In re Zoom Securities Litigation

Background

The court had granted final approval of a $150 million class settlement in a securities-fraud action against Zoom Video Communications, Inc. and its CEO, Eric Yuan. The claims arose under Section 10(b) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5. Adam Ali was the lead plaintiff, and Robbins Geller Rudman & Dowd LLP was lead counsel for the settlement class.

The litigation began in April 2020. In February 2022, the court dismissed claims based on 14 of the 15 alleged misstatements and dismissed individual defendant Kelly Steckelberg. The parties later reached a settlement. The court initially denied preliminary approval because of problems with the proposed notice forms and other concerns, then granted preliminary approval of a revised settlement proposal in May 2025. The fee request was unopposed, and the settlement included a “clear sailing” provision under which the defendants agreed not to contest counsel’s fee application.

Attorneys’ Fees and Costs

Robbins Geller reported 3,527.30 hours of work and a lodestar of $2,604,766.50. A lodestar is a fee calculation based primarily on the hours reasonably worked multiplied by hourly rates. Counsel sought 18.75% of the $150 million settlement fund, or $28,125,000, which would have been a multiplier of more than 10 times the lodestar.

The court explained that it had an independent duty to determine whether the award was reasonable, even though no class member objected and the defendants did not oppose the request. That duty was heightened by the clear-sailing provision because counsel’s interest in receiving fees can conflict with the class’s interest in preserving the settlement fund.

The court rejected the view that the Ninth Circuit’s frequently cited 25% percentage was an appropriate starting point in this case. Because the settlement fund exceeded $100 million, the court treated it as a “megafund” case in which a percentage award could produce a windfall. The court also used a lodestar cross-check to test the proposed percentage award. It found that the requested fee would produce an average hourly rate of $7,973.52 and a multiplier of more than 10, even though counsel’s reported work did not include significant expert-witness, class-certification, summary-judgment, or deposition activity.

The court also considered factors relevant to a percentage-of-recovery award, including the result for the class, litigation risk, benefits beyond the cash settlement, market rates, the burdens of litigation, and the contingency-fee arrangement. It found that the record did not support treating the result as exceptional, showing unusual litigation risks, or demonstrating burdens beyond those normally present in securities litigation.

The court therefore used the lodestar method and applied a multiplier of 4.0. It awarded Robbins Geller $10,419,066 in attorneys’ fees and $262,670.49 in costs. Seventy-five percent of the fee award, $7,814,299.50, could be paid immediately from the settlement fund after entry of the order, subject to the settlement agreement. The remaining 25%, $2,604,766.50, was to remain in the fund pending a post-distribution accounting and could be released only at the court’s direction. The awarded costs could be paid under the stated conditions.

Lead Plaintiff Compensation

Ali requested $48,750 for 75 hours spent representing the class. The court stated that the Private Securities Litigation Reform Act allows a lead plaintiff to receive only reasonable costs and expenses, including lost wages, directly related to representing the class, and does not allow a payment beyond the plaintiff’s proportional share of the recovery.

The court denied Ali’s $48,750 request without prejudice. It found that his brief declaration did not establish that the amount represented specific costs, expenses, or lost wages, and did not provide a factual basis for compensating his time at $650 per hour. The court also noted that the request was substantially larger than similar requests in other securities cases without sufficient explanation. Ali could file an amended compensation request consistent with the order and the statute by November 21, 2025.

Disposition

Judge James Donato awarded Robbins Geller $10,419,066 in attorneys’ fees and $262,670.49 in costs, and denied Ali’s $48,750 compensation request without prejudice, allowing an amended request by the stated deadline.