In re Romeo Power Inc. Securities Litigation

Background

Plaintiffs moved for final approval of a class-action settlement and for attorneys’ fees, costs, and service awards for the five lead and named plaintiffs. After a July 24, 2024, hearing, the court approved the settlement and granted the request for attorneys’ fees and costs on August 1, 2024. The court reserved its decision on the service awards.

The Private Securities Litigation Reform Act provides that a class representative generally receives the same settlement share, on a per-share basis, as other class members. It also permits reasonable costs and expenses, including lost wages, that directly relate to representing the class. The Second Circuit considers whether plaintiffs provide a thorough accounting of the time they devoted to the litigation and a statement that the time constituted lost work time.

Requested Awards and Court’s Analysis

The plaintiffs requested $80,000 in total: $20,000 for lead Plaintiff Mike Castleberg and $15,000 each for named Plaintiffs Joshua Cante, Nathaniel Tapia, Artur Chimchirian, and Van Nguyen.

The declarations stated that the plaintiffs spent between 70 and 125 hours assisting counsel over several years. They described activities such as providing trading records and other documents, communicating with counsel, reviewing pleadings and court orders, responding to discovery, preparing for and attending depositions, seeking appointment as class representatives, participating in settlement discussions, and evaluating the settlement. However, the declarations did not provide a specific accounting of what the hours involved or when the work occurred. They also did not estimate the time diverted from professional or investing activities or identify specific lost wages.

A supplemental letter identified some additional expenses. It stated that Cante took time off work and traveled from Arizona to New York for his deposition, Tapia incurred childcare expenses related to his deposition, Chimchirian took time away from work and traveled from Florida to New York for his deposition, and Castleberg spent substantial time that he otherwise would have devoted to his business. The court found that this information still did not provide enough detail to show that the requested awards reflected the plaintiffs’ actual costs and expenses.

Disposition

The court ordered that the request for service awards was GRANTED in part and DENIED in part. It granted awards of $8,000 to Cante, $8,000 to Chimchirian, $6,000 to Tapia, $5,000 to Castleberg, and $5,000 to Nguyen. The court stated that these amounts reasonably compensated the class representatives for costs and expenses incurred in that role and promoted equity among class members. The awards must be paid from the settlement fund and may not be paid until a majority of class members have received their cash awards.