Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_13-cv-03791/USCOURTS-cand-3_13-cv-03791-9/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:78m(a) Securities Exchange Act

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States District 

Court

For the Northern District of California 

IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF CALIFORNIA 

I. INTRODUCTION 

Now before the Court are Lead Plaintiff's motions for (1) 

final approval of class action settlement and plan of allocation of 

settlement proceeds and (2) attorneys' fees and expenses. ECF Nos. 

88 ("Settlement Motion"); 89 ("Fees Motion"). The motions are 

fully briefed and unopposed. ECF Nos. 94 ("Non-opposition"); 96 

("Reply"). 

The parties appeared before the Court for a final hearing to 

evaluate the fairness of the settlement on August 28, 2015. No 

objections were filed with the Court or made during the hearing. 

Having considered all of the parties' arguments, as well as the 

supporting documents and declarations, the Court hereby GRANTS the 

Settlement Motion and GRANTS the Fees Motion. 

In re ECOTALITY, INC. 

SECURITIES LITIGATION 

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Master File No. 13-cv-03791-SC 

ORDER GRANTING (1) MOTION FOR 

FINAL APPROVAL OF SETTLMENT 

AND PLAN OF ALLOCATION OF 

SETTLEMENT PROCEEDS AND (2) 

MOTION FOR ATTORNEYS' FEES AND 

EXPENSES 

This Document Relates To: 

ALL ACTIONS 

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II. BACKGROUND 

ECOtality designed, built, and sold electric vehicle ("EV") 

charging systems. Most of ECOtality's revenues came via the 

Department of Energy's ("DOE") Vehicle Technologies program. In 

2009, ECOtality received a $100.2 million grant from DOE to deploy 

EV chargers and analyze their usage (known as the "EV Project"). 

Pursuant to a 2012 modification to ECOtality's arrangement with 

DOE, ECOtality was required to deploy 13,200 EV chargers by 

September 2013 and to complete its data analysis by December 21, 

2013. 

Plaintiffs allege that between April 16, 2013 and August 9, 

2013 (the "Class Period"), Defendants made a number of false or 

misleading statements about ECOtality's progress on the EV Project 

and the company's business prospects. In August 2013, ECOtality 

revealed a number of problems with its business, including its 

inability to complete the EV Project, the suspension of DOE 

payments, ECOtality's failure to sell enough EV chargers to support 

its operations, and technological problems with its EV chargers. 

ECOtality's stock price suffered a precipitous drop on August 12, 

2013. ECOtality and its subsidiaries filed for bankruptcy one 

month later. 

Plaintiffs brought this class action suit on August 15, 2013. 

ECF No. 1. Their Consolidated Amended Complaint ("CAC") asserts 

claims against ECOtality officers and directors under sections 

10(b) (for making false or misleading statements that caused 

Plaintiffs to buy overvalued ECOtality stock) and 20(a) (for 

control person liability) of the Securities Exchange Act of 1934 

(the "Exchange Act"). ECF No. 52 ¶¶ 1, 172-95. It also asserts 

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additional claims under Sections 11 (for including false or 

misleading information in a registration statement) and 15 (for 

control person liability) of the Securities Act of 1933 (the 

"Securities Act"). Id. 

The Court dismissed Plaintiffs' CAC on September 16, 2014 with 

leave to amend. ECF No. 70. Several of Plaintiffs' claims were 

dismissed with prejudice, including Plaintiffs' Section 11 claims. 

Prior to filing an amended complaint, the parties stipulated to a 

settlement on December 23, 2014. ECF No. 78 ("Settlement 

Agreement"). Pursuant to the Settlement Agreement, Defendants will 

establish a Settlement Fund of $1,100,000. The Settlement Fund 

will be used to make payments for attorneys' fees and expenses, 

settlement administration expenses, and an incentive award of 

$1,350 to Lead Plaintiff Joseph Vale. The balance will be 

distributed to class members who timely file a claim form pursuant 

to the Plan of Allocation, which is detailed in the Notice to class 

members. See ECF No. 78, Ex. A-1 ("Notice") at 8-10. Any 

remaining balance after the initial distribution will be 

redistributed to class members who timely submitted a claim form, 

without reversion to the Defendants. If 100% of eligible claims 

are filed, the parties estimate a payment of approximately $0.05 

per share after expenses and fees. 

