Post on 25-Apr-2020
AlaFile E-Notice
To: DEGRUY TIFFANY JOHNSON
tdegruy@bradley.com
01-CV-2014-902794.00
Judge: BRENDETTE BROWN GREEN
NOTICE OF ELECTRONIC FILING
IN THE CIRCUIT COURT OF JEFFERSON COUNTY, ALABAMA
The following matter was FILED on 9/17/2018 4:07:11 PM
TRACI SALINAS ET AL V. JAMES S. HOLBROOK JR. ET AL
01-CV-2014-902794.00
MOTION FOR FINAL APPROVAL OF CLASS SETTLEMENT
Notice Date: 9/17/2018 4:07:11 PM
[Filer: BADDLEY THOMAS EDMUND JR.]
ANNE-MARIE ADAMS
CIRCUIT COURT CLERK
JEFFERSON COUNTY, ALABAMA
716 N. RICHARD ARRINGTON BLVD.
BIRMINGHAM, AL, 35203
205-325-5355
anne-marie.adams@alacourt.gov
JEFFERSON COUNTY, ALABAMA
C004 WAINWRIGHT HOWARD LOWELL
Motion to Intervene ($297.00)
Oral Arguments Requested
Pendente Lite
CV201490279400
9/17/2018 4:02:25 PM
0
C004 - WAINWRIGHT HOWARD LOWELL
Local Court Costs $
*Motion fees are enumerated in §12-19-71(a). Feespursuant to Local Act are not included. Please contact theClerk of the Court regarding applicable local fees.
($50.00)pursuant to Rule
(Subject to Filing Fee)Alabama Rules ofCivil Procedure
pursuant to Rule
Motion for Final Approval of ClassSettlement
Other
Withdraw
Vacate or Modify
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Strike
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Motion to Dismiss, or in the AlternativeSummaryJudgment($50.00)
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Summary Judgment pursuant to Rule 56($50.00)
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Default Judgment ($50.00)
Motions Not Requiring FeeMotions Requiring Fee
TYPE OF MOTION
BAD001
BIRMINGHAM, AL 35209
850 Shades Creek Parkway, Ste. 310
THOMAS E. BADDLEY JR.
Attorney Bar No.:
Name, Address, and Telephone No. of Attorney or Party. If Not Represented.
Name of Filing Party:
CIVIL MOTION COVER SHEETTRACI SALINAS ET AL V. JAMES S. HOLBROOKJR. ET AL
Revised 3/5/08
Circuit CourtDistrict Court01-JEFFERSON
Unified Judicial System
STATE OF ALABAMA Case No.
Check here if you have filed or are filing contemoraneouslywith this motion an Affidavit of Substantial Hardship or if youare filing on behalf of an agency or department of the State,county, or municipal government. (Pursuant to §6-5-1 Codeof Alabama (1975), governmental entities are exempt fromprepayment of filing fees)
Date: Signature of Attorney or Party
/s/ THOMAS E. BADDLEY JR.
ELECTRONICALLY FILED9/17/2018 4:05 PM
01-CV-2014-902794.00CIRCUIT COURT OF
JEFFERSON COUNTY, ALABAMAANNE-MARIE ADAMS, CLERK
DOCUMENT 652
**Motions titled 'Motion to Dismiss' that are not pursuant to Rule 12(b) and are in fact Motions for Summary Judgments are subject to filing fee.*This Cover Sheet must be completed and submitted to the Clerk of Court upon the filing of any motion. Each motion should contain a separate Cover Sheet.
DOCUMENT 652
1
IN THE CIRCUIT COURT OF JEFFERSON COUNTY, ALABAMA
HAROLD LOWELL WAINWRIGHT, )
derivatively on behalf of STERNE AGEE )
GROUP, INC., )
)
Plaintiff, )
)
v. ) CASE NO: CV-2014-902794
)
JAMES S. HOLBROOK, JR., et al. )
)
Defendants. )
PLAINTIFF’S MOTION AND MEMORANDUM BRIEF IN SUPPORT OF FINAL
APPROVAL OF CLASS SETTLEMENT
COMES NOW the Plaintiff, Harold Lowell Wainwright, and respectfully files
Plaintiff’s Motion and Memorandum Brief in Support of Final Approval of Class
Settlement. If approved by the Court, the Settlement will resolve the claims of the Plaintiff
and Settlement Class, bringing this complex litigation to a conclusion and resulting in a
substantial recovery for the Class.
I. INTRODUCTION
Plaintiff, Lowell Wainwright (“Plaintiff” or “Wainwright”), individually and as
representative of the Class, respectfully makes this submission in support of the Settlement
of all claims in this Action, together with the accompanying Declaration of Thomas E.
Baddley, Jr.; attached hereto as Exhibit 1, and the Affidavit of Andrew P. Campbell,
attached hereto as Exhibit 2. The Stipulation of Settlement and Release (hereinafter
“Settlement”) resolves all claims asserted against Sterne Agee Group, Inc., Stifel Financial
Corp., Saban Successor Subsidiary, LLC, James S. Holbrook, Jr. and William K. Holbrook,
ELECTRONICALLY FILED9/17/2018 4:05 PM
01-CV-2014-902794.00CIRCUIT COURT OF
JEFFERSON COUNTY, ALABAMAANNE-MARIE ADAMS, CLERK
DOCUMENT 653
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Jon S. Sanderson, Eric B. Needleman, Sal A. Nunzuata, Robert G. Nunziata, Walter S.
Robertson III, Walter A. Ruch III, Henry S. Lynn Jr., Linda M. Daniel, Jay W. Carter, and
Joe R. Roberts Jr. (hereinafter “Defendants”).
The Settlement is a favorable resolution of a complex case, crafted at arms-length
by experienced counsel on both sides. The total economic relief to be conferred upon the
Class represents a recovery that surpasses all criteria for fairness, reasonableness and
adequacy under applicable law. In the broadest outline, the Settlement provides, at a
minimum, $23,000,000 to Settlement Class members through a simple claim process
whereby Class members submit a claim form and receive a pro rata distribution of a $6.5
million Payment Fund from Defendants’ insurance carrier, as well as a pro rata distribution
from the $15 million Indemnity Earnout Fund held by Stifel Financial Corp., and at least
$1.5 million in reimbursement from insurance carrier. (Settlement Agreement, ¶¶ 4.1, 4.2,
4.3). Finally, Defendants have agreed that fees and expenses commonly borne by class
members may be deducted from class settlement funds, which included the cost of
settlement administration, notice, and class counsel’s attorneys’ fee and expense request.
Plaintiff and Class Counsel believe that the Settlement is in the best interests of the
Settlement Class. Class Counsel are informed of the strengths and weaknesses of the
claims and defenses in the Action and believe that the Settlement represents a favorable
outcome for the Settlement Class. As explained herein, the Settlement is fair, reasonable
and adequate under governing standards.
In addition, the Plan of Allocation which ties each Settlement Class Member’s
recovery to his/her pro rata share of holdings in Sterne Agee Group, Inc. as of the June 5,
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2015 merger is a fair and reasonable method for distributing the net Settlement Fund to the
Settlement Class and warrants approval.
II. BACKGROUND AND PROCEDURAL HISTORY
A. Summary of Plaintiff’s Claims
This action was filed on July 2, 2014 and was precipitated by a fraudulent scheme
by Defendant James S. Holbrook, Jr. to misappropriate corporate assets in furtherance of
his own self-interest, and the interest of friends, co-conspirators, and family. Plaintiffs
alleged that Defendant Holbrook unlawfully converted corporate assets in an effort to
fraudulently enrich himself at the expense of SAG’s shareholders, which the Defendant
Board tacitly approved and/or ratified. Further, Plaintiffs alleged that this pervasive breach
of fiduciary duty, coupled with the Non-Holbrook Defendants’ (consisting of SAG’s
Officers and Directors) corresponding dereliction of their fiduciary duties, culminated in a
June 2015 fire-sale merger of the Company at a materially depressed value, without
adequate disclosures to SAG’s shareholders, and included self-interested transactions
benefiting inside Director Defendants.
