("Stipulation") between the parties and preliminarily approved the terms thereof. The Stipulation provided for defendant to establish a fund of $ 8,800,000 from which members of the class would be compensated. Moreover, the Stipulation allowed plaintiffs counsel to receive up to 27.5 percent of the settlement fund as attorney's fees and reimbursement of costs and expenses.
After preliminary approval, the court established April 11, 1997 as the hearing date at which members of the class could voice their objections to the terms of the settlement or opt out of the class entirely. The court required that fair notice be given to class members, including the mailing of notices of settlement to class members and the publication of a summary notice of hearing in The New York Times and The Wall Street Journal.
Despite this ample notice, only one written objection was received, relating to the amount of attorney's fees involved in the litigation. Furthermore, there were no objections raised at the hearing on April 11, 1997. Because plaintiffs counsel had not provided the court with any documentation relating to the amount of work he had done on the project, the court directed him to do so before any award of attorney's fees would be granted. However, at defendant's request, the court agreed to rule separately on the settlement and the amount of fees to be given to plaintiffs counsel. Because the court finds the terms of the settlement to be both fair and reasonable, the court orders final judicial approval thereof, with judgment reserved as to the attorney's fees issue.
The approval of a class action settlement is a matter committed to the sound discretion of the district court. TBK Partners Ltd. v. Western Union, 675 F.2d 456, 463 (2d Cir. 1982). In approving such a settlement as fair and reasonable, however, a district court "must consider many factors, including the complexity of the litigation, comparison of the proposed settlement with the likely result of litigation, experience of class counsel, the scope of discovery preceding settlement, and the ability of the defendant to satisfy a greater judgment." In re Drexel Burnham Lambert Group, Inc., 960 F.2d 285, 292-93 (2d Cir. 1992). See also City of Detroit v. Grinnell Corp., 495 F.2d 448, 463 (2d Cir. 1974)(reciting these and other factors to be considered by a district court).
Upon reviewing the relevant factors, the court finds the terms of the settlement to be fair to members of the class. Though plaintiff's claims may have some merit to them, and though the class members could stand to gain more were he actually to succeed at a full trial on the merits, there are numerous obstacles to recovery which make the decision to settle a reasonable one. First of all, there is the fact that securities fraud cases such as this one are complex, and the time necessary to complete discovery is substantial. Plaintiff, to the benefit of all class members, successfully avoids the time and expense necessary to prepare this case for trial by settling the case. Secondly, defendant is able to raise a number of defenses commonly asserted in 10b-5 actions, including the lack of detrimental reliance, the lack of causation between any alleged misrepresentation and the price of the stock, and the absence of any material misstatements of fact. These defenses pose a significant risk to the class members' ability to recover any damages from defendant. Finally, and most importantly, there is the fact that defendant is a foreign entity. This complicates and adds to the expense of discovery, gives defendant a possible defense of lack of personal jurisdiction, and makes plaintiff's ability to enforce a judgment rendered in his favor considerably more difficult. As a result, the court finds that plaintiffs willingness to settle this case on the terms provided in the Stipulation is both fair and reasonable.
The court grants final approval of the class action settlement reached between the parties and reserves judgment on the amount of attorney's fees to be awarded.
Dated: April 28, 1997
New York, New York
Constance Baker Motley
United States District Judge
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