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jan18.2012.kingruling031113816246

jan18.2012.kingruling031113816246

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Published by len_starn
January 18, 2012- Brown v. Brewer, Judge King Ruling FORCES REBOOT OF NEW CLASS ACTION SHAREHOLDER OBJECTION RIGHT & COURT REVIEW AND RE-START OF REVIEW OF PROPRIETY OF PROPOSED SETTLEMENT - FOR IMPROPRIETIES - MAJOR LOSS FOR "adverse" Class Counsel RGRD & News Corp & other defendants. "In sum, Plaintiff’s Revised Plan is REJECTED"-

News Corp's ability to complete it settlement in the MySpace Federal Brown v. Brewer 2:06-xv-03731 is dealt major setback while shareholders and Class Members in a Class Action win a NEW SETTLEMENT REVIEW WITH RIGHT OF OBJECTION AND FUTURE SETTLEMENT HEARING FOR JUDGE TO MAKE FUTURE RULING OF IF THE $45M IS EQUITABLE AND PASSABLE OR SHOULD BE REJECTED. CERTAINLY THE RULING REJECTS MULTIPLE CONCLUSIONS OF RGRD IN THE RULING LEADING A FACT FINDER TO FORECAST THE FUTURE OF RGRD TO MANAGE THE CASE FOR THE 35M SHARE
CLASS OF HOLDERS OF JULY 18, 2005 FEDERAL CLASS CERTIFIED BY JUDGE KING AND RGRD MANAGING THIS LEGAL ASSET FOR THE PURPORTED BENEFIT OF THE CLASS IS IN SERIOUS DOUBT AFTER RGRD'S SECOND ATTEMPT AT DRESSING UP THE INEQUITABLE SETTLEMENT AMOUNT FOR COURT APPROVAL HAS FAILED AND THE OBJECTORS WHO POINTED OUT THE INEQUITABLE NATURE LED BY INSTITUTIONAL INVESTOR TRAFELET & CO. WHO OWNED OVER 3 MILLION SHARES THAT RGRD WAS IN THE PROCESS OF ELIMINATING FROM ANY RECOVERY WHEN THE COURT TOOK NOTICE RECENTLY OVER THE PAST 6 MONTHS OF PLEADINGS. THIS RULING ON JAN 18 IS EFFECTIVELY ON A NET BASIS -
REJECTING RGRD/DEFENDANTS JOINTMOTION TO FORCE SETTLEMENT FOR THE CLASS AT $45M on 11.9M SHARES FOR CLASS
- TRAFELET AND 15 OTHER INSTITUTIONAL INVESTORS AND MANY INDIVIDUAL SHAREHOLDERS ARE PART OF THE 35M CLASS HOLDING STOCK AS OF JULY 18, 2005 THE DATE THE MERGER WITH NO BIDDING PROCESS WAS EFFECTED. THIS COMBINED WITH A FRAUD UPON THE MARKET BY HIDING MARKET DATA FROM SHAREHOLDERS AND PUBLIC PRIOR TO THE JULY 18. 2005 SALE AT $12.00 SO THERE WAS A FRAUD CAST UPON THE MARKET IN DIMINISHED EBITDA AND DISCLOSURE OF THE MYSPACE SEARCH ASSET AND ABILITY TO AUCTION SUCH ASSET OFF TO YAHOO OR GOOGLE OR ASKJEEVES OR NEWS CORP IN 2005 (OMITTED "MYSPACE SEARCH"). THIS LOSS THE RULE 701 LAY WITNESS HAS PUT AT UP TO $32 BILLION. SENIOR UBS BANKER ARYEH BOURKOFF SAID THE ASSET WAS WORTH UP TO $30B IN 2006. THE SHAREHOLDERS OF MYSPACE NOW CAN GEAR UP A PITCHED OBJECTION TO THE INADEQUATE SETTLEMENT OVER THE NEXT 60 DAYS IN HOPES OF RE-STARTING SETTLEMENT DISCUSSIONS WITH NEW UNCONFLICTED REPRESENTATIVES AND WHERE TRUE VALUE CAN BE RECOGNIZED FOR SHAREHOLDERS VS. FABRICATED $45M SETTLEMENT THAT JIM BROWN AND RGRD HAVE MORE RECENTLY DETERMINED TO TRY TO APPROVE WITH NO RHYME OR REASON RELATIVE TO THE EXPERT VALUATIONS OF EITHER OF ONLY TWO EXPERT OPINIONS: RGRD'S OWN DAMAGE EXPERT PUTS DAMAGES AT UP TO $1.3 BILLION TO THE CLASS. THE RULE 701 LAY EXPERT HAS CALCULATED UP TO $32 BILLION IN DAMAGES. EITHER OF THESE POINT TO THE $45M SETTLEMENT OF WHICH RGRD RECEIVES $15 MILLION OF SUCH TOTAL AND THE 100% CLASS OF Brown V. Brewer RECEIVES $30M IS LESS THEN .03 CENTS ON THE $1.00 AGAINST DAMAGES WHERE THE CLASS HAS ALREADY WON A 6/7/2010 SUMMARY JUDGEMENT "BAD FAITH" DISLOYALTY & BREACH OF FIDUCIARY DUTY CLAIMS AGAINST DEFENDANTS. JUDGE KING SAID A JURY WILL LIKELY FIND AGAINST DEFENDANTS AND NEWS CORP. THEREFORE .03 CENTS OR $45M AGAINST
RGRD'S $1.3Billion damage expert is inadequate on a percentage of potential upside damages. More insufficient on the $45M against up to $32Billion in damages Class could receive within 9 months from Judge overturning RGRD/DEFENDANT $45M SHAM/INADEQUATE SETTLEMENT.
SHAREHOLDERS WILL OVER NEXT 60 DAYS LOOK FOR JUDGE TO FORCE NEW UNCONFLICTED CLASS COUNSEL INTO THE HUGELY IMPORTANT ROLE THAT RGRD THRU THE JAN 18TH RULING AND MANY REJECTIONS AND CRITICAL STATEMENTS OF RGRD'S CLAIMS BEING MADE SAYS VOLUMES OF FUTURE WORTHINESS AND FUTURE ATTEMPTS FOR RGRD TO SURVIVE A REBOOTED AND NEW OBJECTION PERIOD FOR SHAREHOLDERS AND THE COURT TO SCRUTINIZE THE EQUITABLENESS AND PROPRIETY OF THE SETTL
January 18, 2012- Brown v. Brewer, Judge King Ruling FORCES REBOOT OF NEW CLASS ACTION SHAREHOLDER OBJECTION RIGHT & COURT REVIEW AND RE-START OF REVIEW OF PROPRIETY OF PROPOSED SETTLEMENT - FOR IMPROPRIETIES - MAJOR LOSS FOR "adverse" Class Counsel RGRD & News Corp & other defendants. "In sum, Plaintiff’s Revised Plan is REJECTED"-