The parties received the Court's preliminary approval of the 

settlement on March 6, 2015. ECF No. 84 ("Prel. Appr. Order"). As 

of May 1, 2015, the claims administrator distributed 10,131 copies 

of the Notice and claim form (collectively the "Claim Package") to 

potential class members. The claims administrator also published 

the Notice in Investor's Business Daily and PR Newswire. As of May 

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1, 2015, the claims administrator did not receive any requests for 

exclusion from the class. 

Objections to the settlement, the request for final approval, 

and the request for attorneys' fees, costs, and incentive awards 

had to be filed by May 19, 2015. As of July 31, 2015, no 

objections had been filed. Nor were any objections made at the 

fairness hearing held on August 28, 2015. 

III. SETTLEMENT MOTION 

A. Legal Standard 

Settlement of a class action law suit requires approval of the 

Court. See Fed. R. Civ. P. 23(e). The Court must find that the 

proposed settlement is fundamentally fair, adequate, and 

reasonable. Staton v. Boeing Co., 327 F.3d 938, 959 (9th Cir. 

2003) (citing Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th 

Cir. 1998)). In making this determination, the Court may consider 

any or all of the following factors, if applicable: 

the strength of plaintiffs' case; the risk, expense, 

complexity, and likely duration of further litigation; 

the risk of maintaining 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; the presence of a 

governmental participant; and the reaction of the class 

members to the proposed settlement. 

Officers for Justice v. Civil Serv. Comm'n, 688 F.2d 615, 625 (9th 

Cir. 1982). This list is not intended to be exhaustive; the Court 

must consider the applicable factors in the context of the case at 

hand. See id. 

Despite the importance of fairness, the Court must also be 

mindful of the Ninth Circuit's policy favoring settlement, 

particularly in class action law suits. See, e.g., Officers for 

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Justice, 688 F.2d at 625 ("Finally, it must not be overlooked that 

voluntary conciliation and settlement are the preferred means of 

dispute resolution. This is especially true in complex class 

action litigation . . . ."). 

While balancing all of these interests, the Court's inquiry is 

ultimately limited "to the extent necessary to reach a reasoned 

judgment that the agreement is not the product of fraud or 

overreaching by, or collusion between, the negotiating parties." 

Id. The Court, in evaluating the agreement of the parties, is not 

to reach the merits of the case or to form conclusions about the 

underlying questions of law or fact. See id. 

B. Discussion 

The first relevant factor in the present matter is the risk of 

continued litigation balanced against the certainty and immediacy 

of recovery from the settlement. See In re Mego Fin. Corp. Sec. 

Litig., 213 F.3d 454, 458 (9th Cir. 2000). The Defendants denied, 

and continue to deny, liability for Plaintiffs' claims. Given the 

risks associated with continued litigation, the Settlement 

Agreement, which offers an immediate and certain award for all of 

the Class Members, appears a much better option. 

Under the circumstances, the Court also finds that the 

settlement amount is reasonable. Lead Plaintiff initially 

estimated damages to be $12.9 million or $1.16 per share based on 

the $1.16 price decline on August 12, 2013. ECF No. 79 ("Prel. 

Appr. Mot.") at 5-6. That damage estimate was based on Lead 

Plaintiff's claims that all of the false statements alleged in the 

Complaint caused the stock price to be artificially inflated by 

$1.16. Because the Court dismissed with prejudice several of 

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Plaintiffs' claims (ECF No. 70), the estimated recovery at trial is 

now less than $12.9 million. Although Lead Plaintiff has not 

provided a revised estimate of his expected recovery at trial, the 

$1.1 million settlement appears to be at least 10% of the expected 

recovery at this point. 

A settlement of at least 10% of the expected recovery is 

reasonable in light of the strength of Lead Plaintiff's case and 

the risk, expense, complexity, and likely duration of further 

litigation. See ECF No. 80 ("Seefer Decl.") ¶¶ 23-32 (detailing 

the risks of continued litigation, including that the Court could 

dismiss Lead Plaintiff's amended complaint with prejudice or that 

Lead Plaintiff would be unable to prove his claims at trial). 

Further, "[i]t is well-settled law that a cash settlement amounting 

to only a fraction of the potential recovery does not per se render 

the settlement inadequate or unfair." Officers for Justice, 688 

F.2d at 628; see also In re Omnivision Techs., 559 F. Supp. 2d 

1036, 1042 (N.D. Cal. 2007) (approving settlement in which class 

received payments totaling 6% of potential damages). The Court 

concludes, therefore, that the immediacy and certainty of the 

settlement award in light of the risks of continued litigation 

justifies the settlement amount. See Omnivision Techs., 559 F. 

Supp. 2d at 1042. 