Sterne Agee Group, Inc. (“Sterne Agee” “SAG” or “Company”) and the Non-
Holbrook Defendants tacitly acknowledged the merits of Plaintiff’s allegations concerning
repeated breaches of fiduciary duty and pervasive self-dealing by the Holbrook Defendants
as the Director Defendants, who were complicit in the fraud and therefore faced a
substantial risk of personal liability for their acts/omissions, instituted three (3) civil actions
after the instant action was filed and raising many of the same allegations as the instant
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litigation, on behalf of SAG against Defendant CEO and Board Chairman James Holbrook,
Jr., in order to recoup assets unlawfully converted or misappropriated.
By Order dated January 25, 2015, Judge Helen Shores Lee determined that
Plaintiffs allegations were sufficient to withstand the Holbrook Defendants, Non-Holbrook
Defendants’ and Sterne Agee Group, Inc.’s Motions to Dismiss under the heightened
pleading standard of Rule 23.1, based upon the Holbrook Defendants’ pervasive
wrongdoing, their domination and control over the Sterne corporate entities, as well as the
other Director Defendants’ knowledge of, approval and/or complicity in such misconduct.
Non-Holbrook Directors filed a petition for writ of mandamus of the Court’s January 25,
2015 Order with the Alabama Supreme Court, which was denied.
On February 22, 2015, Defendants announced and effectuated a fire-sale merger
with Stifel Financial Corp. (“Stifel”), which closed on June 5, 2015, and which failed to
maximize shareholder value and consisted of self-interested transactions designed to
benefit the inside Director Defendants at the expense of SAG’s shareholders. Plaintiffs
thereafter alleged that in furtherance of obtaining shareholder approval for the merger, the
Defendant Board failed to provide adequate disclosures to SAG’s shareholders regarding
the terms of the proposed merger, including the sale of a valuable corporate asset to inside
Defendant Directors for less-than-adequate price, as well as failed to provide SAG
shareholders with adequate disclosures regarding substantial indemnity holdbacks based
on the Defendants’ pre-merger unlawful conduct.
Amended Complaints:
On October 2, 2015, based on the June 5, 2015 merger closing and the additional
legal impediments created therefrom, Plaintiffs filed their Sixth Amended Complaint
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alleging direct claims against the Defendants arising out of the fraudulent merger between
Sterne Agee and Stifel, as contemplated under Delaware law. See Arkansas Teacher Ret.
Sys. v. Countrywide Fin. Corp., 75 A.3d 888, 896 (Del. 2013).
On July 6, 2016, Plaintiffs filed a Seventh Amended Complaint, to assert additional
class claims in connection with the merger, as well as, added Stifel Financial Corporation
and Saban Successor Subsidiary LLC as party Defendants challenging, inter alia, the
fairness of the merger price and merger process, the adequacy of the disclosures, and
Stifel’s efforts to aid and abet the Individual Defendants’ breaches of fiduciary duty
concerning the fire-sale merger.
On February 13, 2018, Plaintiff filed his Eighth Amended Complaint against Stifel
and the other Defendants, asserting class claims based on, inter alia, Stifel’s alleged breach
of the Merger Agreement’s provisions governing the distribution of the Indemnity Earnout
Holdback.
On May 2-3, 2018, the parties mediated the case before well recognized mediator
Ralph Levy, Esq. The parties’ negotiations continued well after the scheduled mediation
in furtherance of reaching a global resolution of all claims among all parties.
In June and July, 2018, the parties continued their efforts to finalize the global
settlement achieved herein, including negotiations over the terms of the Stipulation of
Settlement and Release, Notice to the Class, Proof of Claim and Release, as well as, the
Motion for Preliminary Approval of the Settlement to be filed with the Court.
The Defendants have denied all allegations of wrongdoing, denied any liability to
the Plaintiff and the putative class members, and asserted affirmative defenses to the claims
DOCUMENT 653
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asserted in this action, and intend to continue with a vigorous defense if the Settlement is
not approved by the Court.
B. History of the Litigation and Settlement Negotiations
Plaintiff has set forth in detail the procedural history of the litigation in Class
Counsel’s Memorandum in Support of Petition for Attorneys’ Fees and Reimbursement of
Litigation Expenses. This action has been pending more than four (4) years, during which
time Defendants have filed repeated motions to dismiss and motions for summary judgment,
which have been opposed, orally argued and ultimately denied. Defendants have further
sought appellate relief on two (2) separate occasions following adverse rulings by the trial
court, which have been denied.
While the case was originally instituted as a shareholder derivative action, Plaintiff
successfully navigated the legal and procedural impediments created as a result of SAG’s
June 2015 merger with Stifel and amended their claims into a class action asserting direct
claims against the former SAG Directors and Officers, as well as Stifel Financial Corp.
Specifically, following the fire sale merger of SAG, Inc. with Stifel in June 2015, which
effectively served to extinguish Plaintiffs’ standing to pursue their derivative claims,
Plaintiffs were forced to change course to assert direct fraud claims in furtherance of a
limited exception recognized under Delaware jurisprudence (i.e., where the Defendant
directors and officers engaged in misconduct which led to the merger, as well as secured
personal benefits for themselves not otherwise available to the other shareholders). Further
complicating matters, in conjunction with the approval of the merger with Stifel, Plaintiff
and the shareholder class were required to execute release agreements, which Defendants
DOCUMENT 653
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argued constituted a waiver of Plaintiffs’ pre-merger claims asserted in this litigation. Such
intervening events altered the risk, complexity and calculus of the action, and required
Class Counsel to successfully plead direct claims under the limited fraud exception
recognized under Delaware law which would allow for post-merger standing to recover
damages.
C. THE SETTLEMENT
1. Summary of the Settlement
Following a two-day mediation with Ralph Levy, Esq., and ongoing negotiations
thereafter, the parties reached a global resolution of all claims among all parties in several
inter-related actions. Such claims were inextricably inter-related as Plaintiff’s claims
against the Holbrook Defendants were subsequently asserted by SAG against James
Holbrook in separate litigation, which directly impacted Stifel’s claims of indemnity out
of the $45 million Indemnity Holdback. As set forth in the Settlement Agreement, the
Total Settlement consists of, at least, $23,000,000 to be distributed to the Settlement Class
Members on a pro rata basis.
Pursuant to the Settlement Agreement, Defendants have agreed to make available
three separate Settlement Funds, which include: (1) The $6.5 Million Payment Fund, (2)
The Indemnity Earnout Payment Fund, and (3) The XL Claim Amount Fund which will be
distributed to the Settlement Class as follows:
a. The $6.5 Million Payment Fund. The Holbrook Defendants, the Non-
Holbrook Director Defendants, and Sterne Agee have agreed to create a $6.5
Million Payment Fund. The $6.5 Million Payment Fund will first be used to (1)
pay all costs and expenses reasonably incurred by the Claims Administrator,
Tilghman & Co., P.C., in connection with preparing and providing this Notice,
processing Proofs of Claim and Release, and otherwise administering and
distributing the $6.5 Million Payment Fund to the Settlement Class Members,
(2) pay Escrow Agent fees and expenses and other administration expenses that
DOCUMENT 653
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are attributable to the $6.5 Million Payment Fund, (3) pay taxes and tax
expenses attributable to the $6.5 Million Payment fund; and (4) pay attorneys’
fees and costs that have been awarded by the Court from the $6.5 Million
Payment Fund.
