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.”
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.
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
Plaintiff’s Revised Plan because it allows Purchased Shares and In-and-Out
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.” (
Dkt. No. 359-1).
CIVIL MINUTES - GENERAL
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