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.

In re Ramp Corp. Securities Litigation

October 10, 2007

IN RE RAMP CORPORATION SECURITIES LITIGATION, THIS DOCUMENT RELATES TO ALL ACTIONS.


The opinion of the court was delivered by: Denise Cote, District Judge

OPINION & ORDER

Through an Order of July 3, 2007, the settlement in this securities class action was approved. This Opinion addresses the application for an award of attorneys fees by counsel for the class and makes the findings under Federal Rule of Civil Procedure 11, as required by the Private Securities Litigation Reform Act ("PSLRA"). See 15 U.S.C. § 78u-4(c)(1).

BACKGROUND

Beginning on July 19, 2005, class action lawsuits were filed against executives of Ramp Corporation ("Ramp") and its auditor BDO Seidman LLP ("BDO"). The actions were consolidated, a consolidated amended complaint ("Complaint") was filed by Lead Counsel for the putative plaintiff class, and through an Opinion of July 21, 2006, the claims in the Complaint were largely dismissed. All claims against BDO and three individuals were dismissed with prejudice. Claims against Andrew Brown ("Brown") and one other individual defendant survived. In re Ramp Corp. Sec. Litig., No. 05 Civ. 6521 (DLC), 2006 WL 2037913 (S.D.N.Y. July 21, 2006)("Motion to Dismiss Opinion"). The Motion to Dismiss Opinion is incorporated by reference, and familiarity with the Opinion is assumed.

Following review of documents obtained from Ramp through motion practice before the United States Bankruptcy Court and negotiation before Magistrate Judge Andrew J. Peck, the parties reached a settlement in principal on November 13, 2006. The parties filed their Stipulation of Settlement and application for preliminary approval of the settlement on February 9, 2007. After several revisions to the proposed notice to the class*fn1 and the terms of the settlement, preliminary approval was given on March 23.

A fairness hearing on the settlement was held on June 29, 2007 ("Fairness Hearing"). One class member attended the hearing to present his objections to the settlement. For the reasons stated at the hearing, and in an Opinion which followed the hearing, the objections were rejected and the settlement was approved. See In re Ramp Corp. Sec. Litig., No. 05 Civ. 6521 (DLC), 2007 WL 1964153 (S.D.N.Y. July 3, 2007).

BDO requested that sanctions be imposed on plaintiffs in a February 17, 2007 letter, and a briefing schedule to address the issues raised by that request was also set at the Fairness Hearing. Among other things, Lead Counsel for the class was directed to address specifically whether it had complied with Rule 11, and to submit further information to support their request for attorneys fees, including copies of the draft notices to the class, their computerized time records, and a revised calculation of their lodestar or presumptively reasonable fee*fn2 based solely on the claims that survived the Motion to Dismiss Opinion. Lead Counsel was advised to give particular attention to the March 1 conference at which the February 26 draft of the class notice was discussed. At that conference the Court raised questions about the scope of the release described in the notice and the discussion of the plan of allocation contained in the notice.

On July 20, Lead Counsel made its presentation regarding compliance with Rule 11 and responded to the remaining directives issued at the Fairness Hearing. Instead of filing the drafts of the notice to the class, however, it removed any request for attorney's fees based on work done in connection with the revised notice to the class or the revised release negotiated with the defendants. It also chose not submit its computerized time records, except in summary form. In a brief of July 29, BDO argued that Lead Counsel had not complied with Rule 11. Lead Counsel replied on August 31.

DISCUSSION

I. Rule 11

The PSLRA requires a court to make findings regarding each attorney and party's compliance with Federal Rule of Civil Procedure 11 in actions arising under the PSLRA upon their "final adjudication." 15 U.S.C. § 78u-4(c). Rule 11 is governed by a reasonableness standard:

A pleading, motion or other paper violates Rule 11 either when it has been interposed for any improper purpose, or where, after reasonable inquiry, a competent attorney could not form a reasonable belief that the pleading is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification or reversal of existing law.

W.K. Webster & Co. v. Am. President Lines, Ltd., 32 F.3d 665, 670 (2d Cir. 1994) (citation omitted).

The issues arising under Rule 11 are presented in their starkest form through the claims pleaded in the Complaint against BDO. The Complaint did not contain traditional allegations against an auditor. For example, the Complaint did not even allege that any of the financial statements audited by BDO contained materially false statements. Indeed, the BDO certifications of the audits it performed of Ramp financial statements for the years 2003 and 2004, each of which reported massive losses, carried "going concern" warnings. The 2004 ...


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.