevailing party. When these cases settle, the courts
often set fees without reference to the fee-shifting statute. Even when fee-shifting statutes
are potentially available, the fee is often awarded out of the class recovery. Our “fee-shifting”
variable codes whether the fee could have been calculated under a fee-shifting statute
had the case progressed to a litigated judgment, regardless of whether the court
actually invoked the fee-shifting statute as a basis for awarding the fee. For the later cases
(2003–2008), we kept track of whether the court had actually used the fee-shifting statute
as a basis for awarding the fee. In that period, a fee-shifting statute was available in 177 cases
but was used as the basis for awarding the fee in only 21 cases, 11.9 percent. We included
as common fund cases the 156 cases in which fee-shifting statutes were available but were
not used. Preliminary regression models indicated no significant difference in fee awards
between these cases and “purer” common fund cases.
For many other variables, coding was reasonably straightforward. In employment
discrimination and civil rights cases, two prominent categories of fee-shifting statute cases,
the amount of the relief to the class, as expected, often was difficult to quantify because an
important element of relief in such cases was often injunctive. For civil rights cases involving
only injunctive relief, the cost to the defendant was used as a measure of the value of the
relief for the class when this was available. In some fee-shifting cases, the court awarded
attorney fees but it was impossible to estimate the amount of class damages. These fee and
recovery coding conventions led to usable values for the fee amount and the client recovery,
two of our core variables, in the 689 cases studied here.
We also coded cases for risk. Where the court addressed the question of risk, we
coded according to our best estimate of the court’s evaluation. In many cases, however, the
court did not explicitly address the risk of the litigation. Coding therefore depended on
assuming that risk was not prominent in cases in which courts did not mention it. We
divided the cases into three risk categories. If nothing was said about risk or if the court’s
discussion suggested a normal degree of risk, the case was coded as being medium risk. If
the court affirmatively indicated the existence of substantial risk, or if exceptional risk was
evident from the facts or procedural history of the case, we coded the case as having high
risk. If the court indicated or the facts otherwise suggested that the case was very likely to
generate a substantial recovery for the class at the time it was brought (e.g., if the case grew
Attorney Fees and Expenses in Class Action Settlements
253
out of a prior government prosecution that had resulted in fines or convictions), we coded
the case as low risk.
As in our earlier work, two caveats about using published opinions are in order.
First, our data include only opinions that were published in some readily available
form. Obviously, therefore, we have not included the full universe of cases in our data set.
Although published opinions are not necessarily representative of the universe of all cases,
they can lead to important insights. For judges seeking to inform their fee decisions with
knowledge of other cases, published opinions are the prime source of data. Further, the
present study expands on the published opinion data by delving into unpublished materials
available on PACER when these could supply information missing from the published case
reports.
A second caveat about the published opinion data is that this methodology overweights federal cases. Opinions of state trial court judges are published less frequently than
opinions of federal district courts; and since fee awards are typically reported in the court
of first instance, we found many more federal than state opinions responsive to our search
request. Further, the PACER system allowed us to “dig” for more information in the case of
federal opinions. There is no state analog to PACER, and therefore we could only rarely
discover information about fees and related issues when a state opinion on a class action or
derivative case failed to report the necessary data.
III. Bivariate Results: Fee Amount and Fee Percent
We first examine bivariate results—that is, the relation between either the fee amount or
the fee percent and one of the other variables coded in our data. We outline the persistent
regular relationship between fees and recovery in both data sets (1993–2002 and 2003–
2008). We then examine the pattern of fees across other dimensions such as time, locale,
case category, risk, settlement class status, and the presence of opt outs and objectors. All
amounts are in 2008 inflation-adjusted dollars.
A. The Persistent Relation Between Fee and Recovery
The relation between fee amount and class recovery has remained consistent over time.
Figure 1 shows scatterplots of the fee amount and class recovery for each of the two time
periods (Figures 1a and 1b), for the time periods combined (Figure 1c), and for cases with
recoveries greater than or equal to $100 million (Figure 1d). The scales have been transformed into log10 units to address the bunching of cases at the lower end of the recovery
scale that would occur in a linear dollar scale. Units of log10 can easily be interpreted
because the log10 scale is simply based on powers of 10 (e.g., a value of 9 on a log10 scale
is equal to $1 billion, or one followed by nine zeros).
Figures 1a and 1b show that the pattern is virtually unchanged over time. The
associations between fee and recovery are striking and large. The linear correlation
between fee and recovery exceeds 0.94 for each time period and the slope of the relationships appears constant for the two time periods. In a regression model with a dummy
254
Eisenberg and Miller
Figure 1: Fees as a function of recovery.
4
4
5
5
Fee (log 10)
8
7
6
Fee (log 10)
6
7
8
9
b. 2003-2008
9
a. 1993-2002
4
5
6
7
8
Recovery (log 10)
9
10
4
6
7
8
Recovery (log 10)
9
10
4
6.5
7
5
Fee (log 10)
6
7
8
Fee (log 10)
7.5 8 8.5
9
d. Recoveries of $100 Million or More
9
c. Time Periods Combined
5
4
5
6
7
8
Recovery (log 10)
9
10
8
8.5
9
9.5
Recovery (log 10)
10
variable for time period and an interaction term consisting of the product of the time
period dummy variable and the class recovery size, one cannot reject the hypothesis that the
dummy variable and the interaction term coefficients are jointly zero, thus confirming the
consistency of the pattern. The relation between fees and class recoveries is also observed
when the data are combined, as shown in Figure 1c. In both the separate and combined
data sets, the size of the class recovery swamps all other influences on the size of the fee, as
shown in regression models in Section VI of this article.6 Figure 1d, which is limited to large
cases, also shows a strong linear relation between fee and recovery. For these 109 cases, the
linear correlation coefficient is 0.77 (p < 0.0001). The decreased slope for the high end of
case recoveries is consistent with the scaling effect discussed in Section III.B.4 of this article.
Figure 2 further supports the primacy of the recovery as the explanation for the fee
award. For ease of comparison, Figure 2a reproduces the combined time period data from
Figure 1c. Figures 2b and 2c show that neither the hours claimed nor the age of a case are
as strongly associated with the fee amount as is the class recovery amount.
With six additional years of data, we can extend our prior analysis of the pattern of
fees and class recoveries over time. One notable earlier finding was the absence of
6
Figure 1b shows the later time period with more low-recovery cases (less than $100,000). This is likely attributable to
our inclusion in the non-fee-shifting sample cases in which a fee-shifting statute existed but was not used, as well as
to the information about smaller cases now available on PACER See Section II.
255
Attorney Fees and Expenses in Class Action Settlements
Fee as a function of recovery, hours, and age, 2003–2008.
Figure 2:
b. Fee as a Function of Hours
4
4
5
5
Fee (log 10)
8
6
7
Fee (log 10)
8
6
7
9
9
a. Fee as a Function of Recovery
4
5
6
7
8
Recovery (log 10)
9
10
1
2
3
4
Hours (log 10)
5
6
4
5
Fee (log 10)
6
7
8
9
c. Fee as a Function of Age
0
1
2
3
4 5 6 7 8
Age of case in years
9
10
increases in class recoveries or fees over time,7 a finding that heartened opponents of
attempts to reform the class action system via the Class Action Fairness Act of 2005
(CAFA)8 and prompted a response from a noted Yale Law School professor.9 The newer
data reveal that the level of both class recoveries and attorney fees has not varied substantially over time. As Figure 3 shows, these amounts have shown no distinct time trend
for most of 16 years. Inflation-adjusted recoveries and fees through 2007 were at levels
not significantly different from levels in 1993 and in fact are lower in inflation-adjusted
dollars. In 2008, a noticeable drop in mean and median recoveries and fees occurred.
The difference in class recovery medians between 2008 and all earlier years combined
is statistically significant at p = 0.002, and the difference in fees between 2008 and
earlier years is significant at p = 0.0003. The difference in the median ratio of fee to
recovery (ratio of the logs) did not significantly differ between 2008 and earlier years
7
Eisenberg & Miller, supra note 5.
8
Class Action Fairness Act, Pub. L. No. 109-2, 119 Stat. 4 (2005). See 149 Cong. Rec. S1299902 (Oct. 22, 2003)
(remarks of Senator Feingold); 151 Cong. Rec. S1086-02 (Feb. 8, 2005) (remarks of Senator Feingold).
9
George L. Priest, What We Know and What We Don’t Know About Modern Class Actions: A Review of the
Eisenberg-Miller Study (Feb. 2005, Manhattan Inst.).
256
Eisenberg and Miller
6
Amount (log(10)
6.5
7
7.5
Figure 3: Class recovery and attorney fee over time, mean and median.
1993
1995
1997
1999
Mean recovery
Mean fee
2001
Year
2003
2005
2007
Median recovery
Median fee
Sources: Westlaw, LexisNexis, PACER.
(p = 0.517).10 We therefore do not view the changes in 2008 as necessarily indicating
anything significant about longer-term fee patterns.
B. Locales, Case Categories, and Other Factors
Table 1 shows the distribution of cases by locale. It combines all 25 federal appellate
opinions into one category, “Appeal,” and all 75 state cases into one category, “State.”
Federal district court cases dominate the sample, accounting for approximately 85 percent
of the cases. The federal class action cases cluster by districts. The Southern District of New
York accounted for 103 of 589 federal district court cases, and the Eastern District of
Pennsylvania accounted for 70 such cases. They are the only two districts to account for 10
percent or more of the federal trial court portion of the sample and together accounted for
25 percent of all cases in the sample. Two other districts accounted for more than 5 percent
of the federal court portion of the sample: the Northern District of California had 47 cases
10
This pattern of average and median fees in more recent years may be partly due to the increase in smaller cases that
we were able to code by accessing the PACER database and to inclusion in the later period of cases in which
fee-shifting statutes were theoretically available but not used to set the fee. We investigated whether a changing mix
of cases explained the pattern by separately assessing, for the two time periods, cases with recoveries greater than or
equal to $5 million and recoveries less than $5 million. For both recovery size groups, the difference in recovery across
the two time periods was not statistically significantly different. The difference over time in medians for cases with
recoveries greater than or equal to $5 million was significant at p = 0.590; for cases with recoveries less than $5 million,
the difference in medians was significant at p = 0.749. But the smaller cases were more prevalent in the later period.
