Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Schwartz v. Cook

United States District Court, N.D. California, San Jose Division

June 30, 2017

KRISTOPHER A. SCHWARTZ, individually and on behalf of all others similarly situated, Plaintiff,
v.
ART COOK, et al., Defendants, and BUCKLES-SMITH ELECTRIC COMPANY EMPLOYEE STOCK OWNERSHIP PLAN, Nominal Defendant.

          ORDER GRANTING PLAINTIFF'S MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT; AND GRANTING PLAINTIFF'S MOTION FOR AWARD OF ATTORNEYS' FEES AND COSTS [RE: ECF 129, 130]

          BETH LABSON FREEMAN United States District Judge.

         On June 15, 2017, the Court heard Plaintiff's Motion for Final Approval of Class Action Settlement and Plaintiff's Motion for Award of Attorneys' Fees and Costs. See Minute Entry, ECF 137. The Court granted both motions on the record and issued a short order memorializing its rulings so that Plaintiff could begin administrative tasks necessary to distribution of the settlement fund. See Order Granting Plaintiff's Motion for Final Approval, ECF 136. The Court indicated that it would issue a lengthier order setting forth its reasoning, which it does below.

         I. BACKGROUND

         Plaintiff Kristopher A. Schwartz and class members were participants in or beneficiaries of the Buckles-Smith Electric Company Employee Stock Ownership Plan (“the ESOP” or “the Plan”), an employee pension benefit plan covered by the Employee Retirement Income Security Act of 1974 (“ERISA”). Plaintiff claims that Defendants - Buckles-Smith Electric Company (“Buckles-Smith” or “the Company”), several of its Board members, and Bankers Trust Company of South Dakota - breached fiduciary duties owed to the Plan and its participants. See Second Amended Complaint (“SAC”), ECF 118. Specifically, Plaintiff asserts that Defendants terminated the ESOP in 2014 and forced a buyout at “far less than the fair market value of the ESOP's shares, far less than the amount the ESOP was entitled to under the operative bylaws of Buckles-Smith, and far less than the liquidation value of Buckles-Smith's assets - which represented the price at which the Company's departing shareholders had been redeemed for decades pursuant to shareholder agreements.” SAC ¶ 1. Plaintiff also alleges that “Defendants ignored in-hand, bona fide written offers to purchase either all of the shares of Buckles-Smith or just those shares owned by the ESOP for nearly double the price actually paid.” Id. Plaintiff claims that “[b]y this abuse of their position of trust and authority with respect to the ESOP, Defendants enriched themselves at the expense of the ESOP and its participants.” Id.

         After more than a year of litigation, the parties settled the case with the aid of a mediator, the Hon. Edward A. Infante. The written Settlement Agreement contemplates the certification of a non-opt out class pursuant to Federal Rule of Civil Procedure 23, defined as: “All Persons who were participants (whether vested or non-vested) in or beneficiaries of the Plan at any time from and after September 1, 2012 (the “Class Period”), provided, however, that the Class shall not include any Defendant or any beneficiary of any Defendant.” Settlement Agreement ¶¶ 1.3, 3.3.2, ECF 116-1 (emphasis omitted). The Settlement Agreement provides that the Company will pay the total amount of $350, 000 (“Settlement Payment”) to settle all claims asserted against all defendants in the action. Id. ¶¶ 1.20, 8.1.1. The $350, 000 Settlement Payment will be used to establish a Settlement Fund which will be maintained and distributed by Class Counsel. Id. ¶ 1.19. The cost of preparing and mailing the class notice will be paid from the Settlement Fund, and class counsel may apply to the Court for an award of attorneys' fees and expenses to be paid from the Settlement Fund. Id. ¶¶ 8.1.2, 8.2.

         On March 20, 2017, the Court issued an order which: granted preliminary approval of the class action settlement; preliminarily certified the class; appointed Plaintiff as class representative; appointed Plaintiff's counsel as class counsel; approved forms and methods of notice to the class; set a deadline of May 15, 2017 for objections; and set a hearing date of June 15, 2017 for Plaintiff's motion for final approval of the class action settlement and for Plaintiff's motion for attorneys' fees. See Order Preliminarily Approving Settlement, ECF 125. The only objection received in response to the class notice was a letter dated May 10, 2017 from Robert J. Polito. See Polito Objection, ECF 133. Mr. Polito does not object to the settlement per se, but he suggests a modification to the Settlement Agreement as discussed below. Id. Mr. Polito does not object to Plaintiff's motion for attorneys' fees and costs. Id.

         On June 15, 2017, the Court heard Plaintiff's motion for final approval and motion for attorneys' fees and costs. Mr. Polito appeared at the hearing and presented argument to the Court. The Court thereafter granted both the motion for final approval of class action settlement and the motion for attorneys' fees on the record, and it advised the parties that a short order memorializing the ruling would issue immediately while a more lengthy order setting forth the Court's reasoning would issue at a later date.

         II. MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT

         A. Legal Standard

         Federal Rule of Civil Procedure 23(3) provides that “[t]he claims, issues, or defenses of a certified class may be settled, voluntarily dismissed, or compromised only with the court's approval.” Fed.R.Civ.P. 23(e). “Adequate notice is critical to court approval of a class settlement under Rule 23(e).” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1025 (9th Cir. 1998). Moreover, “[a] district court's approval of a class-action settlement must be accompanied by a finding that the settlement is ‘fair, reasonable, and adequate.'” Lane v. Facebook, Inc., 696 F.3d 811, 818 (9th Cir. 2012) (quoting Fed.R.Civ.P. 23(e)). The district court “must evaluate the fairness of a settlement as a whole, rather than assessing its individual components.” Id. at 818-19. “[A] district court's only role in reviewing the substance of that settlement is to ensure that it is fair, adequate, and free from collusion.” Id. (internal quotation marks and citation omitted). In making that determination, the district court is guided by several factors articulated by the Ninth Circuit in Hanlon v. Chrysler Corp (“Hanlon factors”). Id. Those factors include:

the strength of the plaintiffs' case; the risk, expense, complexity, and likely duration of further litigation; the risk of maintaining class action status throughout the trial; the amount offered in settlement; the extent of discovery completed and the stage of the proceedings; the experience and views of counsel; the presence of a governmental participant; and the reaction of the class members to the proposed settlement.

Hanlon, 150 F.3d at 1026-27; see also Lane, 696 F.3d at 819 (discussing Hanlon factors). “Additionally, when (as here) the settlement takes place before formal class certification, settlement approval requires a ‘higher standard of fairness.'” Lane, 696 F.3d at 819 (quoting Hanlon, 150 F.3d at 1026).

         B. Notice was Adequate

         The Court previously approved Plaintiff's plan for providing notice to the class when it granted preliminary approval of the class action settlement. See Order Preliminarily Approving Settlement, ECF 125. Prior to the preliminary approval hearing, the Court examined carefully the proposed class notice and found some aspects of the proposed notice to be unclear. The Court required Plaintiff to make certain changes to the notice to clarify the procedures for objecting to the settlement and attending the final approval hearing. Plaintiff submitted a revised proposed class notice along with a blackline version showing that the required revisions had been made. See Notice Re: Revised Form of Notice of Proposed Settlement, ECF 128. Plaintiff provides declaration of counsel stating that the notice was delivered to all ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.