The balance of the $6.5 Million Payment Fund (the “Net $6.5 Million Payment
Fund”) shall be distributed to Settlement Class Members who have submitted a
timely and valid Proof of Claim and Release. Settlement Class Members who
submit a timely and valid Proof of Claim and Release will receive a pro-rata
distribution of the Net $6.5 Million Payment Fund based on their percentage
ownership of SAG as of June 5, 2015. Specifically, each Settlement Class
Member shall be entitled to a proportion of the Net $6.5 Million Payment Fund
that is equal to that Settlement Class Member’s proportionate holdings as of
June 5, 2015 of the fully-diluted outstanding shares of SAG common and
preferred stock (including shares of common stock issuable upon exercise of
In-the-Money Company Warrants and the conversion of SAG convertible
debentures, as well as vested performance and tracking shares under SAG’s
Amended and Restated Compensation Plan and Amended and Restated 2009
Deferred Compensation Plan) as compared to the other Settlement Class
Members.
b. The $15 Million Indemnity Earnout Payment Fund. Stifel has agreed to
create a $15,000,000 Indemnity Earnout Payment Fund. The Indemnity Earnout
Payment Fund will first be used to (1) pay all escrow fees, costs, and other
administration expenses that are attributable to the Indemnity Earnout Payment
Fund; and (2) pay taxes and tax expenses that are attributable to the Indemnity
Earnout Payment Fund. The balance of the Indemnity Earnout Payment Fund
(the “Net Indemnity Earnout Payment Fund”) shall be distributed to
Equityholders as set forth in Paragraphs 8.7 and 8.10 of the Stipulation.
Specifically, (a) Equityholders who are members of the Settlement Class and
(b) Equityholders who are not members of the Settlement Class but who, as of
the Effective Date, are entitled under Section 3.06 of the Merger Agreement to
receive distributions of the Indemnity Earnout Amount Balance (“Eligible
Equityholders”), shall receive a pro rata share of the Net Indemnity Earnout
Payment Fund based on their percentage ownership of SAG as of June 5, 2015
as set forth in the Merger Agreement. For the avoidance of all doubt, if you are
an Equityholder entitled under Section 3.06 of the Merger Agreement to receive
a distribution of the Indemnity Earnout Amount Balance, then you shall receive
a pro rata share of the Net Indemnity Earnout Fund, even if you choose to
exclude yourself from the Settlement Class.
The Net Indemnity Earnout Payment Fund shall be apportioned in the same
proportions that the Indemnity Earnout Amount Balance would be apportioned
under the terms of the Merger Agreement were that amount distributed. Thus,
those entitled to receive a pro-rata share of the Net Indemnity Earnout Payment
DOCUMENT 653
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Fund shall receive the same percentage share of the Net Indemnity Earnout
Payment Fund as they would be entitled to receive, under the Merger
Agreement, of a distribution of the Indemnity Earnout Amount Balance. For
illustrative purposes, if, under the Merger Agreement, a Settlement Class
Member or an Eligible Equityholder is entitled to receive 1% of any distribution
of the Indemnity Earnout Amount Balance, then that Settlement Class Member
or Eligible Equityholder shall receive a 1% share of the Net Indemnity Earnout
Payment Fund.
c. The XL Claim Amount Fund. Stifel also has agreed to distribute the XL
Claim Amount, which comprises any amounts that Stifel and/or Sterne Agee
are able to recover from XL Specialty Insurance Company (“XL”), SAG’s
directors’ and officers’ liability insurer, on the claims for indemnification
and/or defense costs that Stifel and/or Sterne Agree have made with XL as of
July 19, 2018, which are set forth in the schedule attached to the Stipulation as
Exhibit J.
Amounts that Stifel and/or Sterne Agee recover as of the Effective Date are
referred to as the “Initial XL Claim Amount Fund.” The Initial XL Claim
Amount Fund will first be used to (1) pay all escrow fees, costs, and other
administration expenses that are attributable to the Initial XL Claim Amount
Fund; (2) pay taxes and tax expenses that are attributable to the Initial XL Claim
Amount Fund; and (3) pay attorneys’ fees that have been awarded by the Court
from the Initial XL Claim Amount Fund. The balance of the Initial XL Claim
Amount Fund (the “Net Initial XL Claim Amount Fund”) shall be distributed
to Equityholders as set forth in Paragraphs 8.7 and 8.10 of the Stipulation.
Specifically, (a) Equityholders who are members of the Settlement Class and
(b) Eligible Equityholders shall receive a pro rata share of the Net Initial XL
Claim Amount Fund based on their percentage ownership of SAG as of June 5,
2015 as set forth in the Merger Agreement. For the avoidance of all doubt, if
you are an Eligible Equityholder, then you shall receive a pro rata share of the
Net Initial XL Claim Amount Fund, even if you choose to exclude yourself
from the Settlement Class.
Amounts that Stifel and/or Sterne Agee recover after the Effective Date are
referred to as the “Subsequent XL Claim Amounts.” The Subsequent XL
Claim Amounts will first be used to pay attorneys’ fees, expenses, and costs
that have been awarded by the Court from the Subsequent XL Claim Amounts.
The balance of the Subsequent XL Claim Amounts (the “Net Subsequent XL
Claim Amounts”) shall be distributed to Equityholders in the same manner as
the Net Initial XL Claim Amount Fund.
Like the Net Indemnity Earnout Payment Fund, the Net Initial XL Claim
Amount Fund and the Net Subsequent XL Claim Amounts shall be apportioned
in the same proportions that the Indemnity Earnout Amount Balance would be
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apportioned under the terms of the Merger Agreement were that amount
distributed. Those entitled to receive a pro-rata share of the Net Initial XL Claim
Amount Fund and the Net Subsequent XL Claim Amounts shall receive the
same percentage share of those funds as they would be entitled to receive, under
the Merger Agreement, of a distribution of the Indemnity Earnout Amount
Balance. For illustrative purposes, if, under the Merger Agreement, a
Settlement Class Member or an Eligible Equityholder is entitled to receive 1%
of any distribution of the Indemnity Earnout Amount Balance, then that
Settlement Class Member or Eligible Equityholder shall receive a 1% share of
the Net Initial XL Claim Amount Fund and a 1% share of any Net Subsequent
XL Claim Amounts.
The actual amount that each Settlement Class Member will receive will
ultimately depend on a variety of factors, including his or her percentage
ownership of SAG as of June 5, 2015, whether he or she submits a Proof of
Claim, the number of potential Settlement Class Members who exclude
themselves from the Settlement, the amount of Escrow Agent fees and
expenses, the amount of costs and expenses reasonably incurred by the Claims
Administrator, the amount of taxes and tax expenses, the amount of notice and
other administration costs, and whether and in what amounts the Court will
approve Fee and Expense Awards.
(See Settlement Agreement, ¶ 4)
2. Class Notice
Class Counsel and Defendants’ counsel negotiated a Class Notice form designed to
inform and educate Class Members regarding the Settlement and the benefits available to
them under the Settlement. This Notice involved the mailing of notice to 390 Class
Members based on shareholder information provided by Stifel Financial Corp. containing
the names, last known mailing addresses and Sterne Agee Group holdings information as
of June 5, 2015. Such Notice also included the establishment of a settlement website which
was printed in the Class Notice, activated on August 2, 2018, and periodically updated with
additional settlement information and filings from this Action.
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3. The Release
The terms of the release were included in the Notice mailed to Class Members. If
the Settlement is given final approval and reaches the Effective Date then the Releasing
parties:
(i) shall be deemed to have, and by operation of the Final Judgment and
Order of Dismissal, shall have, fully, finally, and forever waived, released,
relinquished, and discharged to the fullest extent permitted by law, all
Released Claims against each and all of the Released Persons, whether or
not you execute and deliver a Proof of Claim and Release; (ii) shall forever
be barred and enjoined from commencing, instituting, or prosecuting a class
action or any other action or proceeding in any court of law or equity,
arbitration tribunal, or other forum of any kind, directly, representatively,
derivatively, or in any other capacity and wherever filed, any Released
Claims against any of the Released Persons; and (iii) agree and covenant
not to sue any of the Released Persons with respect to any Released Claims
or to assist any third party in commencing or maintaining any suit against
any Released Person related in any way to any Released Claims.