Cases with recoveries of less than $5 million comprised 33 percent of the later period cases compared to 24 percent
of the earlier period cases, a difference statistically significant at p = 0.022. Thus the decreasing recovery amount over
time is attributable to a different mix of cases in our sample, and not to differences in treatment of similar cases over
time. Thus, throughout more than a decade of civil litigation reform efforts based on claims of increasing awards and
fees, the pattern in available opinions, which tend to include the largest cases, has not significantly changed.
Attorney Fees and Expenses in Class Action Settlements
257
Table 1: Frequency of Class Action Fee Opinions, by
Court, 1993–2008
Locale
Other
SDNY
State
EDPA
NDCA
DNJ
NDIL
EDNY
APPEAL
DDC
EDMI
DMN
EDLA
MDFL
EDCA
CDCA
DMA
SDCA
Total
N
% of Cases
161
103
75
70
47
35
29
26
25
18
17
16
13
12
12
10
10
10
689
23.37
14.95
10.89
10.16
6.82
5.08
4.21
3.77
3.63
2.61
2.47
2.32
1.89
1.74
1.74
1.45
1.45
1.45
100.00
Sources: Westlaw, LexisNexis, PACER.
and the District of New Jersey 35 cases. The Northern District of Illinois had just under 5
percent of the federal district cases. Together, these five districts accounted for over 50
percent of the federal district court opinions.
These results suggest that class action litigation in the federal system is heavily
concentrated in a few jurisdictions. Of the 94 federal district courts, nearly half of all
class actions in our data set occurred in five courts. Even adjusting for population (the
popular class action districts also tend to be ones with large populations), the concentration ratio remains striking. We take this as evidence that certain jurisdictions offer
advantages for class action litigation, either in the form of experienced judges who can
handle these cases in a fair and expeditious manner, faster dockets, a sense on the part
of plaintiffs’ attorneys that the courts in these districts are reasonably well-inclined toward
class action litigation, or a concentration of class action attorneys specializing in the
practice.
We also investigated whether different federal courts appear to specialize in different
types of cases. Table 2 shows the breakdown of the four largest case types, plus the residual
case type, “Other,” in the federal district courts with the largest number of class action
settlements in our data (those listed in Table 1). For each case category, one column shows
the percent of cases in each district and a second column shows the number of cases. For
example, the Southern District of New York accounted for 70 of 253 securities cases, 28
percent of that category. Thus, the Southern District of New York tends to dominate
securities class actions, whereas the Eastern District of Pennsylvania is the leader in antitrust
258
Table 2:
Eisenberg and Miller
Class Action Case Categories by Locale, 1993–2008
Antitrust
Consumer
Employment
Securities
Other
Total
District
%
N
%
N
%
N
%
N
%
N
%
N
Other
SDNY
EDPA
NDCA
DNJ
NDIL
EDNY
DDC
EDMI
DMN
EDLA
EDCA
MDFL
CDCA
DMA
SDCA
Total
16
7
20
7
8
10
5
16
3
5
0
0
2
0
2
0
100
10
4
12
4
5
6
3
10
2
3
0
0
1
0
1
0
61
35
1
14
7
7
7
7
1
0
3
3
2
2
2
5
2
100
34
1
13
7
7
7
7
1
0
3
3
2
2
2
5
2
96
30
10
2
14
2
4
2
0
0
4
4
16
2
6
0
4
100
15
5
1
7
1
2
1
0
0
2
2
8
1
3
0
2
50
21
28
14
8
6
5
6
1
2
2
2
0
3
1
1
2
100
52
70
36
19
15
12
14
2
6
6
4
0
7
3
2
5
253
38
18
6
8
5
2
1
4
7
2
3
2
1
2
2
1
100
49
23
8
10
7
2
1
5
9
2
4
2
1
2
2
1
128
27
18
12
8
6
5
4
3
3
3
2
2
2
2
2
2
100
160
103
70
47
35
29
26
18
17
16
13
12
12
10
10
10
588
Note: Table includes only federal district court cases.
Sources: Westlaw, LexisNexis, PACER.
and consumer cases. The Northern and Eastern Districts of California are the leaders in
employment cases. Table 2 shows that the SDNY’s dominance is almost completely attributable to its large role in securities cases.
1. Fees Across Locales
Table 3 shows summary statistics about fees and recoveries by locale. The mean fee to
recovery ratio was 0.23, or 23 percent of the class award, but this percent varies by recovery
size, as shown in Figure 5 and Table 7. The mean fee was $12.8 million and the median
was $2.3 million. The mean class recovery was $116.0 million and the median was $12.5
million.
Some bankruptcy case fee studies11 and other studies of case outcomes show notable
interdistrict variation. Like these studies, we find significant variation across federal districts. For the 16 federal districts with at least 10 cases with necessary information in the
11
See Lynn M. LoPucki & Joseph W. Doherty, The Determinants of Professional Fees in Large Bankruptcy Reorganization Cases, 1 J. Empirical Legal Stud. 111, 114, 136 (2004) (showing significant fee request reduction variation
across Delaware and the Southern District of New York); Stephen J. Lubben, Corporate Reorganization and Professional Fees, 82 Am. Bankr. L.J. 82 (2008) (showing some significant Delaware and Southern District of New York
effects). But see Lynn M. LoPucki & Joseph W. Doherty, Professional Overcharging in Large Bankruptcy Reorganization Cases, 5 J. Empirical Legal Stud. 983, 1010 (2008) (tbl. 5, showing insignificant Delaware and Southern District
of New York effects).
Attorney Fees and Expenses in Class Action Settlements
Table 3:
APPEAL
CDCA
DDC
DMA
DMN
DNJ
EDCA
EDLA
EDMI
EDNY
EDPA
MDFL
NDCA
NDIL
Other
SDCA
SDNY
State
Total
259
Fee and Class Recoveries, by Locale, 1993–2008
Mean
Ratio
Median
Ratio
Mean
Fee
Median
Fee
Mean
Gross
Recovery
Median
Gross
Recovery
Number
of Cases
0.19
0.25
0.22
0.16
0.25
0.21
0.26
0.26
0.22
0.32
0.28
0.21
0.26
0.24
0.24
0.26
0.22
0.20
0.23
0.20
0.25
0.22
0.15
0.27
0.22
0.25
0.23
0.20
0.25
0.29
0.21
0.25
0.24
0.25
0.25
0.22
0.20
0.24
5.89
3.93
16.69
11.50
8.77
32.26
0.40
7.79
6.56
11.33
12.66
3.64
4.44
12.14
20.47
4.66
11.54
5.94
12.84
2.15
2.75
2.14
7.00
4.75
7.80
0.12
1.77
1.34
2.38
1.51
2.66
2.00
2.75
3.25
1.14
2.13
2.00
2.33
57.86
16.30
134.79
118.55
40.99
503.42
3.26
43.53
34.80
142.42
75.79
18.23
24.06
51.45
154.98
63.12
127.97
61.61
116.01
13.37
19.90
13.00
81.00
14.25
36.88
0.54
8.61
11.75
9.03
6.88
14.87
9.25
12.50
16.38
4.90
12.85
12.32
12.50
25
10
18
10
16
35
12
13
17
26
70
12
47
29
161
10
103
75
689
Note: Dollar amounts are in millions of 2008 dollars.
Sources: Westlaw, LexisNexis, PACER.
sample (including “Other” as a district), a test of the hypothesis that the median ratio of fee
to class recovery does not differ significantly can be rejected, with a Mann-Whitney test
yielding a significance level of p = 0.014. Given the strong association between fee and class
recovery, we explored these initial interdistrict differences by accounting for recovery level
and case category in regression models. The district dummy variables were collectively
statistically significant (p = 0.035), indicating that when the size of class recoveries and case
categories are accounted for, one can reject the hypothesis of no statistically significant
interdistrict differences. Table 3’s first two numerical columns suggest that interdistrict
differences can be nontrivial but are not dramatic. With one exception, the District of
Massachusetts, the median ratio always ranges from 0.20 to 0.29.
In federal courts, attorney fee doctrine is dictated at the circuit court level if
the appeals court has issued an opinion on point (the Supreme Court has never offered
definitive guidance on this issue). The Ninth Circuit has a 25 percent benchmark fee in
common fund cases but allows departures based on individual case factors,12 and the
Eleventh Circuit has indicated that its district courts view 25 percent as a benchmark.13
12
E.g., Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1376 (9th Cir. 1993).
13
Camden I Condo. Ass’n v. Dunkle, 946 F.2d 768, 775 (11th Cir. 1991).
260
Table 4:
Eisenberg and Miller
Fee and Class Recoveries, by Federal Circuit, 1993–2008
Circuit
Mean
Ratio
Median
Ratio
Mean
Fee
Median
Fee
Mean
Gross
Recovery
Median
Gross
Recovery
Number
of Cases
1st
2nd
3rd
4th
5th
6th
7th
8th
9th
10th
11th
DC
Total
0.20
0.23
0.26
0.20
0.24
0.23
0.26
0.25
0.25
0.22
0.21
0.21
0.24
0.20
0.24
0.26
0.21
0.23
0.23
0.24
0.30
0.25
0.23
0.22
0.22
0.25
31.83
10.58
17.38
29.27
42.39
10.42
8.79
11.21
4.53
12.46
17.35
15.17
13.74
3.50
2.13
3.00
1.89
2.63
3.33
2.15
4.18
1.80
7.42
4.22
1.94
2.40
227.41
119.06
193.50
320.07
368.34
94.65
38.37
68.35
32.97
63.96
87.09
122.04
123.12
19.32
11.63
13.38
13.55
15.65
15.50
10.07
14.70
9.50
32.00
26.85
11.00
12.50
21
145
120
8
26
42
42
29
101
22
34
20
610
Note: Three Federal Circuit cases and all state court cases are omitted. Dollar amounts are in millions of 2008 dollars.
