Source: http://ny.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20101014_0002048.C02.htm/qx
Timestamp: 2017-06-25 12:23:13
Document Index: 737110162

Matched Legal Cases: ['§ 11', '§ 11', '§ 11', '§ 10', '§ 77', '§ 78', '§ 11', '§ 11', '§ 11', '§ 11', '§ 11']

| Alvin Victor, William D. Huhn, Harriet G. Victor v. Argent Classic Convertible Arbitrage Fund L.P.
Alvin Victor, William D. Huhn, Harriet G. Victor v. Argent Classic Convertible Arbitrage Fund L.P.
ALVIN VICTOR, WILLIAM D. HUHN, HARRIET G. VICTOR, PLAINTIFFS-APPELLANTS,v.ARGENT CLASSIC CONVERTIBLE ARBITRAGE FUND L.P., ELKMONT CAPITAL LIMITED, UBS O`CONNOR LLC., ARGENT LOWLEV CONVERTIBLE ARBITRAGE FUND LTD., ARGENT CLASSIC CONVERTIBLE ARBITRAGE FUND [BERMUDA] L.P., EMINENCE CAPITAL, L.L.C., PLAINTIFFS-APPELLEES, NEW YORK CITY EMPLOYEES' RETIREMENT SYSTEM, ET AL., DEFENDANTS.
Appeal from a post-judgment order of the United States District Court for the Southern District of New York (McKenna, J.) denying non-lead class counsel's petition for increased attorneys' fees.
08-4904-cv
In re: Adelphia Communications Corp. v. Securities & Derivative Litigation (No. II)
Before: SACK, B.D. PARKER, WESLEY, Circuit Judges.
Under the common fund doctrine, attorneys who create a fund for the benefit of a class of plaintiffs are entitled to reasonable compensation from that fund. Plaintiffs-Appellants, represented by the firm of Chimicles & Tikellis LLP ("C&T"), filed two class action complaints alleging securities fraud by Adelphia Communications Corporation. The class action complaints were consolidated with other securities class actions filed against Adelphia, and Abbey Spanier Rodd & Abrams, LLP ("Abbey") and Kirby McInerney LLP ("Kirby") were appointed lead counsel. The class ultimately reached a settlement of $245 million with a number of Adelphia's lenders and underwriters. From that amount, the United States District Court for the Southern District of New York (McKenna, J.) awarded lead counsel $52.4 million in attorneys' fees, a substantial multiplier over their lodestar amount. Abbey and Kirby then allocated $155,610 of the attorneys' fees award to C&T, an amount that represents C&T's lodestar with no multiplier. C&T petitioned the District Court for an increase to $17 million in fees, arguing that but for the claims it had raised, a settlement would not have been reached. The District Court denied C&T's request. This appeal followed. We affirm.
In March 2002, Adelphia, a large cable television provider, disclosed that it had incurred $2.3 billion in previously undisclosed, off-balance sheet debt arising from widespread self- dealing by various members of the Rigas family, who were Adelphia=s founders and controlling shareholders. Adelphia's disclosures precipitated numerous lawsuits and, beginning in April 2002, more than thirty individual and class action law suits were filed in the United States District Court for the Eastern District of Pennsylvania against Adelphia and its officers, directors, auditors, underwriters, and lenders.
In June 2002, C&T filed a lawsuit in the Eastern District of Pennsylvania styled Victor v. Adelphia Communications Corp., 02-cv-3659 ("Victor I"), on behalf of investors who purchased certain Adelphia Notes between January 2001 and May 2002. That same month, C&T filed another complaint, Huhn v. Rigas, 02-cv-4334 ("Victor II"), on behalf of investors who purchased the same Notes between March 2002 and June 2002. Together, the Victor complaints alleged that Solomon Smith Barney ("SSB") and Bank of America Securities ("BAS"), Adelphia's lead underwriters, violated §§ 11 and 12(a)(2) of the Securities Act by making untrue statements or omissions of material fact in a 1999 Registration Statement underlying the Notes' offerings. On June 7, 2002, the same day that C&T filed Victor I, a law firm not party to this appeal filed W.R. Huff Asset Management Co., LLC v. Deloitte & Touche, LLP, No. 02-cv-0417 ("Huff"), in the Western District of New York, also alleging, among other things, that BAS and SSB violated §§ 11 and 12 of the Securities Act.
In July 2003, the Panel on Multidistrict Litigation transferred the various suits against Adelphia to the Southern District of New York, where they were consolidated. Huff was also transferred to the Southern District of New York but was not consolidated. In December 2003, the District Court entered an order appointing Argent/UBS Group and Eminence Capital, LLC lead plaintiffs and the Abbey and Kirby law firms lead counsel. Lead plaintiffs then filed a consolidated complaint on behalf of a class whose members bought Adelphia debt and securities between August 1999 and June 2002. The consolidated complaint incorporated the Victor complaints' §§ 11 and 12 claims against SSB and BAS. The complaint also added certain new §§ 10(b), 11, and 12 claims against SSB, BAS, and other underwriters and lenders not previously named in any of the Adelphia actions. Additionally, the complaint asserted claims arising under the Exchange Act, the Trust Indenture Act of 1939, and state common law. Under the Securities Act, claims are time-barred unless they are brought "within one year after the discovery of the untrue statement or the omission, or after such discovery should have been made by the exercise of reasonable diligence, [and within] three years after the security was bona fide offered to the public." 15 U.S.C. § 77m. Similarly, under the Exchange Act, claims are time-barred unless they are brought "within one year after the discovery of the facts constituting the cause of action and within three years after such cause of action accrued." 15 U.S.C. § 78r(c).
In March 2004, the bank defendants to the consolidated complaint moved to dismiss most of the complaint as time-barred. Notably, the bank defendants did not challenge the timeliness of the §§ 11 and 12 claims in the Victor complaints. The District Court granted the bank defendants' motion. See In re Adelphia Commc'ns Corp., No. 03 MD 1529, 2005 WL 1278544, at *20 (S.D.N.Y. May 31, 2005). However, the District Court ruled that under Fed. R. Civ. P. 15, the consolidated complaint's § 11 claims related back to the § 11 claims originally asserted against SSB and BAS in the Victor complaints to the extent that existing plaintiffs were asserting the claims. Id. at *16.*fn1 Thus, the only securities claims to survive dismissal were the Victor complaints' §§ 11 and 12 claims against BAS and SSB and the new § 11 claims against BAS and SSB that related back to the Victor complaints.
In June 2006, lead counsel and the bank defendants entered into a $245 million cash settlement, which provided that lead counsel would have the discretion to allocate court-awarded attorneys' fees among the other class counsel. After the District Court preliminarily approved the settlement, C&T petitioned the court for attorneys' fees of $17,476,500, or one-third of the aggregate fees award attributable to the bank settlement, arguing that the Victor complaints were "solely responsible for the entire recovery from the [bank defendants]" because the complaints "preserved the only viable securities claims asserted against SSB and BAS." In November 2006, the District Court denied C&T's petition, approved the settlement, and awarded lead counsel $52.4 million in attorneys' fees (or 21.4% of the settlement), representing a lodestar (hours times ordinary rates) multiplier of 2.89. The District Court also directed lead counsel to allocate fees to C&T, subject to later review by the court. Accordingly, lead counsel allocated C&T $155,610 (or % 0.29 of the total attorneys fees awarded), corresponding to C&T's lodestar with no multiplier, for the work C&T performed prior to the appointment of lead counsel. The District Court approved this allocation, finding that it was reasonable under the factors outlined in Goldberger v. Integrated ...