This release will include claims that Settlement Class Members do not know or
suspect to exist in their favor at the time final approval may be granted to the Settlement,
if those claims arise from, are based on, or relate to the Released Claims. If the Settlement
is given final approval and reaches the Effective Date, all Settlement Class Members will
be deemed to have knowingly and voluntarily waived, relinquished and released the
protections of any laws that would limit this release, including, without limitation, Section
1542 of the California Civil Code.1
1 The full terms of the Release are set forth in Section 2 of the Settlement Agreement.
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ARGUMENT
A. NOTICE AND JURISDICTION
1. Distribution and Timing of the Notice
The threshold requirement concerning class notice is that the means employed to
distribute the notices “be reasonably calculated, under all of the circumstances, to apprise
interested parties of the pendency of the settlement proposed and to afford them an
opportunity to present their objections.” Mullane v. Central Hanover Bank & Trust, Co.,
339 U.S. 306, 314 (1950); Arbuthnot v. Pierson, 607 F. App’x 73 (2d Cir. 2015). However,
“[d]ue process does not require that every class member receive notice.” In re AT&T
Mobility Wireless Data Services Sales Tax Litig., 789 F.Supp.2d 935, 968 (N.D. Ill. 2011)
(citing Mullane, 339 U.S. at 314-315).
Both the substance of the Notice and the method of dissemination to members of
the Settlement Class satisfies these standards. As noted above, notice was sent by first
class United States mail to all Settlement Class Members based on information provided
by Stifel Financial Corp. Additionally, a website was created by the Settlement
Administrator which contains detailed information and filings from this Action. In sum,
direct notice was provided to all Class Members for whom Defendants possess accessible
address information. The notice distribution program employed by the parties amply
satisfies not only the requirements of Rule 23, but also of Constitutional Due Process.
The timing of the Class Notice was also sound. The Settlement Administrator
mailed the Notice package to all Class Members on August 2, 2018. The deadline for Class
Members to decide whether to object or request to be excluded from the Settlement was
September 10, 2018. Thus, Class Members had over thirty-five (35) days following the
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mailing of the Class Notice to decide whether to object to the Settlement, and the Class
Notice was mailed more than forty-five (45) days prior to the Final Fairness Hearing.
As set forth hereinafter, the Class Members have responded favorably to the
Settlement. In fact, only 5 class members, or just over 1% of the Settlement Class, have
filed an objection, none of whom object to the Settlement itself, but rather only to Class
Counsel’s fee request. Further, no opt-out notices or requests for exclusion were received
from Settlement Class Members. The form of distribution of the Notice and the
outstanding response rate plainly satisfies Ala. R. Civ. P. 23(c)(2).
2. Content of the Notice and the Opportunity to Object
The content of the Class Notice complies with the requirement of Rule 23. The
Notice advised Class Members that they will be bound by the judgment, and that any Class
Member may enter an appearance or objection with or without counsel if desired. (Class
Notice, ¶ 16). The Notice advises that the Final Hearing in this matter will be held on
September 24, 2018, at which time Class Members or their attorneys may be heard, and
informs Class Members how to object or exclude themselves from the Class.
Additionally, the Notice further informs the Class of the nature of the pending
litigation and claims asserted; a description of the key terms of the Settlement, including
the consideration amount and releases to be given; the parties’ reasons for proposing the
Settlement; an explanation of the Settlement Class member’s right to request exclusion
from the Settlement Class and to object to the Settlement; and the notice of the binding
effect of a judgment on Settlement Class members. The Notice also provides instructions
for submitting a Claim Form in order to be eligible to receive a distribution from the $6.5
Million Payment Fund, relevant deadlines and contact information. Furthermore, Class
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Members were instructed to contact Class Counsel or visit a settlement website for further
inquiry or information concerning the Settlement and applicable deadlines.
The details provided by the Class Notice thus go far beyond the “summary” of
information required by Rule 23(e). Unquestionably, the Class Notice presents “a fair
recital” of the subject matter and proposed terms of the Settlement. Marshall v. Holiday
Magic, Inc., 550 F.2d 1173, 1177 (9th Cir. 1977). The content of the Class Notice was
adequate, comprehensive and timely, and afforded the Settlement Class Members with
information necessary to make an informed and intelligent decision whether to object to
the Settlement.
B. THE SETTLEMENT IS FAIR, REASONABLE AND ADEQUATE
1. The Proposed Settlement Satisfies the Standard Governing Approval
of the Settlement
Because of the substantive identity of Rule 23 of the Alabama Rules of Civil
Procedure and Rule 23 of the Federal Rules of Civil Procedure, federal authority is deemed
persuasive when applying Alabama’s procedural rules in the context of class action
litigation. See e.g., Ex Parte American Bankers Life Assur. Co., 715 So.2d 186 (Ala. 1997);
Adams v. Robertson, 676 So.2d 1265 (Ala. 1995); First Baptist Church of Citronelle v.
Citronelle-Mobile Gathering, Inc., 409 So. 2d 727, 729 (Ala. 1991).
Alabama follows the well-established standards that give effect to the strong policy
favoring class action settlement. There is a “strong judicial policy favoring settlement as
well as the realization that compromise is the essence of settlement,” Bennett v. Behring,
737 F.2d 982, 986 (11th Cir. 1984), and settlements of class actions are “highly favored in
the law and will be upheld whenever possible because they are a means of amicably
resolving doubts and preventing lawsuits.” Bennett v. Behring Corp., 96 F.R.D. 343 (S. D.
DOCUMENT 653
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Fla. 1982), aff’d, 737 F.2d 982 (11th Cir. 1984)(quoting Miller v. Republic Nat. Life Ins.
Co., 559 F.2d 426, 428 (5th Cir. 1977)). See also, Donovan v. Estate of Fitzsimmons, 778
F.2d 298, 307 (7th Cir. 1985)(“there is an overriding public interest in favor of settlement
of class action suits.”).
The courts have recognized that “class action suits have a well-deserved reputation
as being the most complex” and, therefore, compromise is particularly appropriate. Cotton
v. Hinton, 559 F.2d 1326, 1331 (5th Cir. 1977); In re Domestic Air Transportation Antitrust
Litigation, 148 F.R.D. 297, 312 (N.D. Ga. 1993 )(“Settlements of class actions are highly
favored in the law and will be upheld whenever possible because they are a means of
amicably resolving doubts and preventing lawsuits”); In re General Motors Corp. Pick-up
Truck Fuel Tank Litig., 55 F.3d 768, 784 (3rd Cir. 1995)(“The law favors settlement,
particularly in class actions. . . .”).
A court will approve a settlement if it is “fair, reasonable and adequate and not a
product of collusion.” Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 116 (2d Cir.
2005); see, e.g., Maywalt v. Parker & Parsley Petroleum Co., 67 F.3d 1072, 1079 (2d Cir.
1995); In re Paine Webber Ltd. Partnership Litig., 171 F.R.D. 104, 124 (S.D.N.Y. 1997);
Isby v. Bayh, 75 F.2d 1191, 1196 (7th Cir. 1996). The determination of a “reasonable”
settlement is not susceptible to a mathematical equation yielding a particular sum. Rather,
there is a “range of reasonableness” with respect to a settlement. McDonald v. Chicago
Milwaukee Corp., 464 F.2d 416, 428 (7th Cir. 1977); Newman v. Stein, 464 F.2d 689, 693
(2nd Cir. 1972). The authority to approve a class settlement is committed to the sound
discretion of the trial court. Bennett, 737 F.d at 986. If the Court considers the settlement
DOCUMENT 653
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within the range of reason and fairness, its decision is reviewable only for abuse of
discretion. In re U.S. Oil & Gas Litigation, 967 F.2d 489, 493 (11th Cir. 1992).
