Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_06-cv-04346/USCOURTS-cand-5_06-cv-04346-20/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 28:1331 Fed. Question

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Case No. C 06-4346 JF (HRL)

ORDER (1) GRANTING FINAL APPROVAL OF CLASS ACTION SETTLEMENT ETC.

(JFLC2)

**E-filed 5/14/08**

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

IN RE RAMBUS, INC. SECURITIES

LITIGATION,

Master File No.: C 06-4346 JF (HRL)

ORDER (1) GRANTING FINAL

APPROVAL OF CLASS ACTION

SETTLEMENT; (2) APPROVING

PLAN OF ALLOCATION; 

(3) AWARDING ATTORNEYS’ FEES

AND COSTS ; AND 

(4) ADDRESSING OBJECTIONS OF

WILLIAM AND KATHLEEN

MCWHORTER 

[re: doc. nos. 176, 178, 179 & 180]

On May 14, 2008, Court conducted a hearing with respect to the following motions and

objections: (1) motion of named Plaintiffs and Defendants for final approval of the settlement;

(2) motion of named Plaintiffs and Defendants for approval of plan of allocation; (3) motion of

class counsel for an award of attorneys’ fees and costs; and (4) objections of William and

Kathleen McWhorter. The Court has reviewed the documents filed in connection with these

motions and objections and requests and has considered the oral arguments presented at the

hearing. The Court finds and concludes as follows:

(1) The proposed settlement is “fundamentally fair, adequate and reasonable” as is

required under Fed. R. Civ. P. 23(e) and applicable Ninth Circuit authority. See Mego Financial

Corp. Sec. Litig., 213 F.3d 454, 459 (9th Cir. 2000); Officers for Justice v. Civil Service

Case 5:06-cv-04346-JF Document 187 Filed 05/14/08 Page 1 of 6
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 Defendants filed motions to dismiss, but the hearing on those motions was continued 1

several times and ultimately vacated in light of the parties’ settlement negotiations.

 The settlement fund actually consists of $18,000,000 plus interest accrued from March 2

6, 2008.

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Case No. C 06-4346 JF (HRL)

ORDER (1) GRANTING FINAL APPROVAL OF CLASS ACTION SETTLEMENT ETC.

(JFLC2)

Commission, 688 F.2d 615, 625 (9th Cir. 1982). “Assessing a settlement proposal requires a

district court to balance a number of factors: the strength of the plaintiffs’ case; the risk,

expense, complexity, and likely duration of further litigation; the risk of maintaining a 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; . . . and the

reaction of the class members to the proposed settlement.” Mego Financial, 213 F.3d at 458. 

The district court also must satisfy itself that the settlement is not be the product of collusion

among the negotiating parties. Id.

In this instance, the Court cannot assess the strength of Plaintiffs’ case with any degree of

certainty, because the complaint was not tested by motion during the litigation. Plaintiffs 1

represent that they have every confidence that they would have defeated a motion to dismiss. 

However, given the discovery restrictions applicable to securities fraud litigation, and the

rigorous pleading standards applicable to such cases, Plaintiffs faced significant risks of defeat

or, at the least, protracted litigation, had they not reached settlement. The settlement was

negotiated at arms length by experienced counsel. The $18,000,000 settlement provides the 2

class with a greater recovery than many other class actions involving securities backdating. See

Motion, p. 9 (collecting cases). The proposed plan of allocation provides for cash recoveries for

class members; in the event that money remains in the fund after all claims have been processed,

those monies will be distributed to class members rather than reverting to defendants. Only one

objection has been received, which is addressed below. 

(2) The plan of allocation of the settlement proceeds appears to be fair, reasonable

and adequate as required by applicable authority. See Class Plaintiffs v. Seattle, 955 F.2d 1268,

1284-85 (9th Cir. 1992). The Recognized Loss formula is based upon reasoned distinctions

between the three categories of securities, and also takes into account the three separate

Case 5:06-cv-04346-JF Document 187 Filed 05/14/08 Page 2 of 6
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Case No. C 06-4346 JF (HRL)

ORDER (1) GRANTING FINAL APPROVAL OF CLASS ACTION SETTLEMENT ETC.

(JFLC2)

corrective disclosures dated May 29, 2006, June 27, 2006 and July 18, 2006. 

(3) Class counsel seeks a fee award of 25% of the settlement fund, as well as

reimbursement of litigation expenses in the amount of $282,788.49. The expenses are welldocumented in the declarations of counsel and are of the type that typically would be billed to

paying clients. See Harris v. Marhoefer, 24 F.3d 16, 19 (9th Cir. 1994). 

With respect to the fees, the Court concludes that the “reasonable percentage” method

appropriately may be applied. The Ninth Circuit has held that under the reasonable percentage

method, 25% of the common fund is the “benchmark” award. Paul, Johnson, Alston & Hunt v.

Graulty, 886 F.2d 268, 272-73 (9th Cir. 1989). Counsel provides citations to ninety-four district

court decisions awarding 25% or more in securities class actions. Turning to the specific facts in

this case: the settlement achieved is favorable to the class, and is for a significantly greater dollar

amount than many other settlements in backdating cases; counsel took on the burden of the

contingent fee arrangement and fronted all the litigation expenses; a 25% award reflects the

market rate in similar complex, contingent litigation; and the case would have been difficult and

risky to litigate. Accordingly, the Court will award attorneys’ fees in the amount of 25% of the

settlement fund, as well as litigation expenses in the amount of $282,788.49.