News Corp's ability to complete it settlement in the MySpace Federal Brown v. Brewer 2:06-xv-03731 is dealt major setback while shareholders and Class Members in a Class Action win a NEW SETTLEMENT REVIEW WITH RIGHT OF OBJECTION AND FUTURE SETTLEMENT HEARING FOR JUDGE TO MAKE FUTURE RULING OF IF THE $45M IS EQUITABLE AND PASSABLE OR SHOULD BE REJECTED. CERTAINLY THE RULING REJECTS MULTIPLE CONCLUSIONS OF RGRD IN THE RULING LEADING A FACT FINDER TO FORECAST THE FUTURE OF RGRD TO MANAGE THE CASE FOR THE 35M SHARE
CLASS OF HOLDERS OF JULY 18, 2005 FEDERAL CLASS CERTIFIED BY JUDGE KING AND RGRD MANAGING THIS LEGAL ASSET FOR THE PURPORTED BENEFIT OF THE CLASS IS IN SERIOUS DOUBT AFTER RGRD'S SECOND ATTEMPT AT DRESSING UP THE INEQUITABLE SETTLEMENT AMOUNT FOR COURT APPROVAL HAS FAILED AND THE OBJECTORS WHO POINTED OUT THE INEQUITABLE NATURE LED BY INSTITUTIONAL INVESTOR TRAFELET & CO. WHO OWNED OVER 3 MILLION SHARES THAT RGRD WAS IN THE PROCESS OF ELIMINATING FROM ANY RECOVERY WHEN THE COURT TOOK NOTICE RECENTLY OVER THE PAST 6 MONTHS OF PLEADINGS. THIS RULING ON JAN 18 IS EFFECTIVELY ON A NET BASIS -
REJECTING RGRD/DEFENDANTS JOINTMOTION TO FORCE SETTLEMENT FOR THE CLASS AT $45M on 11.9M SHARES FOR CLASS
- TRAFELET AND 15 OTHER INSTITUTIONAL INVESTORS AND MANY INDIVIDUAL SHAREHOLDERS ARE PART OF THE 35M CLASS HOLDING STOCK AS OF JULY 18, 2005 THE DATE THE MERGER WITH NO BIDDING PROCESS WAS EFFECTED. THIS COMBINED WITH A FRAUD UPON THE MARKET BY HIDING MARKET DATA FROM SHAREHOLDERS AND PUBLIC PRIOR TO THE JULY 18. 2005 SALE AT $12.00 SO THERE WAS A FRAUD CAST UPON THE MARKET IN DIMINISHED EBITDA AND DISCLOSURE OF THE MYSPACE SEARCH ASSET AND ABILITY TO AUCTION SUCH ASSET OFF TO YAHOO OR GOOGLE OR ASKJEEVES OR NEWS CORP IN 2005 (OMITTED "MYSPACE SEARCH"). THIS LOSS THE RULE 701 LAY WITNESS HAS PUT AT UP TO $32 BILLION. SENIOR UBS BANKER ARYEH BOURKOFF SAID THE ASSET WAS WORTH UP TO $30B IN 2006. THE SHAREHOLDERS OF MYSPACE NOW CAN GEAR UP A PITCHED OBJECTION TO THE INADEQUATE SETTLEMENT OVER THE NEXT 60 DAYS IN HOPES OF RE-STARTING SETTLEMENT DISCUSSIONS WITH NEW UNCONFLICTED REPRESENTATIVES AND WHERE TRUE VALUE CAN BE RECOGNIZED FOR SHAREHOLDERS VS. FABRICATED $45M SETTLEMENT THAT JIM BROWN AND RGRD HAVE MORE RECENTLY DETERMINED TO TRY TO APPROVE WITH NO RHYME OR REASON RELATIVE TO THE EXPERT VALUATIONS OF EITHER OF ONLY TWO EXPERT OPINIONS: RGRD'S OWN DAMAGE EXPERT PUTS DAMAGES AT UP TO $1.3 BILLION TO THE CLASS. THE RULE 701 LAY EXPERT HAS CALCULATED UP TO $32 BILLION IN DAMAGES. EITHER OF THESE POINT TO THE $45M SETTLEMENT OF WHICH RGRD RECEIVES $15 MILLION OF SUCH TOTAL AND THE 100% CLASS OF Brown V. Brewer RECEIVES $30M IS LESS THEN .03 CENTS ON THE $1.00 AGAINST DAMAGES WHERE THE CLASS HAS ALREADY WON A 6/7/2010 SUMMARY JUDGEMENT "BAD FAITH" DISLOYALTY & BREACH OF FIDUCIARY DUTY CLAIMS AGAINST DEFENDANTS. JUDGE KING SAID A JURY WILL LIKELY FIND AGAINST DEFENDANTS AND NEWS CORP. THEREFORE .03 CENTS OR $45M AGAINST
RGRD'S $1.3Billion damage expert is inadequate on a percentage of potential upside damages. More insufficient on the $45M against up to $32Billion in damages Class could receive within 9 months from Judge overturning RGRD/DEFENDANT $45M SHAM/INADEQUATE SETTLEMENT.
SHAREHOLDERS WILL OVER NEXT 60 DAYS LOOK FOR JUDGE TO FORCE NEW UNCONFLICTED CLASS COUNSEL INTO THE HUGELY IMPORTANT ROLE THAT RGRD THRU THE JAN 18TH RULING AND MANY REJECTIONS AND CRITICAL STATEMENTS OF RGRD'S CLAIMS BEING MADE SAYS VOLUMES OF FUTURE WORTHINESS AND FUTURE ATTEMPTS FOR RGRD TO SURVIVE A REBOOTED AND NEW OBJECTION PERIOD FOR SHAREHOLDERS AND THE COURT TO SCRUTINIZE THE EQUITABLENESS AND PROPRIETY OF THE SETTL