In assessing a class settlement, the courts are advised to “refrain from making a
precise determination of the parties’ respective legal rights.” EEOC v. Hiram Walker &
Sons, Inc., 768 F.2d 884, 889 (7th Cir. 1985). Similarly, “[t]he proposed settlement is not
to be judged against a hypothetical or speculative measure of what might have been
achieved by the negotiators.” Officers for Justice v. Civil Serv. Comm’n, 688 F.2d 614, 625
(9th Cir. 1982); accord, Armstrong, 616 F.2d at 315 (“[j]udges should not substitute their
own judgment as to the optimal settlement terms for the judgment of the litigants and their
counsel”). Even if “the relief afforded by the proposed settlement is substantially more
narrow than it would be if the suits were successfully litigated,” this is no objection to a
class settlement, since the “public interest may indeed be served by a voluntary settlement
in which each side gives ground in the interest of avoiding litigation.” Air Line Stewards
& Stewardesses Ass’n v. American Airlines, Inc., 455 F.2d 101, 109 (7th Cir. 1972).
Courts may apply a presumption of fairness when a class settlement is the product
of “arm’s-length negotiations between experienced, capable counsel.” In re Citigroup Inc.
Bond Litig., 296 F.R.D. 147, 155 (S.D.N.Y. 2013)(quoting Wal-Mart, 396 F.3d at 16).
Because counsel are “most closely acquainted with the facts of the underlying litigation,”
courts give “great weight” to the recommendations of counsel regarding settlement,
especially when negotiations are facilitated by an experienced, third party mediator. In re
Telik, Inc. Sec. Litig., 576 F.Supp.2d 570, 576 (S.D.N.Y. 2008); see also D’Amato v.
Deutsche Bank, 236 F.3d 78, 85 (2d Cir. 2001)(finding that a mediator’s involvement in
settlement negotiations “helps to ensure that the proceedings were free of collusion and
DOCUMENT 653
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undue pressure”). As a result, considerable weight should be given to the views of
experienced counsel on the merits of the settlement. Gautreaux v. Pierce, 690 F.2d 616,
631 (7th Cir. 1982). There is a “strong initial presumption” that an arm’s-length settlement
arrived at by counsel experienced in the type of litigation involved on the basis of sufficient
information concerning the claims at issue is fair. Feder v. Harrington, 58 F.R.D. 171, 175
(S.D.N.Y. 1975). Stated another way, “[t]he trial judge, absent fraud, collusion, or the like,
should be hesitant to substitute its own judgment for that of the counsel.” Cotton v. Hinton,
559 F.2d 1326, 1330 (5th Cir. 1977)(citing Flinn v. FMC Corp., 528 F.2d 1169, 1173 (4th
Cir. 1975)); Pettway v. American Cast Iron Pipe Co., 57 F.2d 1157, 1214 (5th Cir. 1978)
cert. denied, 439 U.S. 1115 (1979). Also it is essential that the Court not examine the
settlement as if the defendants had been found liable. See, e.g., City of Detroit v. Grinnell
Corp., 495 F.2d 448, 455-56 (2nd Cir. 1974); Cf. Cotton, 559 F.2d at 1330 )(“Inherent in
compromise is a yielding of absolutes and an abandoning of highest hopes”)(quoting
Milstein v. Werner, 57 F.R.D. 515, 524-25 (S.D.N.Y. 1972).
A non-exhaustive list of factors that trial courts may consider in evaluating the
fairness of a class settlement is as follows:
1. The likelihood of success at trial;
2. The range of possible recovery;
3. The point on or below the range of possible recovery at which the settlement
is fair, adequate and reasonable;
4. The complexity, expense and duration of the litigation;
5. The substance and amount of opposition to the settlement;
6. The state of the proceedings at which the settlement was achieved.
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Bennett v. Behring Corp., 737 F.2d 982, 986 (11th Cir. 1984). Also, the opinion of
competent counsel as to the reasonableness of the settlement must be given substantial
weight by the Court. See, e.g., Cotton, 559 F.2d at 1330. Consideration of these factors
in the context of this litigation demonstrates that this settlement is fair, reasonable,
adequate and in the best interest of the Class.
2. Factors Supporting Approval of the Settlement
a. Likelihood of Success at Trial
In assessing the likelihood of success at trial for purposes of determining whether
the settlement is fair, adequate and reasonable, the Court need only make a “limited inquiry
into whether the possible rewards of continued litigation with its risks and costs are
outweighed by the benefits of settlement.” Ressler v. Jacobson, 822 F.2d 1551, 1553 (M.D.
Fla. 1992); see also Garst v. Franklin Life Ins. Co., 1999 LEXIS 226666 *62 (N.D. Ala.
1999). Here, Class Counsel assessed the probability of ultimate success on the merits vis-
à-vis the risks of establishing liability.
While Plaintiff believes this case has substantial merit, Plaintiff recognizes the risks
involved in complex litigation, both in establishing liability and in obtaining class
certification. Defendants are represented by experienced counsel, who no doubt would
continue to mount a vigorous and thorough defense to Plaintiff’s claims for relief.
Although class certification had not yet been briefed in this case, Defendants would
undoubtedly have raised vigorous challenges to class certification, and such disputes
“could well devolve into yet another battle of the experts.” Bear Stearns, 909 F.Supp.2d at
268. If a class were to be certified, Defendants could move to decertify the class at any
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time. See Fed. R. Civ. P. 23(c)(2); Global Crossing, 225 F.R.D. at 460 (“[E]ven if plaintiffs
could obtain class certification, there could be a risk of decertification at a later stage”).
Here, “the uncertainty surrounding class certification supports approval of the Settlement,”
Marsh & McLennan, 2009 WL 5178546, at *6, because “even the process of class
certification would have subjected Plaintiffs to considerably more risk than the unopposed
certification that was ordered for the sole purpose of the Settlement.” AOL Time Warner,
2006 WL 903236, at *12. While it is easy to hope for an astronomical recovery, as one
federal district court reminded several objectors to a class settlement, “[i]n the real world .
. . the path to a large damage award is strewn with hazards.” In re Gulf Oil/Cities Serv.
Tender Offer Litigation, 142 F.R.D. 588, 595 (S.D.N.Y. 1992). This settlement replaces
the risks of establishing liability and damages with immediacy and certainty of a substantial
recovery. See, e.g., Girsh v. Jepson, 521 F.2d 153, 157 (3rd Cir. 1975).
In assessing the fairness, reasonableness and adequacy of the Settlement, therefore,
the Court must balance those risks of establishing liability and damages against the benefits
afforded to the class members, and the immediacy and certainty of a substantial recovery
against the risks of continued litigation. Maley v. Del Global Techs. Corp., 186 F.Supp.2d
358, 364 (S.D.N.Y. 2002); Weiss v. Mercedes Benz of North America, Inc., 899 F.Supp.
1297, 1301 (D.N.J. 1995)(“[T]he risks surrounding a trial on the merits are always
considerable”); see also, West Virginia v. Chas. Pfizer & Co., 314 F.Supp. 710 743-44
(S.D.N.Y. 1970)(“[N]o matter how confident one may be of the outcome of the litigation,
such confidence is often misplaced”), aff’d, 440 F.2d 1079 (2d Cir. 1971). These risks are
especially acute when defendants have a large litigation war chest at their disposal, and
have evidenced a willingness to expend significant resources.
DOCUMENT 653
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b. Range of Possible Recovery and Point At or Below the Range of
Possible Recovery Which is Fair
In assessing the Settlement, the Court must also consider the range of possible
damages the could be recovered at trial and then combine this possibility with the
Plaintiff’s likelihood of prevailing at trial, and other relative factors, to determine if the
settlement falls at a point in the possible recovery range that is fair to the Class.