Sources: Westlaw, LexisNexis, PACER.
The Eleventh and D.C. Circuits mandate the percentage methodexclusively, while other
circuits allow percentage or lodestar methods.14 The Second Circuit’s Goldberger decision
rejected the use of benchmarks and mandated a fact-specific inquiry.15
Table 4 explores intercircuit variation, showing summary statistics about fees and
recoveries by circuit, and excludes state court cases. The median and mean fee to recovery
ratios were 0.24 and 0.25, respectively. In regression models of the ratio, circuit dummy
variables were not collectively statistically significant (p = 0.124), indicating that when the
size of class recoveries and case categories are accounted for, one cannot reject the
hypothesis of no statistically significant intercircuit differences. We also explored differences between particular circuits and all other circuits based on announced benchmarks
and methods. In regression models using dummy variables for individual circuits, and
controlling for case category and recovery size, none of the individual circuit effects were
statistically significant. Nor were differences within the Second Circuit significantly different pre- and post-Goldberger.16
14
Swedish Hosp. Corp. v. Shalala, 1 F.3d 1261, 1271 (D.C. Cir. 1993); Camden I Condo. Ass’n v. Dunkle, 946 F.2d 768,
774 (11th Cir. 1991).
15
Goldberger v. Integrated Res., Inc., 209 F.3d 43 (2d Cir. 2000).
16
Nor was the variance in fee percent significantly different between the Ninth or Eleventh Circuits and other circuits.
For a more in-depth exploration of the effect (or lack of effect) of the Goldberger decision, see Theodore Eisenberg,
Geoffrey Miller & Michael Perino, A New Look at Judicial Impact: Attorneys’ Fees in Securities Class Actions After
Goldberger v. Integrated Resources, Inc., 29 Wash. U. J. Law & Policy 5 (2009).
Attorney Fees and Expenses in Class Action Settlements
261
2. State-Federal Differences
We hypothesized that the fee percent would tend to be higher in class actions in state court
than in federal court.17 Beliefs in differences in how federal and state courts process class
actions were cited as reasons for enactment of CAFA.18 The Congress that enacted CAFA
intended to route interstate class actions to federal court, “with the expressed intent of
defeating the plaintiffs’ bar’s manipulation of state courts.”19 President George W. Bush
declared that it “marks a critical step toward ending the lawsuit culture in our country.”20
Empirical support for CAFA was almost entirely lacking, however, with both Federal Judicial
Center (FJC) research21 and our own prior work22 suggesting little in the way of significant
state-federal defferences.
Table 3 shows that the mean fee to class recovery ratio for state court cases
was 0.20, lower than the overall mean ratio of 0.24. Regression models of the fee (log 10)
or the ratio (of logs) as a function of the case category and the class recovery
size indicate that the federal-state difference was sometimes statistically significant in
the direction suggested by Table 3—namely, that state courts award lower percentage
fees.23 The direction of the effect is surprising if one believes federal courts are less
receptive to class actions than are state courts. A lower fee to recovery ratio suggests
somewhat less encouragement of class action activity by state courts compared to federal
courts.
3. Case Categories
Table 5 summarizes fees, recoveries, and their ratios by case categories. Mean fees ranged
from 11 percent of the class recovery in tax cases to 27 percent in employment cases. In the
17
Eisenberg & Miller, supra note 5.
18
Pub. L. No. 109-2, 119 Stat. 4 (2005) (codified in scattered sections of 28 U.S.C.). See generally Kevin M. Clermont
& Theodore Eisenberg, CAFA Judicata: A Tale of Waste and Politics, 156 U. Pa. L. Rev. 1553 (2008); Georgene M.
Vairo, Class Action Fairness Act of 2005 (2005).
19
Clermont & Eisenberg, supra note 18, at 1554–55.
20
Remarks on Signing the Class Action Fairness Act of 2005, 41 Weekly Comp. Pres. Doc. 265, 265 (Feb. 18, 2005); see
also Edward A. Purcell, Jr., The Class Action Fairness Act in Perspective: The Old and the New in Federal Jurisdictional Reform, 156 U. Pa. L. Rev. 1823 (2008) (stressing partisan support for CAFA).
21
Thomas E. Willging & Shannon R. Wheatman, Attorney Choice of Forum in Class Action Litigation: What Difference Does it Make? 81 Notre Dame L. Rev. 591, 645, 652–54 (2006) (finding insignificant differences in state court
and federal court treatment of class actions, and observing that “[a]ttorney perceptions of judicial predispositions
toward their clients’ interests show little or no relationship to the judicial rulings in the surveyed [state and federal
class action] cases”). See also Section VII.
22
Eisenberg & Miller, supra note 5.
23
The state court effect was significant in multilevel models with a random intercept for case category. The effect was
insignificant in models with dummy variables for case category.
262
Table 5:
Eisenberg and Miller
Fee and Class Recoveries, by Case Category, 1993–2008
Antitrust
Civil rights
Consumer
Corporate
Employment
ERISA
Securities
Tax refund/tax
Tort
Other
Total
Mean
Ratio
Median
Ratio
Mean
Fee
Median
Fee
Mean
Gross
Recovery
Median
Gross
Recovery
Number
of Cases
0.22
0.24
0.25
0.21
0.27
0.23
0.23
0.11
0.21
0.23
0.23
0.23
0.23
0.20
0.19
0.25
0.25
0.25
0.06
0.20
0.25
0.24
21.02
4.10
10.04
3.35
2.43
6.61
14.78
12.96
30.15
13.59
12.84
9.15
1.52
1.70
1.12
0.75
3.46
2.52
5.50
6.33
2.00
2.33
163.48
16.53
128.42
16.51
12.28
29.54
141.96
188.01
254.60
61.86
116.01
39.36
7.48
9.33
9.86
3.00
14.00
12.50
60.07
25.86
10.75
12.50
71
18
125
30
55
43
268
8
29
42
689
Note: Dollar amounts are in millions of 2008 dollars.
Sources: Westlaw, LexisNexis, PACER.
Table 6:
Frequency of Case Categories, by Time Period
Non-Fee-Shifting Cases
1993–2002
Antitrust
Civil rights
Consumer
Corporate
Employment
ERISA
Securities
Tax refund/tax
Tort
Other
Total
2003–2008
N
% of Cases in Period
N
% of Cases in Period
36
2
52
15
7
7
142
6
17
19
303
11.9
0.7
17.2
5.0
2.3
2.3
46.9
2.0
5.6
6.3
100
35
16
73
15
48
36
126
2
12
23
386
9.1
4.2
18.9
3.9
12.4
9.3
32.6
0.5
3.1
6.0
100
Sources: Westlaw, LexisNexis, PACER.
larger case categories, fees ranged from 21 percent to 27 percent of recoveries. A test of the
hypothesis that the median ratio of fees to recoveries is the same across case categories can
be rejected at p < 0.022, if one includes the small civil rights and tax categories. But the effect
becomes statistically insignificant if one excludes the two smallest categories (p = 0.222).
The case category makeup of the samples varied over time. Table 6 shows the case
category breakdown for the time period of our prior study and the years 2003 to 2008,
added for purposes of this study. In each time period, securities cases were the dominant
case category, but they declined as a proportion of the sample in the later time period. This
Attorney Fees and Expenses in Class Action Settlements
Fee and recovery by case category, 1993–2008.
Antitrust
Civil Rights
Consumer
Corporate
Employment
ERISA
Securities
Tax Refund/Tax
Tort
Other
10
8
6
4
6
8
10
4
Fee (log 10)
4
6
8
10
Figure 4:
263
4
6
8
10 4
6
8
10
Gross recovery (log10)
Sources: Westlaw, LexisNexis, PACER.
is due to the increase in the proportion of civil rights, employment, and ERISA cases, which
likely increased because of the change in coding, discussed above, to allow inclusion with
common fund cases, cases subject to a fee-shifting statute but in which the fee was not
determined pursuant to the statute, as well as to increased availability of information
through the PACER database.
Figure 4 explores whether the core relation between fee amount and class recovery
varies by case category. It shows that relation through separate scatterplots for 10 case
categories. The consistency of the pattern across category is striking. Every category shows
the same basic relation between fee and recovery.
4. Scaling Effect
The existence of a scaling effect—the fee percent decreases as class recovery increases—is
central to justifying aggregate litigation such as class actions. Plaintiffs’ ability to aggregate
into classes that reduce the percentage of recovery devoted to fees should be a hallmark of
a well-functioning class action system.24 As Figure 5 shows, a substantial scaling effect existed
24
Eisenberg & Miller, supra note 5.
264
Eisenberg and Miller
Figure 5:
Fee as a percent of recovery for two time periods.
2003-08
60
40
0
20
Fee percent
80
100
1993-2002
4
5
6
7
8
9
10 4
5
6
7
8
9
10
Recovery (log 10)
Sources: Westlaw, LexisNexis, PACER.
in the 2003–2008 period, as well as in the earlier 1993–2002 period. The linear correlation
coefficient for 2003–2008 was -0.57 and for 1993–2002 was -0.50, both statistically significant at p < 0.0001. The lines in the figure show the best-fitting regression line for each data
subset.
Table 7 presents additional information about the scale effect. For purposes
of this table, we divided the range of class recoveries into deciles of about 69
cases each. Table 7’s first column shows the bounds on the deciles, starting with the
lowest decile of class recoveries. Thus the table’s first numerical row includes cases
with class recoveries in the first decile, those recoveries less than or equal to $1.1 million.