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Published by: len_starn on Jan 22, 2012
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E-FiledUNITED STATES DISTRICT COURTCENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.CV 06-3731-GHK (SHx)DateJanuary 18, 2012Title
 Jim Brown v. Brett C. Brewer, et al.
Presiding: The HonorableGEORGE H. KING, U. S. DISTRICT JUDGE
Beatrice HerreraN/AN/ADeputy ClerkCourt Reporter / RecorderTape No.Attorneys Present for Plaintiffs:Attorneys Present for Defendants:NoneNone
Proceedings: (In Chambers) Order re:
(1) Plaintiff’s Revised Plan of Allocation; (2) Trafelet& Company’s Proposal Re Plan of Allocation; (3) Plaintiff’s Motion to StrikeTrafelet & Company’s Proposal Re Plan of Allocation or, in the Alternative,Response TheretoOn September 29, 2011, we rejected the proposed plan of allocation (“Initial Plan”) as not fair,adequate, and reasonable because it did not allow shareholders who held stock on July 18, 2005, butsold before September 30, 2005 (“Sold Shares”), to share in the proceeds, yet the Settlement Agreementrequired them to release their claims. On October 28, 2011, Lead Plaintiff Jim Brown (“Plaintiff”)submitted his Revised Plan of Allocation (“Revised Plan”). On October 31, 2011, purported ClassMember Trafelet & Company LLC (“Trafelet”) filed its Proposal Re Plan of Allocation, which we deemto be Trafelet’s objections to the Revised Plan (“Proposal” or “Objections”). On November 7, 2011,Plaintiff filed a Motion to Strike Trafelet & Company’s Proposal Re Plan of Allocation or, in theAlternative, Response Thereto (“Motion to Strike”). We held oral argument in this matter on January12, 2012. At oral argument we
DENIED
Plaintiff’s Motion to Strike and
REJECTED
Plaintiff’sRevised Plan. Additionally, we informed Trafelet that we would issue rulings on each of its purportedobjections. We now set forth our findings and conclusions. As the Parties are familiar with the facts of this case, we will repeat them only as necessary.
I.Plaintiffs Motion to Strike
Plaintiff moves to strike Trafelet’s Proposal on the ground that our September 29, 2011 Orderdid not invite Trafelet to submit its own plan of allocation. We note that because Trafelet is not arepresentative of the Class, it may not submit a plan of allocation on behalf of the Class. However,having reviewed Trafelet’s Proposal, we deem it to be a series of objections to the fairness of Plaintiff’sRevised Plan. Because we have an independent duty to assess the fairness of any plan of allocation, wechoose to entertain Trafelet’s Proposal. Accordingly, Plaintiff’s Motion to Strike is
DENIED
.
CV-90 (06/04)
CIVIL MINUTES - GENERAL
Page 1 of 6
Case 2:06-cv-03731-GHK -SH Document 402 Filed 01/18/12 Page 1 of 6 Page ID#:13496
 