 Courts also look at the extent of the discovery conducted and 

the stage of the litigation to determine whether the plaintiff has 

enough information to make an informed decision regarding 

settlement. In re Mego Fin. Corp. Sec. Litig., 213 F.3d at 459. 

No discovery has been conducted in this case. Lead Plaintiff 

nevertheless argues that "the stage of the proceedings have reached 

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a point where an intelligent evaluation of the Litigation and the 

propriety of settlement could be made." Settlement Motion at 12. 

Specifically, Lead Plaintiff asserts that his counsel has conducted 

an extensive investigation of the facts alleged, reviewed and 

analyzed witness accounts of ECOtality's business, consulted with 

an expert in damages, reviewed and analyzed all public information 

regarding ECOtality, and participated in extensive settlement 

negotiations, including an exchange of mediation statements. Id. 

at 13. The Court is mindful that "in the context of class action 

settlements, formal discovery is not a necessary ticket to the 

bargaining table where the parties have sufficient information to 

make an informed decision about settlement." In re Mego Fin. Corp. 

Sec. Litig., 213 F.3d at 459 (citations and internal quotation 

marks omitted). Overall, however, this factor does not weigh in 

favor of approval. 

 The next factor considers the recommendations of experienced 

counsel. Lead Counsel has significant experience in securities and 

other complex class action litigation and has negotiated numerous 

other class action settlements. In their view, the settlement is 

"clearly fair, reasonable and adequate, and in the best interest of 

the Class." Settlement Motion at 13. This factor therefore weighs 

in favor of approval. 

 The final factor considered is the reaction of the class to 

the proffered settlement. "'It is established that the absence of 

a large number of objections to a proposed class action settlement 

raises a strong presumption that the terms of a proposed class 

settlement are favorable to the class members.'" Omnivision 

Techs., 559 F. Supp. 2d at 1043 (quoting Boyd v. Bechtel Corp., 485 

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F. Supp. 610, 622 (N.D. Cal. 1979)). After receiving notice of the 

proposed settlement, class members in this suit have been silent. 

As a result, this factor weighs heavily in favor of approval. See 

In re Rambus Inc. Derivative Litig., 2009 U.S. Dist. LEXIS 131845, 

*9, 2009 WL 166689 (N.D. Cal. Jan. 20, 2009) (quoting In re 

SmithKline Beckman Corp. Sec. Litig., 751 F. Supp. 525, 530 

(E.D.Pa. 1990)). 

 Given the benefits to the class and the lack of objections, 

the Court finds the settlement to be fair, adequate, and a sound 

alternative to continued litigation. Lead Plaintiff's motion for 

final approval is GRANTED. 

IV. FEES MOTION 

A. Legal Standard 

Rule 23(h) provides that "[i]n a certified class action, the 

Court may award reasonable attorneys' fees and nontaxable costs 

that are authorized by law or by the parties' agreement." Fed. R. 

Civ. P. 23(h). However, courts "have an independent obligation to 

ensure that the award, like the settlement itself, is reasonable, 

even if the parties have already agreed to an amount." In re 

Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 941 (9th Cir. 

2011) (citations omitted). Where, as here, the settlement of a 

class action creates a common fund, the court has discretion to 

award attorneys' fees using either the lodestar method or the 

percentage of the fund approach. Vizcaino v. Microsoft Corp., 290 

F.3d 1043, 1047 (9th Cir. 2002). The percentage of the fund is the 

typical method of calculating class fund fees. See id. at 1050 

(noting "the primary basis of the fee award remains the percentage 

method"). The Ninth Circuit has established 25% of the common fund 

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as the "benchmark" for attorneys' fees, with 20–30% as the usual 

range. Id. at 1047. However, the "benchmark percentage should be 

adjusted, or replaced by a lodestar calculation, when special 

circumstances indicate that the percentage recovery would be either 

too small or too large in light of the hours devoted to the case or 

other relevant factors." Six Mexican Workers v. Ariz. Citrus 

Growers, 904 F.2d 1301, 1311 (9th Cir. 1990). 

Even when applying the percentage method, the Court should use 

the lodestar method as a cross-check to determine the fairness of 

the fee award. Vizcaino, 290 F.3d at 1050. "The lodestar crosscheck calculation need entail neither mathematical precision nor 

bean counting . . . [courts] may rely on summaries submitted by the 

attorneys and need not review actual billing records." In re Rite 

Aid Corp. Sec. Litig., 396 F.3d 294, 306–07 (3d Cir. 2005) 

(footnote and citation omitted). The Court's selection of the 

benchmark or any other rate must be supported by findings that take 

into account all of the circumstances of the case, including the 

result achieved, the risk involved in the litigation, the skill 

required and quality of work by counsel, the contingent nature of 

the fee, awards made in similar cases, and the lodestar crosscheck. Vizcaino, 290 F.3d at 1048–50. 