The table’s last row includes cases in the highest decile, those with recoveries
greater than $175.5 million. The table’s columns show, within each decile range, the
mean, median, and standard deviation of the fee percent for the row decile. Thus, for
the 69 cases with class recoveries of less than $1.1 million, the mean fee percent
award was 37.9 percent in 69 cases, the median fee percent award was 32.3 percent,
and the standard deviation was 19.6 percent. Although there is some fluctuation in the
scale effect trend across the middle deciles, the overall trend is clear, with the highest
decile having less than one-third of the median and mean percentage fee of the lowest
decile.
Attorney Fees and Expenses in Class Action Settlements
265
Table 7: Mean, Median, and Standard Deviation of
Fee Percent, Controlling for Class Recovery Amount,
1993–2008
Range of Class Recovery
(Millions) Decile
Mean
Median
SD
N
Recovery <= 1.1
Recovery > 1.1 <= 2.8
Recovery > 2.8 <= 5.3
Recovery > 5.3 <= 8.7
Recovery > 8.7 <= 14.3
Recovery > 14.3 <= 22.8
Recovery > 22.8 <= 38.3
Recovery > 38.3 <= 69.6
Recovery > 69.6 <= 175.5
Recovery > 175.5
37.9
27.1
26.4
22.8
23.8
22.7
22.1
20.5
19.4
12.0
32.3
26.4
25.0
22.1
25.0
23.5
24.9
21.9
19.9
10.2
19.6
9.1
9.8
8.4
8.1
7.5
8.7
10.0
8.4
7.9
69
69
69
69
69
69
68
70
69
68
Sources: Westlaw, LexisNexis, PACER.
Table 8:
Fee Percent, by Risk Level
High Risk
Antitrust
Civil rights
Consumer
Corporate
Employment
ERISA
Securities
Tax refund/tax
Tort
Other
Total
Low/Medium Risk
N
Fee %
N
Fee %
9
4
14
4
4
5
45
—
8
13
106
20.1
29.3
31.3
23.4
35.1
24.6
26.4
—
25.1
22.1
26.1
62
13
110
26
51
38
217
8
21
29
575
22.2
23.2
24.7
20.8
26.2
23.2
22.7
10.8
19.0
23.9
23.1
Sources: Westlaw, LexisNexis, PACER.
5. Risk
Standards applied to attorney fees uniformly indicate that greater risk warrants an
increased fee.25 Table 8 reports, by case category, the mean fee percent separately for high
risk and other cases. It confirms that courts systematically reward risk. For every case
category except antitrust and “other,” mean fee percents were higher in high-risk cases than
in other cases. The difference within a case category between high-risk cases and other cases
25
E.g., Goldberger v. Integrated Res., Inc., 209 F.3d 43, 50 (2d Cir. 2000).
266
Eisenberg and Miller
Table 9: Fee Percent and Settlement Classes, Opt
Outs, Objectors
Period
2003–2008
A. Settlement Class Status
Settlement class
Not a settlement class
B. Presence of Objectors
Any objector
No objector
C. Number of Opt Outs
No opt outs
One opt out
>One opt out
N
Fee %
208
160
24.4%
25.4%
142
123
23.4%
28.6%
28
20
116
34.6%
37.2%
23.6%
Sources: Westlaw, LexisNexis, PACER.
was statistically significant only for the large securities category (t test significance level,
p = 0.006).
6. Settlement Classes, Opt Outs, and Objectors
Table 9 reports the relation between the fee percent and three class action case characteristics: settlement class status (Panel A),26 whether any objection was filed (Panel B), and the
number of class members opting out of the class (Panel C). We collected useful data on
these issues only for the later time period (2003–2008). No significant difference in fee
percent for settlement class cases compared to nonsettlement class cases emerged. There
were significant differences in the fee percent for cases with and without objectors. Cases
with objectors tended to have lower fee percents than cases without objectors. Cases with
more than one opting-out class member tended to have lower fee percents than cases with
zero or one opting-out class member. But, in regression models that supplement those
reported in Table 17, the objector and opt-out variables were found not to be significant
once one controlled for recovery size.
IV. Bivariate Results: Fee Methods and Multipliers
The dominant method used to calculate fees in class actions has evolved from considering
multiple factors27 to the dominance of two other methods, the lodestar and percentage
26
A settlement class is a case in which a class was certified for settlement purposes only.
27
The factors include the time and labor required, the customary fee, whether the fee is fixed or contingent, the
amount involved and the results obtained, the experience, reputation, and ability of the attorneys, awards in similar
Attorney Fees and Expenses in Class Action Settlements
Table 10:
267
Frequency of Method Used, by Time Period
1993–2002
Lodestar
Percent
Both (usually % with LS check)
Other
Total
2003–2008
N
% of Cases in Period
N
% of Cases in Period
38
158
68
16
280
13.6
56.4
24.3
5.7
100
37
146
165
38
386
9.6
37.8
42.8
9.8
100
Note: LS = lodestar method.
Sources: Westlaw, LexisNexis, PACER.
methods. Under the lodestar method, courts multiply the reasonable number of hours
expended by counsel by a reasonable hourly rate and then adjust the product for various
factors.28 Under the percentage method, the court multiplies the amount recovered on
behalf of the class by a percentage factor. Some courts adopt a blended approach that
checks the percentage method for reasonableness against a lodestar calculation.29 We
explore here the rates at which courts use the fee calculation methods, the relation between
those methods and fees, the rates at which courts granted requested fees, and the use of
multipliers in cases using the lodestar method.
A. Lodestar
1. Frequency of Use of Lodestar Versus Percent
Table 10 reports the rate of use of competing methods of computing a fee award. One
result is the decline in the use of the lodestar method. From 1993 to 2002, 13.6 percent of
cases used a pure lodestar method. From 2003 to 2008, only 9.6 percent of cases used the
lodestar method, a notable but not statistically significant reduction (p = 0.136). This is
likely due to the relatively few cases using the lodestar method exclusively.
Table 10 also suggests a reduction in use of the pure percent method, from 56.4
percent to 37.8 percent, but this understates the dominance of the percent method. For the
1993 to 2002 period, we coded which method was primary and which was used as a check.
In non-fee-shifting cases in this period, 61 cases used the percent method with a lodestar
cases, the nature and length of the professional relationship with the client, the time limitations imposed by the client
or the circumstances, the preclusion of other employment by the attorney due to acceptance of the case, the novelty
and difficulty of the questions, the skill needed to perform the legal services, and the “undesirability” of the case. The
leading precedent outlining this multifactor approach is Johnson v. Georgia Highway Express, 488 F.2d 714, 717–19
(5th Cir. 1974).
28
E.g., Gisbrecht v. Barnhart, 535 U.S. 789 (2002). See Charles Silver, Unloading the Lodestar: Toward a New Fee
Award Procedure, 70 Tex. L. Rev. 865 (1992); Charles Silver, Due Process and the Lodestar Method: You Can’t Get
There from Here, 74 Tulane L. Rev. 1809 (2000).
29
See notes 12–15 supra for circuit level case law addressing the fee method to be used.
268
Eisenberg and Miller
0
.1
Proportion lodestar
.2
.3
.4
.5
Figure 6: Pure lodestar use over time.
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Year
Securities cases
Other cases
check compared with three cases that used the lodestar method with the percent method
as a check. The 68 cases shown as using “both” methods in the earlier period included an
additional four cases that used both methods without indicating which was dominant. So
cases coded as using “both” methods were almost always percent method cases with a
lodestar check. We used less detailed coding of the method in the second period. If a case
used both methods, we simply coded it as “both.” Nevertheless, it is reasonable to assume
that the “both” cases in the second period are similar to those in the earlier period and are
dominated by the percent method with the lodestar as a check. So our best estimate is that
the percent method is the overwhelmingly dominant method of computing fees, either as
the sole method or as the primary method with the lodestar as a check. Figure 6 shows the
rate of pure lodestar use over time, with a separate line for the large subset of securities class
actions. Figure 1’s strong linear correlation between fee and recovery supports this assessment as a lodestar-dominated system would likely show a less strong association between fee
and class recovery.
Table 11 limits the sample to federal cases and shows the fee method used broken
down by circuit. As suggested by Table 10, the use of the percent method, combined with
the use of the percent method with a lodestar check, dominates. Table 11 shows that this is
the pattern in every circuit, regardless of formal fee method doctrine. The lodestar method
peaks at 21 percent of cases in the Sixth Circuit and only the Second Circuit combines
nontrivial lodestar use with a substantial number of cases. The table slightly overstates the
more recent federal rate of lodestar use, which totaled only 9 percent in cases from 2003 to
2008.
Attorney Fees and Expenses in Class Action Settlements
Table 11:
269
Fee Method by Circuit, Federal Cases, 1993–2008
Lodestar
Percent
Both
Other
Total
Circuit
%
N
%
N
%
N
%
N
%
N
1st
2nd
3rd
4th
5th
6th
7th
8th
9th
10th
11th
D.C.
Federal Circuit
Total
5
19
5
13
20
21
10
0
9
9
3
0
0
11
1
26
6
1
5
8
4
0
9
2
1
0
0
63
60
37
37
50
40
62
61
59
48
41
52
50
100
46
12
51
43
4
10
24
25
17
48
9
17
10
3
273
35
40
56
38
36
13
17
34
30
45
36
35
0
37
7
55
65
3
9
5
7
10
30
10
12
7
0
220
0
5
3
0
4
5
12
7
13
5
9
15
0
7
0
7
3
0
1
2
5
2
13
1
3
3
0
40
100
100
100
100
100
100
100
100
100
100
100
100
100
100
20
139
117
8
25
39
41
29
100
22
33
20
3
596
Sources: Westlaw, LexisNexis, PACER.
Table 12:
Fee Percent by Method Used, by Time Period
1993–2002
Lodestar
Percent
Both (usually % with LS check)
Other
Total
2003–2008
N
Mean Fee % of Recovery
N
Mean Fee % of Recovery
38
158
68
16
280
17.2
23.4
22.9
11.4
21.7
37
146
165
38
386
31.6
25.3
21.9
28.7
24.8
Note: LS = lodestar method.