E-FiledUNITED STATES DISTRICT COURTCENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.CV 06-3731-GHK (SHx)DateJanuary 18, 2012Title
 Jim Brown v. Brett C. Brewer, et al.
II.Legal Standard Governing Approval of a Plan of Allocation
Assessment of a plan of allocation of settlement proceeds in a class action under Federal Rule of Civil Procedure 23 is governed by the same standards of review applicable to the settlement as a whole– the plan must be fair, reasonable, and adequate.
Class Plaintiffs v. City of Seattle
, 955 F.2d 1268,1284-85 (9th Cir. 1992). “As numerous courts have held, a plan of allocation need not be perfect.”
 Inre Giant Interactive Grp., Inc. Sec. Litig.
, No. 07 Civ. 10588(PAE), 2011 WL 5244707, at *8 (S.D.N.Y.Nov. 2, 2011). Instead, “[a]n allocation formula need only have a reasonable, rational basis, particularlyif recommended by competent class counsel.”
 In re WorldCom, Inc. Sec. Litig.
, 388 F. Supp. 2d 319,344 (S.D.N.Y. 2005). Moreover, “[a] plan of allocation that reimburses class members based on theextent of their injuries is generally reasonable.”
 In re Oracle Sec. Litig.
, No. C-09-0931-VRW, 1994WL 502054, at *1 (N.D. Cal. June 18, 1994). “It is also reasonable to allocate more of the settlement toclass members with stronger claims on the merits.”
 Id.
III.Plaintiff’s Revised Plan
 The claims in this litigation are based on (a) violations of federal proxy laws, and (b) breach of fiduciary duty under Delaware law in connection with the merger agreement. Plaintiff’s Revised Planallocates sixty percent (60%) of the net settlement fund to the proxy claim and forty percent (40%) tothe fiduciary duty. Under the Revised Plan, only shareholders who continuously held their shares fromthe announcement of the merger agreement on July 18, 2005 until the closing of the transaction onSeptember 30, 2005 (“Held Shares”) may recover on the proxy claim. Held Shares, Sold Shares,Purchased Shares, and In-and-Out Shares are provided various recovery percentages within the fiduciaryduty claim.
1
Of the forty percent (40%) of the net settlement fund allocated to the fiduciary duty claim,Held Shares receive sixty percent (60%), Purchased Shares receive twenty-five percent (25%), SoldShares receive ten percent (10%), and In-and-Out Shares receive five percent (5%). Thus, of the totalNet Settlement Fund, Held Shares receive eighty-four percent (84%) on a pro-rata basis, PurchasedShares receive ten percent (10%) on a pro-rata basis, Sold Shares receive four percent (4%) on a pro-rata basis, and In-and-Out Shares receive two percent (2%) on a pro-rata basis.We
REJECT
Plaintiff’s Revised Plan because it allows Purchased Shares and In-and-Out
1
Under the Revised Plan, “Held Shares” are “Intermix stock held by a member of the SettlementClass on July 18, 2005 and exchanged for Merger consideration on or after September 30, 2005.”“Purchased Shares” are “Intermix stock purchased by a member of the Settlement Class after July 18,2005 and exchanged for the Merger Consideration on or after September 30, 2005.” “Sold Shares” are“Intermix stock held by members of the Settlement Class on July 18, 2005 and sold prior to September30, 2005.” “In-and-Out Shares” are “Intermix stock purchased by a member of the Settlement Classafter July 18, 2005 and sold prior to September 30, 2005.” (
See
Dkt. No. 359-1).
CV-90 (06/04)
CIVIL MINUTES - GENERAL
Page 2 of 6
Case 2:06-cv-03731-GHK -SH Document 402 Filed 01/18/12 Page 2 of 6 Page ID#:13497
 