At its discretion, the Court may also award incentive or 

service awards to named plaintiffs to compensate them for work done 

on behalf of the class and in consideration of the risk undertaken 

in bringing the action. Rodriguez v. West Publishing Corp., 563 

F.3d 948, 958–59 (9th Cir. 2009). Courts often assess the 

reasonableness of the award by taking into consideration: "(1) the 

risk to the class representative in commencing a suit, both 

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financial and otherwise; (2) the notoriety and personal 

difficulties encountered by the class representative; (3) the 

amount of time and effort spent by the class representative; (4) 

the duration of the litigation; and (5) the personal benefit (or 

lack thereof) enjoyed by the class representative as a result of 

the litigation." Van Vranken, 901 F. Supp. at 299 (citations 

omitted). In this district, a $5,000 incentive award is 

presumptively reasonable. See Pierce v. Rosetta Stone, Ltd., No. C 

11-01283 SBA, 2013 WL 5402120, at *6 (citations omitted). 

B. Discussion 

Lead Plaintiff's counsel requests a fee award of $275,000, 

payable out of the gross settlement amount of $1.1 million. The 

requested fee amounts to 25% of the common fund, consistent with 

the 25% benchmark the Ninth Circuit considers presumptively 

reasonable. See In re Bluetooth, 654 F.3d at 942. 

The result achieved by Lead Plaintiff's counsel through this 

settlement is an adequate one in light of the risks. If the 

parties pursued further litigation, Lead Plaintiff would face 

possible dismissal with prejudice and potential challenges 

associated with proving his claims at trial. Further, a 25% fee 

award is less than the median fee award for similar cases. See 

Fees Motion at 7-8. Finally, the requested fee is reasonable under 

a lodestar cross-check analysis. Lead Plaintiff's counsel has 

provided evidence showing that its lodestar is $800,836.75. Thus, 

the requested fee represents only 34% of its lodestar. For these 

reasons, the Court finds the proposed 25% award for attorneys' fees 

reasonable. 

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Lead Plaintiff's counsel is also entitled to reimbursement of 

reasonable expenses. Fed. R. Civ. P. 23(h); see Van Vranken, 901 

F. Supp. at 299 (approving reasonable costs in class action 

settlement). The Settlement Agreement permits Lead Plaintiff's 

counsel to seek up to $50,000 in litigation costs. Lead 

Plaintiff's counsel's incurred litigation expenses total 

$38,943.48. Having reviewed the evidence submitted in support of 

the request for expenses, the Court finds the expenses were 

reasonably incurred and awards Lead Plaintiff's counsel $38,943.48. 

Finally, the Fees Motion requests $1,350 to compensate Lead 

Plaintiff for his time and effort as a representative of the Class. 

Lead Plaintiff has filed a declaration asserting that he devoted at 

least 15 hours to litigation-related activities in this matter. 

ECF No. 90 ¶ 8. Based on his recent income, he submits that a rate 

of $90 per hour is reasonable under the circumstances. Id. ¶ 9. 

The Court agrees. 

 For these reasons, Lead Plaintiff's motion for attorneys' fees 

is GRANTED. 

V. CONCLUSION 

For the reasons detailed above, the Court GRANTS the 

Settlement Motion and GRANTS Lead Plaintiff's Fees Motion, and 

ORDERS as follows: 

1. The Court hereby APPROVES the Settlement Agreement and 

the Plan of Allocation of Settlement Proceeds as set 

forth in the Settlement Agreement (ECF No. 78) and the 

Notice sent to class members. 

2. The Court AWARDS Lead Plaintiff's counsel attorneys' fees 

in the amount of $275,000. The fees shall be allocated 

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among counsel for the Lead Plaintiff in a manner that 

reflects each counsel's contribution to the initiation, 

prosecution, and resolution of the litigation. 

3. The Court AWARDS Lead Plaintiff's counsel reimbursement 

of expenses in the amount of $38,943.48. 

4. The Court AWARDS an incentive payment of $1,350 to Joseph 

Vale, the class representative. 

All such amounts are to be paid from the settlement fund in 

accordance with the terms of the Settlement Agreement. 

 IT IS SO ORDERED. 

Dated: August 28, 2015 

UNITED STATES DISTRICT JUDGE

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