(4) From 169,514 notices sent to potential class members, only one objection has

been received, that of William and Kathleen McWhorter. However, the McWhorters in fact do

not appear to be class members. The settlement class is defined to include all persons and

entities who “purchased the common stock and/or call options of Rambus, or sold put out options

of Rambus, between December 4, 2001 and July 18, 2006, inclusive, and were damaged

thereby.” The McWhorters do not represent that they purchased common stock during this

period, but instead state that they sold common stock during the class period. Moreover, it

appears that the McWhorters sold prior to the first corrective disclosure, which was made on

May 30, 2006. The Plan of Allocation does not provide for any recovery for shares sold prior to

that date. Accordingly, the McWhorters do not appear to have standing to participate in this

proceeding.

At the hearing, the Court was informed by counsel that the McWhorters have withdrawn

Case 5:06-cv-04346-JF Document 187 Filed 05/14/08 Page 3 of 6
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Case No. C 06-4346 JF (HRL)

ORDER (1) GRANTING FINAL APPROVAL OF CLASS ACTION SETTLEMENT ETC.

(JFLC2)

their objection. The Court nonetheless raised with counsel the McWhorters’ contention that

potential class members were not given adequate time to opt out of the class or file objections. 

The notice was mailed to brokers and other nominees on March 17, 2008. Beginning on April 7,

2008, the Claims Administrator began receiving records containing the names and addresses of

potential class members. The Claims Administrator then began mailing the notice to those

individuals and entities on a rolling basis. The deadline for opting out or submitting objections

was April 24, 2008. Accordingly, even though the notice also was published in The Wall Street

Journal on March 24, 2008, the Court had some question as to whether potential class members

received adequate notice. At the hearing, counsel represented that the McWhorters’ objection –

since withdrawn – is the only objection received before or after the April 24 deadline. Given that

more than 169,000 notices were mailed, the Court takes this fact as a strong indication that none

of the potential class members felt that they did not have adequate time to respond. The Court

noted at the hearing that if an objection were to be raised based on this point after the Court

grants final approval of the settlement, such objection could be considered by the Court under

Federal Rule of Civil Procedure 60.

IT IS SO ORDERED. 

DATED: May 14, 2008

__________________________________

JEREMY FOGEL

United States District Judge

Case 5:06-cv-04346-JF Document 187 Filed 05/14/08 Page 4 of 6
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Case No. C 06-4346 JF (HRL)

ORDER (1) GRANTING FINAL APPROVAL OF CLASS ACTION SETTLEMENT ETC.

(JFLC2)

This Order has been served upon the following persons:

Mary E. Alexander malexander@maryalexanderlaw.com 

Patrice L. Bishop service@ssbla.com 

Michael L. Braunstein mbraunstein@kgglaw.com 

Timothy J. Burke service@ssbla.com 

Justin S. Chang jchang@shearman.com, rcheatham@shearman.com 

Douglas John Clark dclark@wsgr.com 

Jeffrey S. Facter jfacter@shearman.com, jae.ko@shearman.com, rcheatham@shearman.com 

William B. Federman wfederman@aol.com, law@federmanlaw.com, ngb@federmanlaw.com 

Boris Feldman boris.feldman@wsgr.com, ncarvalho@wsgr.com 

Anthony I. Fenwick anthony.fenwick@dpw.com, angela.quach@dpw.com, cdoyle@dpw.com 

Donald P. Gagliardi dgagliardi@be-law.com, emtofelogo@be-law.com, gsimmons@be-law.com 

Martin N. Gelfand mgelfand@irell.com 

Michael M. Goldberg info@glancylaw.com 

Gary S. Graifman ggraifman@kgglaw.com 

Erin Jane Holland eholland@foley.com 

John Charles Hueston jhueston@irell.com 

Frank James Johnson frankj@johnsonbottini.com, brett@johnsonbottini.com,

frankb@johnsonbottini.com, trisha@johnsonbottini.com 

Willem F. Jonckheer wjonckheer@schubert-reed.com 

Alexander Louis Karpman akarpman@irell.com 

Garland Aycuff Kelley GKelley@irell.com 

Felix Shih-Young Lee flee@fenwick.com 

Case 5:06-cv-04346-JF Document 187 Filed 05/14/08 Page 5 of 6
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Case No. C 06-4346 JF (HRL)

ORDER (1) GRANTING FINAL APPROVAL OF CLASS ACTION SETTLEMENT ETC.

(JFLC2)

Howard Theodore Longman tsvi@aol.com 

Susan Samuels Muck smuck@fenwick.com, cgalvin@fenwick.com 

Juan Carlos Orellana corellana@fenwick.com, bwalrod@fenwick.com,

DocketCalendarRequests@fenwick.com 

Jay L. Pomerantz jpomerantz@fenwick.com, slim@fenwick.com 

Darryl Paul Rains drains@mofo.com, dgillis@mofo.com 

Ignacio Evaristo Salceda isalceda@wsgr.com, rlustan@wsgr.com 

David Siegel dsiegel@irell.com 

Jay Edward Smith js@gslaw.org, jlawton@gslaw.org 

Dennis Stewart dstewart@hulettharper.com, office@hulettharper.com 

Cheryl Thomae Viirand cheryl.viirand@dpw.com, ecf.ct.papers@dpw.com,

richard.cooper@dpw.com, susan.lee@dpw.com 

Namita Wahi namita.wahi@dpw.com, catherine.stevenson@dpw.com 

James H.R. Windels james.windels@dpw.com 

Stephanie Laura Zeller szeller@mofo.com, llontayao@mofo.com 

Jill R. Zimmerman jill.zimmerman@dpw.com, brooke.russakoff@dpw.com,

nanci.salyer@dpw.com 

Daniel Scott Brown

Law Office of Daniel Brown

131 Lawnview Circle

Danville, CA 94526-5107

William K. Langfan Trust

Three Embarcadero Center

Suite 1650

San Francisco, CA 94111

Case 5:06-cv-04346-JF Document 187 Filed 05/14/08 Page 6 of 6