Iowa Public Employees' Retirement System v. Bank of America Corporation

Background

The plaintiffs were Iowa Public Employees’ Retirement System; Los Angeles County Employees Retirement Association; Orange County Employees Retirement System; Sonoma County Employees’ Retirement Association; and Torus Capital, LLC. The order addressed a settlement with the Goldman Sachs, JPMorgan, Morgan Stanley, UBS, and EquiLend defendants, collectively called the settling defendants.

Settlement Class

The court certified a class solely for purposes of settlement. The class covered people who, directly or through an agent, entered stock-loan transactions with the prime-broker defendants or their direct or indirect parents, subsidiaries, or divisions in the United States from January 7, 2009, through the settlement’s execution date. The order excluded the defendants and specified related entities, entities that had previously requested exclusion from a class in the action, and the United States Government, while providing that investment vehicles were not excluded.

The court found that the requirements for class certification under Rules 23(a) and 23(b)(3) were satisfied for settlement purposes. It found that the class was too numerous for all members to join individually, that common legal and factual questions predominated, that the plaintiffs’ claims were typical, that the plaintiffs and their counsel had adequately represented the class, and that a class action was the superior method for resolving the controversy. The court appointed the plaintiffs as class representatives and Quinn Emanuel Urquhart & Sullivan, LLP, and Cohen Milstein Sellers & Toll PLLC as settlement class co-lead counsel.

Court’s Rulings

The court granted final approval of the settlement under Rule 23(e), finding that it was fair, reasonable, adequate, and in the best interests of the settlement class. The court found that the settlement resulted from arm’s-length, good-faith negotiations; that the case presented serious and contested legal and factual issues; that continued litigation had uncertain results; and that the value of an immediate monetary recovery outweighed the possibility of obtaining greater relief after further litigation. The court also considered the settlement class members’ reaction to the settlement.

The court overruled the lone objection, finding that it did not meaningfully undermine approval under the standards applied in the circuit. Except for individual claims of people listed in Exhibit 1 who had timely and validly opted out, the court dismissed the action, all claims in it, and the released class claims against the settling defendants and released settling defendant parties with prejudice. The parties were to bear their own costs except as provided in the settlement agreement and the court’s orders.

The opt-outs were excluded from the settlement class, were not bound by the judgment, and could not claim benefits under the settlement. Once the settlement became effective, the plaintiffs and settlement class members released the specified released class claims and were barred from pursuing those claims against the released settling defendant parties. Claims outside the released class claims and claims to enforce the settlement agreement were not released. The judgment also released specified claims by the settling defendants against the plaintiffs, settlement class members, and plaintiffs’ counsel, and barred certain contribution, indemnification, or similar claims by other defendants to the extent provided by applicable law.

The judgment reserved class members’ rights against other defendants in the action, formerly named defendants, alleged co-conspirators, and other persons later added or joined, except as to the settling defendants and released settling defendant parties for released class claims. The court found that the mailed and published notice satisfied Rule 23 and due process. It retained continuing and exclusive jurisdiction over implementation and administration of the settlement, the settlement fund, fee and expense applications, incentive awards, and enforcement or interpretation of the settlement agreement. If the settlement did not become effective under its terms, the judgment and related releases would become void and the parties would generally return to their positions as of the execution date.

Disposition

Judge Katherine Polk Failla ordered the Clerk to enter the final judgment and order of dismissal immediately under Rule 54(b). The order approved the settlement and dismissed the released claims against the settling defendants with prejudice, subject to the exclusions, releases, reservations, and other terms stated in the judgment.