Sources: Westlaw, LexisNexis, PACER.
2. Is Use of the Lodestar Method Associated with Lower Fee Awards?
Table 12 explores the relation between fee method and fee percent. Although the table’s
first row suggests a substantial increase in fee percents in lodestar cases over time, the
higher fee percents in recent lodestar cases are an artifact of case category. Consumer cases
comprise 37 percent of the lodestar category and the difference between percent and
lodestar methods vanishes if one excludes consumer cases. The consumer case category
percent of cases changed for the two periods in our sample. Consumer cases were 59.5
percent of the lodestar cases in the later period compared to 15.8 percent of the lodestar
cases in the earlier period. The lodestar method was used at a higher rate, 23.0 percent, in
consumer cases than in any case category other than the small tax category. These highpercent consumer cases (see Table 8) are the source of the change in mean lodestar fee
percents over time. The increased prominence of consumer cases in the later period
270
Eisenberg and Miller
sample is likely attributable to our including as common fund cases those in which a
fee-shifting statute was theoretically available but was not in fact used. In regression models,
reported below (see Table 18), the percent and “both” fee methods have positive and
statistically significant coefficients compared to the lodestar method once case category is
controlled for.
For the period 2003 to 2008, we coded the hours worked by attorneys in cases with
opinions reporting that information. The lower lodestar awards appear to be a consequence of fewer hours worked, or at least fewer hours claimed in court filings. Fewer hours
were worked, on average, in lodestar method cases than in other cases and fewer hours were
worked in consumer cases than in any other case category. As in regressions of the fee
amount, regression of hours worked that controlled for fee method, case category, and
circuit yielded coefficients for the percent and “both” method dummy variables that are
statistically significant and positive compared to lodestar cases.
B. Fee Grant Rates
Fee requests were generally granted in the amount requested, with 72.5 percent of requests
granted in full, as shown in Table 13’s last row (Panel A). Our data for the rate of grants is
limited to the 2003 to 2008 period because requested amounts were not recorded for the
earlier time period. Table 13 shows that strong intercircuit differences (p = 0.012, excluding the two Federal Circuit cases) in the grant rate existed, with the Second Circuit granting
the requested amount statistically significantly less often than the Third Circuit or the Ninth
Circuit. These intercircuit differences remain significant in logistic regression models that
control for case category and recovery amount, and in models that exclude securities cases.
The table also shows that state courts tended to grant award requests at a lower rate than
federal courts. The difference between federal and state grant rates was only statistically
significant at p = 0.148.
Fee requests were not granted in full in 100 of 363 cases. In those cases, the mean fee
grant was 68 percent of the request and the median was 74 percent. The mean grant of 61
percent in state court cases was lower than the 69 percent in federal court cases and the
median of 66 percent in state court cases was also lower than the median of 75 percent in
federal court cases. However, only nine of the 100 cases with less than full grants were state
court cases.
Table 13, Panel B, shows the rate at which requested fees were granted in relation
to the range of class of recovery, using the same decile ranges as Table 7. It shows a
declining grant rate as the class recovery increases. The grant rate for the lowest recovery
decile was 83 percent compared to 56 percent for the highest recovery decile. We interpret this as indicating that judges tend to scrutinize fee requests in large cases more
closely than they do for smaller cases. Panel C shows the grant rate in relation to the
percent of class recovery requested as fees. Instead of using class recovery deciles, it uses
deciles of the percent of recovery requested, which range from the lowest decile of
requests up to 11.8 percent of the recovery to the highest decile of requests over 35.7
percent. It shows a trend of decreasing grant rates as the percent of the recovery
requested increased. Attorneys requesting the lowest percents received requested amounts
Attorney Fees and Expenses in Class Action Settlements
Table 13:
271
Rates at Which Requested Fees Were Given, 2003–2008
A. By Locale
Locale
Proportion of Fee Requests
Granted in the Amount Requested
N
0.70
0.54
0.83
0.60
0.69
0.79
0.79
0.83
0.83
0.77
0.64
0.80
0.50
0.59
0.72
10
74
64
5
13
24
14
18
72
13
22
10
2
22
363
1st
2nd
3rd
4th
5th
6th
7th
8th
9th
10th
11th
D.C.
Federal Circuit
State court
Total
B. By Range of Class Recovery (Millions)
Range of Class Recovery (Millions) Decile
Recovery <= 1.1
Recovery > 1.1 <= 2.8
Recovery > 2.8 <= 5.3
Recovery > 5.3 <= 8.7
Recovery > 8.7 <= 14.3
Recovery > 14.3 <= 22.8
Recovery > 22.8 <= 38.3
Recovery > 38.3 <= 69.6
Recovery > 69.6 <= 175.5
Recovery > 175.5
Rate Granted
N
0.83
0.75
0.82
0.67
0.77
0.68
0.76
0.68
0.67
0.56
52
36
38
33
35
34
33
34
36
32
Rate Granted
N
0.81
0.86
0.62
0.76
0.72
0.71
0.67
0.61
36
36
37
75
72
35
36
36
C. By Range of Class Recovery Percent Requested Decile
Percent
Percent
Percent
Percent
Percent
Percent
Percent
Percent
of
of
of
of
of
of
of
of
recovery
recovery
recovery
recovery
recovery
recovery
recovery
recovery
requested <= 11.8%
requested > 11.8% <= 17.8%
requested > 17.8% <= 21.9%
requested > 21.9% <= 25%
requested > 25.0% <= 30.0%
requested > 30.0% <= 33.3%
requested > 33.3% <= 35.7%
requested > 35.7%
Note: In Panel C, the number of observations in the fourth and fifth rows reflects the bunching of fee requests at 25
percent and 30 percent. They each occupy approximately two deciles of fee requests.
Sources: Westlaw, LexisNexis, PACER.
272
Eisenberg and Miller
Table 14: Mean Multiplier by Circuit and
Case Category
Mean Multiplier
N
2.10
1.58
2.01
2.43
2.07
1.97
1.85
2.30
1.54
1.91
1.19
2.23
1.54
1.81
15
97
87
7
15
22
16
14
50
14
19
11
1
368
2.24
1.99
1.82
1.94
1.24
1.58
1.75
1.83
2.35
1.81
38
11
60
7
21
29
177
11
14
368
A. Circuit
1st
2nd
3rd
4th
5th
6th
7th
8th
9th
10th
11th
D.C.
Federal
Total
B. Case Category
Antitrust
Civil rights
Consumer
Corporate
Employment
ERISA
Securities
Tort
Other
Total
Sources: Westlaw, LexisNexis, PACER.
in 81 percent of cases compared to 61 percent for attorneys requesting the highest percents. This result suggests that attorneys who make more modest fee requests have a
greater chance of having their requests granted.
We explored the effects of the class recovery amount, percent of recovery requested,
circuit, and type of case in logistic regression models in which whether the requested
fee was granted was a dichotomous dependent variable. The class recovery amount and
the percent of recovery requested were highly statistically significant (each p < 0.001), the
circuit dummy variables were jointly significant at p = 0.005, and the case type dummy
variables were not statistically significant (p = 0.262).
C. Multipliers
Courts often check the percentage-based attorney fee against the lodestar award. If the
percentage fee grossly exceeds the lodestar amount, the fee may be deemed excessive, and
the courts can adjust the fee downward to a more reasonable range. Table 14 reports, for
Attorney Fees and Expenses in Class Action Settlements
Relation between multipliers and fee percent, recovery, and hours, 2003–2008.
Figure 7:
b. Recovery vs. Multiplier, 2003-2008
10
a. Fee Percent vs. Multiplier, 2003-2008
c
oc
Recovery (log 10)
6
8
cc
c = Consumer case
o = non-consumer case
cc
o
occ
cc
c
ooo
c oo
oo ooo
ooo
ocooo
ooco co
cococo
ooco
oo
ooo
cco
coo
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cco
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oo
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o
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o
ooo
ooo
o
oooo
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ooo
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oco
oo o
oo
oo
oo
o
o
o
o
c
o
o
o
o
o
c
o
o
o
oooooocoooo
o
o
o
c
c
c
o
o
ocoocoooooo
ooooo
ccooooo
oooo
o
c
oo
o
o
o
o
o
o
o
o
c
o
o
o oo
o oo ooco
oc oco
co
oo
o
o
o
o
o
c
o
o
o o o oooo
o
o
c
o
o
coc coc ccoo
cooooco
c o
o
o
o
o o ococ o c occccooccocoooco o c
c
c
0
o
-4
-2
0
Multiplier (log)
o
c
oo
cooo o
o
oc o
o
o
o
o coo cooo
oo oc co c
oo oo
ooo
ooco
o occoo o o
c oco
o
oo
o
oo
o
o
o
o
o
o
o
o
o
o
c
o
o
o
o
oo oo
coooooooco
oooo
ooo
coo
ocoooocooooooco
o o
o
cccc
ooccoooco
o
o ooooco
cooo
c
ooo
oo
cco
oo
oco
oocooooooooooo o
occoo
oocoo
oo o ooooooooooo
o
o
c
c
o
o
ooo o o
oocoooc
o
o
o
o oco
cooo
o
oo o
o oooooo
ooooocoo
o
ooooo o
o
ooooo
o ooocoo o
oocooocooco
o oo o
c
co coooo
oo c ooo
oooo oo c
o
o
oo o
o
co c
o
o c cco c c cc
c ooc
c cc
c
c c
o
4
o
20
Fee percent
40 60 80 100
273
2
4
-4
-2
0
Multiplier (log)
2
4
Multiplier (log)
2
-2
0
4
c. Multiplier vs. Hours, 2003-2008
o
o
o
o
o oo o
c
o o oooo o o oo oo
o
o coco
o
ooc oooo oooco
c
c oco ooooooo coooooooo
o o
o oo
c
o
o
o
ooco oo o cco
o
ooooooo co oo o
c c ococ oc ooo o oco
cc o cc oo cooo oo oo o
o oo o o o
o oo
o o
oo
oo
o
c
cc
o
oo o o oc
o
-4
o
4
6
8
10
Hours (log)
12
14
Sources: Westlaw, LexisNexis, PACER.
federal cases, the mean multiplier applied by circuit and by case category. The sample is
limited to those cases that reported a multiplier that was not equal to 1.