E-FiledUNITED STATES DISTRICT COURTCENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.CV 06-3731-GHK (SHx)DateJanuary 18, 2012Title
 Jim Brown v. Brett C. Brewer, et al.
Shares to participate in the portion of the net settlement fund attributed to the fiduciary duty claim.Delaware law clearly holds that these shares do not have standing to pursue a breach of fiduciary dutyclaim in connection with a merger agreement.
See Omnicare, Inc. v. NCS Healthcare, Inc.
, 809 A.2d1163, 1169 n.11 (Del. Ch. 2002) (“A stockholder-plaintiff is barred from bringing claims when shepurchases stock after the board of directors has approved a transaction and the transaction has beenpublicly disclosed” because “public policy detests the ‘purchase’ of a lawsuit.”). Because Plaintiff hasnot pointed to, nor have we found, any authority to the contrary, we conclude that the Revised Planlacks a “rational basis” insofar as it entitles Purchased Shares and In-and-Out Shares (both of whompurchased their shares after the merger agreement) to participate in the recovery allocated to thefiduciary duty claim. Indeed, Plaintiff has stated that he, “too, recognized the likely problem withstanding for shareholders with Purchased [or In-and-Out] Shares.” (Dkt. No. 373, at 6). Additionally,no shareholders with Purchased or In-and-Out Shares objected to the Initial Plan, under which theywould have received no portion of the net settlement fund. Moreover, during oral argument, Plaintiff’scounsel acknowledged that he knew of no authority that conflicts with
Omnicare
’s holding that theseshares do not have standing to assert the fiduciary duty claim.
2
 
IV.Trafelets Proposal
We construe Trafelet’s Proposal to raise the following objections to Plaintiff’s Revised Plan: (1)Purchased and In-and-Out Shares should not participate in the settlement proceeds; if they doparticipate, Purchased Shares should not participate at a greater rate than Sold Shares; (2) the RevisedPlan fails to take into account that different rates of claim submissions may result in under- or over-allocation to some shareholders; (3) the Revised Plan fails to account for the possibility that there aremore Sold Shares than Purchased Shares; and (4) there is no basis to assign greater value to the proxyclaim than the breach of fiduciary duty claim. Insofar as any of these objections may relate to any planof allocation proposed in the future, we rule on them as follows.
1. Objection 1: Purchased and In-and-Out Shares should not participate in the settlement proceeds; if they do participate, Purchased Shares should not participate at a greater rate than Sold Shares
Because we have already rejected the Revised Plan on the ground that it allows Purchased
2
By contrast, in our September 29, 2011 Order, we noted that “there is no clear authority onth[e] issue” of whether Sold Shares lack standing to pursue the breach of fiduciary duty claim.Therefore, there is a rational basis to allow Sold Shares to participate in the recovery allocated to thisclaim, and thus we do not find the Revised Plan to be unfair, inadequate, or unreasonable on this basis.In sum, the only basis on which we find Plaintiff’s Revised Plan to be insufficient is its inclusion of Purchased and In-and-Out Shares in the recovery attributed to the fiduciary duty claim.
CV-90 (06/04)
CIVIL MINUTES - GENERAL
Page 3 of 6
Case 2:06-cv-03731-GHK -SH Document 402 Filed 01/18/12 Page 3 of 6 Page ID#:13498

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