In determining whether the amount of the Settlement is reasonable, “the Court is
not confined to the mechanistic process of comparing the settlement to the estimated
recovery times the multiplier derived from the likelihood of prevailing on the merits.” In
re Corrugated Container Antitrust Litigation, 643 F.2d 195, 217 (5th Cir. 1981). Instead,
the Court must recognize that, “[i]n any case, there is a range of reasonableness with respect
to a settlement – a range which recognizes the uncertainties of law and fact in a particular
case and the concomitant risks and cost necessarily inherent in taking any litigation to
completion.” Newman v. Stein, 464, F.2d 689, 693 (2ndCir. 1972), cert denied sub nom.,
409 U.S. 1039 (1972).
There is no fixed point above or below which a settlement is fair or not fair. Indeed,
“[t]he fact that a proposed settlement may only amount to a fraction of the potential
recovery does not, in and of itself, mean that the proposed settlement is inadequate; there
is no reason why a satisfactory settlement could not amount to a hundredth or even a
thousandth part of a single percent of the potential recovery.” In re TBK Partners, Limited
v. Western Union Corp., 675 F.2d 456, 463-64 (2nd Cir. 1982); Garst , 1999 LEXIS 22666
at *64-65. In the instant action, a Total Settlement of at least $23 Million will be distributed
among the Settlement Class Members based on their pro rata share of Sterne Agee Group
as of June 5, 2015. This is hardly insignificant or inadequate relief.
DOCUMENT 653
21
c. The Complexity, Expense and Duration of Litigation
Courts have consistently viewed the expense and possible duration of litigation as
factors appropriately considered in evaluating the reasonableness of a settlement. See Class
Plaintiffs v. City of Seattle, 955 F.2d 1268, 1292 (9th Cir. 1992)(“complexity, duration and
sheer enormity of the pending class action weighed heavily against a conclusion that the
district court abused its discretion in approving the settlement”). Continued litigation of
all issues by the Defendants, who are represented by highly experienced counsel, would
have prolonged any recovery to Settlement Class Members. Even if Plaintiff was
successful in the continued prosecution of a case through trial, appeals taken by the
determined Defendants would entail enormous additional effort, risk and expense with no
promise of a greater recovery. Inevitable motion practice would further extend the
litigation for years, and any trial of the action could last for several weeks. Moreover, the
available Directors’ and Officers’ insurance coverage, as well as, the Indemnity Holdback
from the merger, would be substantially depleted, if not exhausted, by defense costs, and
any resulting judgment, in this litigation.
The Settlement assures substantial benefits to the Class without the further delay,
expense and risks that would be unavoidable in further litigation. This factor supports the
approval of the settlement. See Garst, 1999 LEXIS 22666 at *69; In re Prudential Ins. Co.
of America Sales Practices Litigation, 148 F.3d at 318; In re Manufacturers Life Ins. Co.
Premium Litigation, 1998 LEXIS 23217 *10 (S. D. Cal. Dec. 21, 1998). Plaintiff submits
that the Settlement grants the Class members timely relief without the unwarranted risks,
complexity, duration and expense inherent in continuing uncertain litigation.
DOCUMENT 653
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d. The Stage of Proceedings At Which The Settlement Was Achieved
In assessing this factor, the relevant inquiry is whether the parties have conducted
sufficient discovery to assess the strengths and weaknesses of the claims and defenses to
be asserted in the action. Garst, 1999 LEXIS 22666 at *70. Comprehensive discovery is
not required. Woodward v. Nor-Am Chemical Co., 1996 WL 1063670 at *21. To satisfy
this factor, the parties “need not have engaged in extensive discovery as long as they have
engaged in sufficient investigation of the facts to enable the Court to intelligently make . .
. an appraisal of the settlement.” AOL Time Warner, 2006 WL 903236, at *10; IMAX, 283
F.R.D. at 190 (“The threshold necessary to render the decisions of counsel sufficiently well
informed, however, is not an overly burdensome one to achieve –indeed, formal discovery
need not have necessarily been undertaken yet by the parties”).
By the time the parties agreed to settle, Plaintiff and Class Counsel understood the
strengths and weaknesses of the claims and defenses asserted, and could make an informed
evaluation regarding the chances of success. Class Counsel expended significant time and
resources analyzing and litigating the legal and factual issues in the action. Further, Class
Counsel reviewed publicly available information, interviewed former employees of SAG,
and engaged in certain discovery with the parties in furtherance of Plaintiff’s investigation
of claims, and due diligence in preparation for mediation. Plaintiffs also obtained third
party discovery from a former CFO of Sterne Agee Group. In light of these efforts, Class
Counsel had a strong and sufficient understanding of the case to assess the legal and factual
merits of the claims at issue, and the risks, in order to intelligently negotiate a settlement
that provides relief to meet the needs of Class Members in light of the risks associated with
the continued litigation. See, e.g., Ressler v. Jacobson, 822 F. Supp. 1154-55 (“Plaintiffs
DOCUMENT 653
23
have conducted sufficient discovery to be able to determine the probability of the success
on the merits, the possible range of recovery, and the likely expense and duration of the
litigation”); AOL Time Warner, 2006 WL 903236, at *10; see also In re Advanced Battery
Techs., Inc. Sec. Litig., 298 F.R.D. 171, 177 (S.D.N.Y. 2014) (where “no merits discovery
occurred,” counsel that had conducted their own investigation, engaged in detailed
briefing, and conducted targeted due diligence discovery were “knowledgeable with
respect to possible outcomes and risks in this matter and, thus, able to recommend the
Settlement”). This factor favors approval of the settlement.
e. The Absence of Collusion Among the Parties
This Settlement is the product of extensive arm’s-length negotiations, including
two (2) mediation sessions, by experienced counsel, after substantial factual investigation
and legal analysis. The Settlement reached is the culmination of negotiations by
experienced and informed counsel vigorously pursuing their respective clients’ interests.
Class Counsel, who collectively have vast experience in complex class and derivative
action work, negotiated the settlement with a view toward resolving the issues in dispute
on the most favorable terms for the Class.
Class Counsel considered, among other things, the strength and weaknesses of
Plaintiff’s claims against the Defendants, the uncertainties inherent in this complex
litigation, and the substantial benefits provided by the settlement to the members of the
Class. In light of the benefits available under the Settlement and the costs, risks, and
inevitable delay involved in continued litigation and likely appeals, Class Counsel believes
that this Settlement is in the best interest of the Class and is in all respects fair, reasonable
DOCUMENT 653
24
and adequate. The opinion of competent and experienced counsel as to the reasonableness
of the settlement is an important consideration. In re Domestic Air Transportation
Antitrust Litigation, 148 F.R.D. at 312. In fact, when a proposed settlement is the result of
arm’s-length negotiations by capable counsel, the settlement is presumed to be fair and
reasonable. See Newberg on Class Actions, § 11.41, 11-88, 3rd edition, (1992); see also,
e.g., In re NASDAQ Marketmakers Antitrust Litigation, 187 F.R.D. 464, 474 (S.D.N.Y.
1998).
f. Substance and Amount of Opposition to the Settlement
It is well settled that “the reaction of the Class to the settlement is perhaps the most
significant factor to be weighed in considering its adequacy.” Sala v. National Railroad
Passenger Corp, 721 F.Supp. 80, 83 (E.D. Pa. 1989); Donovan, 778 F.2d 308; EEOC, 768
F.2d 889; In re Bear Stearn Cos. Sec., Deriv. & ERISA Litig., 909 F.Supp.2d 259 (S.D.N.Y.