The mean multiplier ranged from 1.19 in the Eleventh Circuit to 2.43 in the Fourth
Circuit. Across case categories, the mean multiplier ranged from 2.35 in “other” to 1.24 in
employment cases. But, in regression models of the multiplier (log) as a function of circuits
and case categories, neither the dummy variables for circuits nor for case categories were
collectively significant. We therefore cannot reject the hypotheses that multipliers are
similar across circuits and case categories.
We do, however, find significantly different multipliers used in cases in which feeshifting statutes were available and cases in which they were not. With no statute in the
background, multipliers averaged 1.96 in 161 cases with necessary data. If a fee-shifting
statute was available, multipliers averaged 1.38 in 66 cases. The difference in medians was
significant at p = 0.021.
Figure 7 shows the relation between the fee outcomes, class recovery amount, and
multipliers (Figures 7a and 7b), and between multiplier and hours reported (Figure 7c).
Since a suspected fee windfall is most likely to occur when the percentage method
would yield what is perceived to be too high a fee, we expect the multiplier to tend to bring
high percentage fee cases into a more moderate range. We therefore predicted and found,
in our prior study, a strong negative correlation between the lodestar multiplier (fee award
274
Eisenberg and Miller
Table 15: Mean, Median, and Standard Deviation of
Multiplier, Controlling for Class Recovery Amount,
1993–2008
Range of Class Recovery
(Millions) Decile
Mean
Median
SD
N
Recovery <= 1.1
Recovery > 1.1 <= 2.8
Recovery > 2.8 <= 5.3
Recovery > 5.3 <= 8.7
Recovery > 8.7 <= 14.3
Recovery > 14.3 <= 22.8
Recovery > 22.8 <= 38.3
Recovery > 38.3 <= 69.6
Recovery > 69.6 <= 175.5
Recovery > 175.5
0.88
0.95
1.44
1.59
1.49
1.68
1.83
1.98
2.70
3.18
0.74
0.77
1.25
1.25
1.45
1.51
1.44
1.75
2.09
2.60
0.45
0.67
0.74
1.32
0.87
0.85
1.44
1.00
2.43
1.99
33
40
32
34
37
38
33
38
43
40
Sources: Westlaw, LexisNexis, PACER.
divided by the lodestar) and the percentage fee awarded.30 A similar relation exists for
2003–2008, as shown in Figure 7a.
Higher multipliers should, in general, lead to higher recoveries, a result shown in
Figure 7b. Increased multipliers do not appear to be being used a reward for hours worked.
Figure 7c shows no clear positive association between mutlipliers and hours.
Table 15 presents more detailed information about the relation between class recovery and multipliers. It uses the recovery deciles reported in Table 7, but Table 15 includes
fewer observations because the sample is limited to cases with multipliers not equal to 1.
The table reports the mean, median, and standard deviation for each recovery decile.
The pattern for the mean and median multiplier confirms that suggested by Figure 7b. As
the recovery decile increases, the multiplier also tends to increase, with the multiplier in the
highest recovery decile more than triple that of the multiplier in the lowest recovery decile.
V. Costs and Expenses
Costs and expenses (collectively “costs”) tended to be a small percentage of the class
recovery and have remained a fairly constant percentage over time. For the 232 cases from
1993 to 2002 for which cost data were available, mean costs were 2.8 percent of the recovery
and median costs were 1.7 percent. For the 304 cases with necessary data from 2003 to 2008,
mean costs were 2.7 percent of the recovery and median costs remained at 1.7 percent. As
before, we found no evidence that the cost percent increased over time.31
30
Eisenberg & Miller, supra note 5.
31
Id.
275
Attorney Fees and Expenses in Class Action Settlements
Figure 8: Costs as a function of recovery, fees, hours, and age, non-fee-shifting cases,
2003–2008.
b. Costs as a Function of Fee
Costs (log 10)
4 5 6 7
2
2
3
3
Costs (log 10)
4 5 6 7
8
8
a. Costs as a Function of Recovery
5
6
7
8
Recovery (log 10)
9
10
4
5
8
9
d. Costs as a Function of Age
2
2
3
3
Costs (log 10)
4 5 6 7
Costs (log 10)
4 5 6 7
8
8
c. Costs as a Function of Hours
6
7
Fee (log 10)
2
3
4
Hours (log 10)
5
6
0
1
2
3
4
5
6
7
Age of case in years
8
9
10
Note: Cases with age greater than 10 years old are coded as 10 years old.
Sources: Westlaw, LexisNexis, PACER.
We further explored costs as a function of four variables: (1) the class recovery,
(2) the fee, (3) the hours reported in the court’s opinion, and (4) the age of the case in
years. We only coded hours billed and case age beginning with the 2003 to 2008 data.
Figure 8 shows the relation between costs and the four factors and limits the sample to cases
in which hours were reported in opinions and costs were at least $100. All four factors are
positively associated with costs. The figure also suggests that the strongest association is
between costs and hours.
Table 16 shows the correlation coefficients between costs and the four factors in
Figure 8. The first four numerical columns cover the period 2003–2008, for which hours
data were recorded. The last two numerical columns show the correlation between costs
and fee and recovery for the period 1993–2002. The correlations between costs and
recovery and fee for either period do not reach the strength of association of hours and
costs in the later period. The weaker correlation between costs and age may be in part a
function of age being coded only in whole years and therefore providing a less continuous
measure of that factor.
A regression model, not reported here, of costs as a percent of recovery controls for
case category and other factors. It shows that costs, like fees, have a scale effect: their
percent of recovery significantly declines as the size of the recovery increases. The cost
276
Eisenberg and Miller
Table 16:
Correlations Between Costs and Four Factors
Fee
(Log10)
Recovery
(Log10)
Hours
(Log)
Age in Years
Period = 2003–2008
Correlation Coeff.
Significance
N
0.86
<0.0001
167
0.85
<0.0001
167
0.91
<0.0001
167
Fee
(Log10)
Recovery
(Log10)
Period = 1993–2002
0.34
<0.0001
167
0.77
<0.0001
232
0.71
<0.0001
232
Sources: Westlaw, LexisNexis, PACER.
percent significantly increases with hours. In a model with both case age and hours as
explanatory variables, only hours were statistically significant.
VI. Multivariate Results
Some of the above results are so strong and robust that no further analysis is needed to
support their credibility. The strong correlation between fees and class recovery and the
scale effect survive any reasonable analysis, are reasonably represented by Figures 1 and 5,
and are confirmed in regression models reported below. Other key results consist of factors
associated with the level of the fee award. These include:
1. The tendency of state courts to award a lower percent of recovery as a fee,
2. The relation between case category and fee percent,
3. The tendency of high-risk cases to receive a higher percent of the class recovery as
a fee, and
4. The tendency of lodestar awards in non-fee-shifting cases to be lower than
percent-method awards.
This section first explores the robustness of these results to simultaneous control for
recovery level and then reports regression models.
A. The Relation Between the Fee Award and State Court Status, Risk, and the Lodestar Method
As Figure 1 and our earlier work suggest, for most explanatory variables, the size of the class
recovery is the most important potential confounding factor in assessing the relation
between other covariates and the fee award. From Figures 1 and 5, we know that: (1) the fee
award increased with class recovery, and (2) the fee award was a declining percent of the
class recovery as the class recovery increased. Regression models assessing nonrecovery
covariates thus require both a dummy variable for the covariate, and an interaction term
between the covariate and the class recovery. That is, the covariate may influence both the
intercept and the slope of the line representing the relation between the covariate and the
fee award. The use of class recovery, a dummy covariate, and an interaction term raises
problems of multicollinearity in the regression model, which preliminary analysis confirmed. The problems arose even when a single covariate and interaction term were
277
Attorney Fees and Expenses in Class Action Settlements
Table 17: Influence of Locale, Risk, and Lodestar Method on Percent Fee Award, Controlling for Class Recovery Amount, 1993–2008
Federal-State
Range of Class Recovery
(Millions) Decile
Recovery <= 1.1
N
Recovery > 1.1 <= 2.8
N
Recovery > 2.8 <= 5.3
N
Recovery > 5.3 <= 8.7
N
Recovery > 8.7 <= 14.3
N
Recovery > 14.3 <= 22.8
N
Recovery > 22.8 <= 38.3
N
Recovery > 38.3 <= 69.6
N
Recovery > 69.6 <= 175.5
N
Recovery > 175.5
N
Risk
Lodestar
Federal
Case
State
Case
Low-/Medium-Risk
Case
High-Risk
Case
Other
Methods
Pure
Lodestar
38.7
64
26.8
63
27.0
58
22.7
61
24.1
61
23.3
62
22.3
58
21.2
61
19.6
64
12.6
61
27.2
5
30.4
6
23.2
11
23.2
8
21.4
8
15.6
6
20.8
10
15.7
9
16.0
5
6.5
7
37.1
64
26.7
60
26.0
61
21.8
55
23.3
58
22.7
63
20.9
58
19.9
62
17.3
50
10.6
52
48.4
5
29.5
9
29.3
8
26.8
14
26.8
11
23.0
6
29.2
10
24.6
8
24.7
19
16.5
16
32.3
53
26.6
64
26.8
65
23.3
54
24.8
56
23.3
61
24.0
53
21.6
61
20.0
62
12.7
62
58.0
15
33.4
5
17.9
2
20.5
9
19.0
11
16.3
6
11.7
11
9.8
7
10.0
4
4.3
5
Sources: Westlaw, LexisNexis, PACER.
included in regression models, and were magnified when multiple covariates and interaction terms were used. Rather than simply report possibly questionable regression models,
we first used a simpler technique to explore the possible influence of certain covariates on
the fee award while simultaneously accounting for the class recovery.
Table 17 expands on Section III’s tables by reporting in more detail, for non-feeshifting cases, the relation between the fee awarded and three key covariates—state court
status, risk, and use of the lodestar method—while controlling for the size of the class
recovery. As was done for Tables 7, 13, and 15, we divided the range of class recoveries into
deciles. Table 17’s first column shows the bounds on the deciles, starting with the lowest
decile of class recoveries. Each decile’s statistics are reported in two rows; the first shows the
fee percent and the second row shows the number of cases included in the fee percent
calculation. Thus the table’s first two numerical rows include cases with class recoveries in
the first decile, those recoveries less than or equal to $1.1 million. The table’s last two rows
include cases in the highest decile, those with recoveries greater than $175.5 million. The
table’s second and third columns show, within each decile range, the mean fee percent
award and the number of cases, divided by federal court versus state court status. Thus, for
the 69 cases with class recoveries of less than $1.1 million, the mean federal case fee percent
award was 38.7 percent in 64 cases and the mean state case fee percent award was 27.2
278
Eisenberg and Miller
percent in five cases. The table’s fourth and fifth columns show the same information, but
now divided by high-risk case status versus low-/medium-risk case status. The table’s sixth
and seventh columns show the same information divided by use of the pure lodestar
method versus use of all other methods.
With respect to federal versus state court status, the mean state case fee percent is
lower than the mean federal percent for every recovery decile except the second and
fourth. Thus, after controlling for class recovery size, state courts tend to award lower fees
than federal courts but not overwhelmingly so. The pattern is even more consistent with
respect to risk. For every recovery decile, the fee percent is higher in high-risk cases than in
low-/medium-risk cases. The lodestar effect follows the same trend, with every class recovery
decile except the lowest two showing a lower fee percent in pure lodestar cases than in
other cases. In the low recovery deciles, of course, the lodestar method can compensate
attorneys for substantial efforts that a percent fee award may not fully reflect. Section III’s
results for these three covariates therefore survive analysis that controls for the key potential
confounder, the class recovery size.
B. Regression Models
Table 18 reports ordinary least squares regression models that confirm our core results.
Model 1 shows that over 90 percent of the variance in the fee is explained by the size of the
Table 18:
Regression Models of Fees
1
2
3
4
5
Dependent Variable = Fee (Log10)
Gross recovery (log10)
0.850
(74.37)**
State court case
0.850
(73.79)**
-0.088
(8.25)**
High-risk case
0.846
(73.32)**
-0.083
(8.15)**
0.111
(7.16)**
0.833
(62.21)**
-0.040
(3.13)**
0.102
(6.06)**
0.827
(61.35)**
0.003
(0.15)
0.098
(5.06)**
0.395
(4.92)**
No
681
0.92
0.188
(4.76)**
0.181
(4.82)**
0.032
(0.62)
0.331
(3.28)**
No
663
0.93
0.169
(4.22)**
0.158
(4.15)**
0.028
(0.51)
0.440
(3.64)**
Yes
663
0.93
Lodestar = reference category
Percent method
Both methods
Other methods
Constant
Case category dummies
Observations
R2
0.374
(4.91)**
No
689
0.92
0.382
(4.69)**
No
688
0.92
Notes: Robust t statistics in parentheses; *significant at 5 percent; **significant at 1 percent; standard errors are
clustered by locale.
Sources: Westlaw, LexisNexis, PACER.
Attorney Fees and Expenses in Class Action Settlements
279
recovery. None of the other models add materially to the explanatory power of this simple
model. Nevertheless, it is noteworthy that the model with the largest set of explanatory
variables, Model 5, shows no statistically significant difference between state and federal
courts. The models also consistently confirm that fee methods other than the pure lodestar
method tend to have higher fees. The models confirm the association between greater risk
and increased fees.32 In Model 5, a test of the hypothesis that the case category dummy
variables are jointly equal to zero can be rejected at p = 0.0003. Their significance persists
if one omits the two small cases categories, civil rights and tax, but the significance level
increases to p = 0.012. The significance of the results in Table 18 persists if one limits the
sample to the 106 cases with recoveries of $100 million or more but the sizes of the
coefficients do change. The percent of variance explained then ranges from 72 percent to
77 percent, depending on the model.
We also tested whether the use of a lodestar “cross-check” generated a different
pattern of fees than when fees were calculated according to the percentage method alone.
A regression analysis not reported here does not find any statistically significant difference
between fees calculated by the percentage method alone and those calculated by the
percentage method with the lodestar cross-check. This result may raise questions about
the utility of the lodestar cross-check, which can involve a time-consuming analysis of the
reasonableness of the attorneys’ hours and hourly rates.
VII. Discussion
The data support several major conclusions.
Strength of Relation and Dominance of Method. The percentage fee method is overwhelmingly
the method used by courts in awarding fees in class actions. It is so widely used and so
consistently employed that other information about cases adds little explanatory power to
study of the fee award. The amount of the class recovery dwarfs all other effects. Even in
circuits that eschew the percentage method, it appears to be the dominant de facto method
used and best explains the pattern of awards. The consistent pattern may help attorneys to
calibrate their fee requests and lead to courts usually approving the requested fee amount.
Scale Effect and Aggregate Litigation. The pattern of class action awards continues to exhibit
a strong scale effect. Attorneys receive a smaller proportion of the recovery as the size of the
recovery increases. Aggregation of claims thus appears to have produced the kind of
efficiency hoped for. This characteristic of aggregate litigation should be considered when
evaluating devices designed to preclude or discourage aggregate litigation or arbitration,
such as prohibitions on class arbitration.33
32
Multilevel models, using random intercepts for locale and case category, do not yield materially different results.
33
For a study suggesting possible efforts to discourage aggregate litigation, see Theodore Eisenberg, Geoffrey P. Miller
& Emily Sherwin, Mandatory Arbitration for Customers But Not for Peers: A Study of Arbitration Clauses in Consumer
280
Eisenberg and Miller
The Scope and Nature of Our Sample. Some perspective on the scope of our sample relative
to the universe of class action cases comes from a study of class actions against insurers
from 1993 through 2002. The RAND Institute for Civil Justice surveyed 269 property
and casualty insurers and 207 life and health insurers, received responses from 205 companies, and obtained usable information from 199 insurers.34 Of 564 attempted class
actions, 12 percent led to a class settlement.35 In 32 cases, the respondents provided
information about the aggregate pool of funds offered to settle the case and its associated
expenses. The amounts ranged from $360,000 to $150 million, with a mean fund size
of $12.8 million and a median size of $2.6 million. Almost two-thirds of the cases, 62.5
percent, resulted in a common fund of less than $5 million.36 In 48 cases, the respondents supplied information about the award to class counsel for fees and expenses. Fees
and expenses ranged from $50,000 to $50,000,000, with a mean of $3.4 million and a
median of $554,000.37 The overall median fee and expense ratio from the pooled data
was thus about 21 percent ($554,000 divided by $2.6 million). This compares to a pooled
median fee of $2.33 million and median gross recovery of $12.5 million in our sample,
as shown in Table 3, which yields a pooled ratio of 19 percent. The scaling effect, combined with our higher median gross recovery, probably helps explain the lower ratio in
our sample of cases.
Aside from the RAND study’s similar findings about fee levels, the study shows the
small fraction of class action filings that lead to information about fees, even in the absence
of being limited to available opinions. In the RAND data, 564 purported class actions led to
78 certified classes and 32 cases with available fee information. Thus, less than 15 percent
of purported class actions were certified and about 6 percent led to usable fee information.
If the same proportions are assumed to apply more broadly, then our 689 fee cases can be
thought of as representing over 12,000 purported class action filings.
Federal-State Differences. Despite claims that CAFA was needed to redress differences in state
and federal court processing of class actions, our data provide little evidence of federal-state
differences. The fee per amount recovered did not systematically differ between federal and
state courts, as shown in Table 17. Table 13 shows that state courts were, if anything, less
likely than federal courts to grant the requested fee amount.
and Non-Consumer Contracts, 92 Judicature 118 (Nov.–Dec. 2008); Theodore Eisenberg, Geoffrey P. Miller & Emily
Sherwin, Arbitration’s Summer Soldiers: An Empirical Study of Arbitration Clauses in Consumer and Nonconsumer
Contracts, U. Mich J.L. Reform 871 (2008), reprinted in 4 ICFAI U.J. of Alternative Disp. Resol. 51 (2008).
34
Nicholas M. Pace, Stephen J. Carroll, Ingo Vogelsang & Laura Zakaras, Insurance Class Actions in the United States
9–10 (2007).
35
Id. at 47 (tbl. 3.16).
36
Id. at 54.
37
Id. at 55.
Attorney Fees and Expenses in Class Action Settlements
281
The absence of pro-class bias in state courts is consistent with sources cited above38
and with additional research. In the RAND insurance study, of 564 attempted class actions,
12 percent led to a class settlement, with 12 percent of the 465 state court cases and 15
percent of the 98 federal court cases settling.39 The modal outcome of a pretrial ruling for
the defense did not significantly differ between federal and state courts.40 The settlement
rate for the cases with certified classes did not statistically significantly differ between
federal and state courts.41
Thus, available evidence about comparative state-federal judicial performance in
class actions consistently suggests no strong differences.
VIII. Conclusion
Over the course of 16 years, attorney fees in class action cases have displayed a strikingly
strong linear relation to class recoveries. Significant associations also exist between the fee
amount and both the fee method and the riskiness of the case. Despite CAFA’s premise of
differences between federal and state court treatment of class actions, our findings add to
a growing body of evidence that little hard data support claims of significant state-federal
differences. Core results persisted in mega-cases, those with recoveries of $100 million or
more, in cases with settlement classes, and in cases with and without objectors and opt outs.
Fees and costs decline as a percent of the recovery as the recovery amount increases,
suggesting the efficiency of this form of aggregate litigation. In this data set that likely
includes the most significant class action decisions, those that lead to an available opinion,
neither fees nor recoveries materially increased over time.