2012). A favorable reception by the Class constitutes “strong evidence” of the fairness of
the settlement and supports judicial approval. In re Paine Webber Limited Partnership
Litig., 171 F.R.D. 104, 126 (S.D.N.Y 1997), aff’d, 117 F.3d 721 (2nd Cir. 1997)(citing
Detroit v. Grinnell Corp., 495 F.2d 448, 462 (2nd Cir. 1974).
Pursuant to the Preliminary Approval Order, the Court approved Tilghman & Co.,
P.C. (“Tilghman”), to serve as the Claims Administrator. On August 2, 2018, in
accordance with the Preliminary Approval Order, Tilghman mailed by USPS First Class
Mail the Court-approved Class Notice, Proof of Claim and Release Forms and Request for
Exclusion Forms (together, the “Notice Packet”) to the 390 putative Settlement Class
Members. See Declaration of L. Stephens Tilghman, attached as Exhibit 3. Thereafter,
DOCUMENT 653
25
Tilghman re-mailed the Notice Packets with updated address information to 15 Settlement
Class Members whose Notice Packets were returned as undeliverable. Id. Tilghman was
unable to deliver just three (4) Class Notice Packets, which amounts to 1.02% of the
putative Settlement Class of 390 persons. Id.
Pursuant to the Court’s Preliminary Approval Order, the deadline for members of
the Settlement Class to object or exclude themselves from the Settlement Class was
September 10, 2018. As of this date, the Claims Administrator had received zero opt-out
notices or Requests for Exclusion. Id. Similarly, as of this deadline, the Claims
Administrator had received 268 timely Proof of Claim and Release forms, which represent
88.81% of the outstanding shares held by Settlement Class Members. Id. As of September
17, 2018, Tilghman has received an additional five (5) untimely Proof of Claim and
Release forms.2 Id. Finally, as of the September 10, 2018 deadline, while no objections
were filed as to the terms of the Settlement Agreement, there were two objections to Class
Counsel’s Fee and Expense Application filed with the Court.3
The paucity of objections weighs heavily in favor of approval. Bell Atlantic Corp.
v. Bolger, 2 F.3d 1304, 1313-14 (3rd Cir. 1993)(small numbers of objectors favors a
settlement); Maher v. Zapata Corp., 714 F.2d 436, 456 (5th Cir. 1983)(minimal shareholder
objection is another factor favoring approval of the settlement); In re Beef Indus. Antitrust
Litig., 607 F.2d 167, 180 (5ht Cir. 1979). The Settlement Class’s favorable reaction
supports the conclusion that the settlement is fair, reasonable and adequate and militates in
2 Class Counsel intends to petition the Court to accept these untimely Proof of Claim and Release forms,
which if approved by the Court, will reflect a total of 273 Proof of Claim and Release forms submitted by
Settlement Class Members, comprising 89.11% of the outstanding shares held by the Settlement Class. Id. 3 These two Objections were filed on behalf of 5 Settlement Class Members, which equates to just 1.28% of
the Class.
DOCUMENT 653
26
favor of approving the Settlement. Grinnell Corp., 495 F.2d at 462 (“[a]ny claim by
appellants that the settlement offer is inadequate is belied by the fact that . . . (o)nly twenty
objectors appeared from the group of 14,156 claimants.”); see Bear Stearns, 909 F.Supp.2d
at 267 (“Given the absence of significant exclusion or objection –the rate of exclusion is
5.1% and the rate of objection is less than 1%-- this factor weighs strongly in favor of
approval).
C. THE PLAN OF ALLOCATION SHOULD BE APPROVED
“When formulated by competent and experienced counsel, a plan for allocation of
net settlement proceeds need only have a reasonable, rational basis.” In re IMAX Sec. Litig.,
283 F.R.D. 178, 192 (S.D.N.Y. 2012); Bear Stearns, 909 F.Supp.2d at 270. “In
determining whether a plan of allocation is fair, courts look largely to the opinion of
counsel.” Marsh v. McLennan, 2009 WL 5178546, at *13.
The net Settlement Fund will be allocated among the Settlement Class Members on
a pro rata basis based on their respective shareholder interest in Sterne Agee Group, Inc. at
the time of the June 5, 2015 Merger.
Class Counsel believes that the proposed Plan of Allocation provides a fair and
reasonable method to equitably allocate the Net Settlement Fund among the Settlement
Class Members. To date, no objections to the Plan of Allocation have been received,
suggesting that the Settlement Class also finds the Plan of Allocation to be fair and
reasonable. In re Nasdaq Mkt.-Makers Antitrust Litig., No. 94 Civ. 3996 RWS, 2000 WL
37992, at *2 (S.D.N.Y. Jan 18, 2000)(holding that the “small number of objections to the
Proposed Plan” was entitled to “substantial weight” in approving the plan).
DOCUMENT 653
27
For each of the foregoing reasons, Plaintiff respectfully submits that the proposed
Plan of Allocation is fair and reasonable and merits final approval from the Court.
D. FINAL CERTIFICATION OF THE SETTLEMENT CLASS
The Court’s July 23, 2018 Preliminary Approval Order conditionally certified the
Settlement Class for settlement purposes only, finding that it satisfied the requirements of
Ala. R. Civ. P. 23(a) and 23 (b)(2) and (b)(3). There have been no changes to alter the
propriety of class certification for settlement purposes. Thus, for the reasons stated in
Plaintiff’s Motion for Preliminary Approval, Plaintiff respectfully requests that the Court
affirm its determinations in the Preliminary Approval Order certifying the Settlement Class
under Rules 23(a) and 23(b)(2) and 23(b)(3).
CONCLUSION
For all the foregoing reasons, Plaintiff respectfully requests that the Court grant
the Motion for Final Approval of Class Settlement and Plan of Allocation.
/s/Thomas E. Baddley, Jr.
THOMAS E. BADDLEY, JR.
/s/ Jeffrey P. Mauro
JEFFREY P. MAURO
/s/John Parker Yates
JOHN PARKER YATES
Attorneys for Plaintiff
BADDLEY, MAURO & YATES, L.L.C.
850 Shades Creek Parkway, Ste. 310
Birmingham, AL 35209
DOCUMENT 653
28
(205) 939-0090
/s/Stephen D. Wadsworth
Andrew P. Campbell
Stephen D. Wadsworth
Yawanna McDonald
OF COUNSEL:
Andrew P. Campbell
Stephen Wadsworth
Yawanna McDonald
CAMPBELL GUIN, LLC
505 20th Street North, Ste. 1600
Birmingham, AL 35203
CERTIFICATE OF SERVICE
I hereby certify that on September 17, 2018, I electronically filed the
foregoing with the Clerk of the Court using the Alafile system, which will send
notification of such filing to the following:
Will Hill Tankersley
Adam K. Israel
Gregory C. Cook
BALCH, BINGHAM, LLP
1901 6th Avenue North, Suite 1500
Birmingham, AL 35203
Bruce L. Gordon
John Dana
GORDON, DANA &GILMORE, LLC
600 University Park Place, Suite 100
Birmingham, AL 35209
Gregory H. Hawley
JONES & HAWLEY, P.C.
2001 Park Place, Suite 830
Birmingham, AL 35203
Carole G. Miller
Matthew I. Penfield
BRESSLER, AMERY &ROSS, P.C.
2000 Park Place, Ste. 1500
Birmingham, AL 35203
DOCUMENT 653
29
David G. Hymer
Bradley Arant Boult Cummings LLP
One Federal Place
1819 Fifth Avenue
North Birmingham,
AL 35203
Phone: (205) 521-8000
/s/ Thomas E. Baddley, Jr.