We hope that the information contained in this study can be of use to courts charged
with the important and sometimes daunting task of setting counsel fees in class action and
derivative cases.
38
Text accompanying notes 18–22 supra.
39
Pace et al., supra note 34, at 47 (tbl. 3.16).
40
Id.
41
Id. at 48 (tbl. 3.17). The study did not distinguish between orders certifying the case for a class trial, those certifying
for settlement purposes only, and those certifying on a provisional basis only. Id. at 17. Neil Marchand reports that
plaintiffs’ preferences for state or federal court in Michigan class actions vary depending on the governing substantive
law, with preference for state courts in cases governed by state substantive law and preference for federal courts in
cases governed by federal substantive law. Neil J. Marchand, Class Action Activity in Michigan’s State and Federal
Courts, available at <http://ssrn.com/abstract=1334923>.
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Exhibit A
CASE 0:08-cv-04546-PAM-FLN Document 266-1
Filed 07/05/11 Page 2 of 2
Figas v. Wells Fargo Time Report
McTigue & Veis LLP
REPORTING PERIOD: February 2007 - June 30, 2011
Attorney
Rate
J. Brian McTigue, Esq.
Bryan Veis
James Moore
Paul Jacobson
Patrick de Gravelles
Gregory Porter
Jennifer Strouf
Jason Luter
Joseph L. Gordon
Joshua Erlich
Emily Peterson
Matthew Olson
Hours
$550.00
$550.00
$500.00
$425.00
$425.00
$500.00
$325.00
$325.00
$325.00
$300.00
$300.00
$425.00
Attorney Totals:
3,420.01
Current
Lodestar
$511,923.50
$362,582.00
$586,200.00
$116,025.00
$17,250.75
$36,125.00
$8,706.75
$12,892.75
$3,948.75
$36,246.00
$3,225.00
$26,171.50
$0.00
$0.00
$1,721,297.00
401.05
41.69
544.42
49.78
49.78
5.52
190.76
1,233.22
$100,262.50
$8,338.00
$108,884.00
$9,956.00
$9,956.00
$966.00
$38,152.00
$266,558.50
930.77
659.24
1,172.40
273.00
40.59
72.25
26.79
39.67
12.15
120.82
10.75
61.58
Paralegal
David Bond (case manager)
Julia Cade
Bietron Staton
Heidi Sohng
Julie Gorka
Sara Gilbertie
Paralegal Totals:
Professional Staff
$250.00
$200.00
$200.00
$200.00
$200.00
$175.00
$200.00
$0.00
$0.00
Professional Staff Totals:
TOTALS:
4,653.23
$1,987,855.50
CASE 0:08-cv-04546-PAM-FLN Document 266-2
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Exhibit B
CASE 0:08-cv-04546-PAM-FLN Document 266-2
Filed 07/05/11 Page 2 of 2
Figas v. Wells Fargo Expense Report
McTigue & Veis LLP
REPORTING PERIOD: February 2007 - June 30, 2011
EXPENSE DESCRIPTION
FINAL
Travel: Air & Train Fares, Hotels, Meals
Photocopying
Telephone & Teleconferences
Postage, Courier & Overnight Mail
Filings and Service of Process
Research & Databases
Transcripts
Document Retrieval
Experts/Consultants
$24,765.02
$8,839.63
$1,342.35
$3,755.11
$1,025.00
$56,663.91
$34,053.80
$1,398.42
$243,588.38
TOTAL EXPENSES:
$375,431.62
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EXHIBIT A
CASE 0:08-cv-04546-PAM-FLN Document 267-1
Figas v. Wells Fargo Time Report (Exhibit A)
Sprenger + Lang PLLC
REPORTING PERIOD: August 27, 2008 - June 10, 2011
Attorney and Bar Admisison Year
Rate
Hours
Bryce Miller, admitted to bar in 2006
Deanna Dailey, admitted to bar in 1999
Iris Barber, admitted to bar in 1991
Mara Thompson, admitted to bar in 1988
Michael Lieder, admitted to bar in 1984
Attorney Totals:
Paralegal and Legal Assistant
$375.00
$500.00
$575.00
$635.00
$695.00
16.70
121.90
100.60
1.25
32.70
273.15
Current
Lodestar
$6,262.50
$60,950.00
$57,845.00
$793.75
$22,726.50
$148,577.75
Carol Cesar Finck (10+ years)
Deborah Toms (10+ years)
Sean McGrew
Thomas Lawson
Paralegal Totals:
TOTALS:
$230.00
$230.00
$190.00
$190.00
21.75
83.75
34.75
9.25
149.50
422.65
$5,002.50
$19,262.50
$6,602.50
$1,757.50
$32,625.00
$181,202.75
Filed 07/05/11 Page 2 of 2
CASE 0:08-cv-04546-PAM-FLN Document 267-2
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EXHIBIT B
CASE 0:08-cv-04546-PAM-FLN Document 267-2
Figas v. Wells Fargo Expense Report
Filed 07/05/11 Page 2 of 2
(Exhibit B)
Sprenger + Lang, PLLC
REPORTING PERIOD: August 27, 2008 - June 10, 2011
EXPENSE DESCRIPTION
Hotels, Meals, Transportation
Photocopying (Internal and External)
Long Distance Telephone Charges
Postage, Courier & Overnight Mail
Filing Fees
Electronic Research Charges
Mediation
TOTAL EXPENSES:
FINAL
$27.12
$523.38
$22.35
$1.62
$260.00
$446.99
$0.00
$1,281.46
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CASE 0:08-cv-04546-PAM-FLN Document 269-1
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EXHIBIT A
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CASE 0:08-cv-04546-PAM-FLN Document 268
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MINNESOTA
Robin E. Figas,
and all others similarly situated,
Civil File No. 08-CV-4546 (PAM/FLN)
Plaintiffs,
V.
Wells Fargo & Company, Employee Benefit
Review Committee, Howard I. Atkins, Patricia
Callahan, Ellen Haude, Mike Heid, Clyde
Ostler, Tim Sloan, John G. Stumpf, Peter J.
Wissinger, and Doe Defendants 1-20.
Defendants.
DECLARATION OF JOEL A. MINTZER IN SUPPORT OF MOTION FOR AWARD
OF ATTORNEYS' FEES, REIMBURSEMENT OF
EXPENSES AND CASE CONTRIBUTION AWARDS
I, Joel A. Mintzer, declare as follows:
I am a partner at the law firm of Robins, Kaplan, Miller & Ciresi, L.L.P.
("RK.IVIC"). I submit this declaration in support of Plaintiff's request for an Award of Attorneys'
Fees and Reimbursement of Expenses based on my personal knowledge.
2.
Beginning in October 2010, I served as local counsel for the attorneys appointed
as class counsel. I have extensive experience in class actions and in ERISA litigation. In my
role, I reviewed various submissions to the Court, provided advice to class counsel, and
participated in the mediation of this matter.
3.
During the period from the inception of RKMC's involvement in this case, in
October 2010, through the present, RKMC performed 25.4 hours of work in connection with the
litigation for which the firm seeks payment. Based upon current hourly rates ordinarily charged
to RKMC's clients, the total fees for this matter are $11,122.00.
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CASE 0:08-cv-04546-PAM-FLN Document 268
4.
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The hourly rates utilized by RKMC in computing its fees are its usual and
customary current hourly rates charged for other similar matters. No upward adjustment in
billing rates was made, notwithstanding the contingency and risk of the matters involved, the
opposition encountered, the preclusion of other employment, the delay in payment, or other
factors present in the case which would justify a higher rate of compensation. Attached hereto as
Exhibit A is a chart indicating the attorney and paralegal who worked on this case, their current
hourly rate and total fees for each.
5.
All of the services performed by RKMC's lawyers and professional staff in
connection with this litigation for which RKMC seeks payment were reasonable and necessary in
the prosecution of this case. In addition, no time is included in the fee petition for work in
connection with preparing the fee and expense application or accompanying documents,
including this declaration.
6.
RKMC has expended or incurred costs and expenses totaling $352.48 in
connection with the prosecution of this litigation. All of the expenses incurred by RKMC for
which reimbursement is sought were reasonable and necessary in the prosecution of this case.
Attached hereto as Exhibit B is a chart that details RKMC's expenses.
7.
The expenses paid by RKMC for which reimbursement is sought are reflected in
the firm's books and records. These books and records are prepared from checks, bills and
expense vouchers, which are regularly kept and maintained by RKMC and accurately reflect the
expenses incurred.
I declare under penalty of perjury under the laws of the United States that the foregoing is
true and correct.
Executed thisZCday of June, 2011
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EXHIBIT A
CASE 0:08-cv-04546-PAM-FLN Document 268-1
Figas v. Wells Fargo Time Report (Exhibit A)
Robins, Kaplan, Miller & Ciresi L.L.P.
REPORTING PERIOD: October 5, 2010 - June 9, 2011
Attorney and Bar Admisison Year
Joel A. Mintzer, admitted to the bar:
Iowa - 1990
Illinois - 1991
Minnesota - 1991
Attorney Totals:
Paralegal and Legal Assistant
Peggy Arman
Paralegal Totals:
TOTALS:
Rate
Hours
Current
Lodestar
$450.00
24.30
24.30
$10,935.00
$10,935.00
$187.00
1.10
$1.10
25.40
$205.70
$205.70
$11,346.40
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EXHIBIT B
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Figas v. Wells Fargo Expense Report
Robins, Kaplan, Miller & Ciresi L.L.P. (Exhibit B)
REPORTING PERIOD: October 5, 2010 to June 9, 2011
EXPENSE DESCRIPTION
FINAL
Hotels, Meals, Transportation
Photocopying
Teleconferences
Postage, Courier & Overnight Mail
Filings and Service of Process
Research
Mediation
Misc. (Image Production Internal)
$252.54
$0.64
TOTAL EXPENSES:
$352.48
$19.95
$2.40
$76.95