THOMAS E. BADDLEY, JR
DOCUMENT 653
EXHIBIT 1
ELECTRONICALLY FILED9/17/2018 4:05 PM
01-CV-2014-902794.00CIRCUIT COURT OF
JEFFERSON COUNTY, ALABAMAANNE-MARIE ADAMS, CLERK
DOCUMENT 654
EXHIBIT 2
ELECTRONICALLY FILED9/17/2018 4:05 PM
01-CV-2014-902794.00CIRCUIT COURT OF
JEFFERSON COUNTY, ALABAMAANNE-MARIE ADAMS, CLERK
DOCUMENT 655
1
AFFIDAVIT OF ANDREW P. CAMPBELL
Before me, the undersigned Notary Public, in and for said State and County, personally
appeared Andrew P. Campbell, who after being duly sworn, states as follows:
1. My name is Andrew P. Campbell, I am over the age of nineteen years, I am an
attorney licensed to practice law in Alabama, and I am the managing partner of the law firm
Campbell Guin, LLC. I have personal knowledge concerning the following facts.
2. I have been a member of the Alabama State Bar for over thirty-eight (38) years.
During the course of my practice, I have served as lead or co-counsel of many class-action matters,
IN THE CIRCUIT COURT OF JEFFERSON COUNTY, ALABAMA
BIRMINGHAM DIVIS IN THE CIRCUIT COURT OF JEFFERSON COUNTY,
ALABAMA
TRACI SALINAS and SHARON LEE )
STARK, derivatively on behalf of )
STERNE AGEE GROUP, INC., )
)
Plaintiffs, )
)
v. ) CASE NO: CV-2014-902794
)
JAMES S. HOLBROOK, JR., )
WILLIAM K. HOLBROOK, )
JON S. SANDERSON, ERIC B. )
NEEDLEMAN, SAL A. NUNZIATA, )
ROBERT G. NUNZIATA, WALTER )
S. ROBERTSON, III, WATLER A. )
RUCH, III, HENRY S. LYNN, JR., )
LINDA M. DANIEL, JAY W. CARTER, )
JOE R. ROBERTS, JR. and )
STERNE AGEE GROUP, INC., )
FICTITIOUS DEFENDANTS A through )
Z )
)
Defendants. )
DOCUMENT 655
2
including, but not limited to, 2:12-CV-04269 Cromeans et al., v. Morgan Keegan & Co., et al and
CV-2010-900013, Green, et al. v Boozer, et al.
3. I, along with my co-counsel, Baddley, Mauro & Yates, LLC, have worked this case
diligently for the last four (4) years. Plaintiffs have had to overcome many obstacles, including,
but not limited to, transfer and/or recusal of this matter to three (3) different judges, dismissal of
named plaintiffs, several motions to dismiss, and numerous motions for summary judgment.
Moreover, Defendants repeatedly petitioned the Alabama Supreme Court for mandamus relief, as
well as appealed this Court’s order overturning dismissal of Plaintiff’s claims.
4. During the course of this litigation, Defendant Sterne Agee merged with Stifel
Financial Corp., (“Stifel”) which presented a set of new issues.
5. Additionally, Plaintiffs had to vigorously fight to maintain standing to prosecute
the claims, as well as withstand challenges as to the Court’s subject matter jurisdiction over post-
merger claims which Defendants sought to litigate in Delaware.
6. This case involved extraordinarily complex issues and questions of law which
required specialized experience and expertise in shareholder derivative actions. First, counsel had
to fight to retain named plaintiffs in this action. When the action commenced in 2014, two
plaintiffs were designated as class representatives; however, during the course of the litigation the
original named plaintiffs withdrew; thus, requiring Class counsel to add additional representatives
to maintain the suit. All named Plaintiffs faced harassment, intimidation and/or fear of retribution
from Defendants, causing several to decide that they no longer wanted to pursue the action.
Second, because Sterne Agee merged with Stifel during the course of this litigation, it required
counsel to modify its case strategies. Thus instead of a derivative suit, Plaintiff then had to assert
direct class claims against Defendants arising out of the fraudulent merger between Sterne Agee
DOCUMENT 655
3
and Stifel, as contemplated under Delaware law. Further, the Defendants raised the releases
required to be executed by the shareholders in the merger documents as a defense. As a result,
there was a significant legal dispute over the enforceability of these releases.
7. Moreover, even after Plaintiff had amended his complaint to include direct claims,
Defendants nonetheless filed motions to dismiss and motions for summary judgment which were
granted in their entirety. However, after filing a motion to reconsider, this Honorable Court
reversed that decision and allowed Plaintiff’s claims to proceed. The Alabama Supreme Court
affirmed this Court’s reversal. These claims all presented additional complex questions of law
which posed great risks of an adverse ruling at summary judgment or at trial. Added to the
difficulties, was the opposition of the purported Shareholders Committee to any efforts by us to
recover for the Shareholders. It is quite ironic that this group of shareholders has objected to
attorney fees when they did not assist us or the shareholders they were appointed to represent; but
rather remained firmly embedded in the pocket of their employer Stifel.
8. Then on May 2-3, 2018, the parties mediated the case over two (2) days before the
well-recognized and highly experienced mediator, Ralph Levy, Esq. Prior to the mediation, the
Parties exchanged financial and accounting information regarding the Sterne Agee-Stifel merger.
At the conclusion of the mediation, the parties had not yet reached a settlement; however,
settlement negotiations continued. The parties spent considerable time negotiating the terms of
the settlement and ultimately were able to reach a global settlement for all of the litigation
involved, including Sterne Agee v. Holbrook.
9. The settlement provides that Plaintiff and the class will receive a benefit of at least
twenty-three million dollars in cash ($23,000,000.00) from Defendants for the benefit of Sterne
Agee Group’s former shareholders. Pursuant to the Settlement, Defendants agreed to make
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available three (3) separate settlement funds for a Total Settlement Amount consisting of the
following:
A. a $6.5 Million Payment Fund;
B. a $15 Million Indemnity Earnout Payment Fund; and
C. a XL Claim Amount Fund (approximate value between $1.5 - 2.8 million)
See Stipulation of Settlement and Release, ¶¶ 4.1-4.3
10. All three (3) of the separate settlement funds are a direct result of Plaintiff’s
counsels hard work and due diligence in this matter. Those sums are part of a class pool which
would not have been paid but for our efforts. The Parties spent considerable time drafting the
Settlement Agreement, which ensures that the Settlement Class Members are provided with
notice of the Settlement Agreement and its terms.
11. Plaintiff and Plaintiff’s counsel believe that this Settlement represents an excellent
result for the Settlement Class Members due to (1) the complexity of the claims and defenses; (2)
duration of case; (3) uncertainty and inherent risks of continued litigation; (4) Defendants’
continued denial of liability and aggressiveness of litigating and appealing the case; (5) best
interest of the Plaintiff and Settlement Class members; (6) puts an end to protracted litigation and
appeals process; (7) pays Settlement Class Members cash; (8) a direct result of at-arm’s length;
(9) the settlement is fair, reasonable, and adequate; and (10) caps the litigation expenses.
12. Out of the 390 Settlement Class Members, there were zero objections to the
Settlement itself, with just five (5) shareholders filing objection to Class Counsel’s Fee and
Expense Petition. Further, there have be no opt-outs or requests to be excluded from the Settlement
Class. As a result, it is apparent that the Settlement has been well-received by the Class. The fact
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that the Settlement Class approves of the Settlement demonstrates that the Settlement is fair,
reasonable and adequate.
13. As a result, undersigned counsel believes and recommends that the Court approve
this Settlement for the Class Members and award attorneys’ fees and expenses commensurate with
Plaintiff’s counsel hard work and dedication in this matter and obtaining substantial and significant
benefits to Class members. I would add that the counsel opposing the attorney’s fees have alleged
that the case presented no novel questions of law, which I can only attribute to counsels’ lack of
experience in handling these type of claims.
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EXHIBIT 3
ELECTRONICALLY FILED9/17/2018 4:05 PM
01-CV-2014-902794.00CIRCUIT COURT OF
JEFFERSON COUNTY, ALABAMAANNE-MARIE ADAMS, CLERK
DOCUMENT 656