The Police Retirement System of St. Louis v. Granite Construction Incorporated

Background

This securities class action followed Granite Construction Incorporated’s restatement of financial information. The parties negotiated a $129 million settlement fund. The court had previously approved a plan of allocation that gave class members with both Section 11 and Section 10(b) claims 2.21 times the recovery of class members with only Section 10(b) claims. Arash Nasseri intervened and argued that the allocation should provide an even greater benefit to Section 11 claimants. The revised plan increased the amount allocated to those claimants, but did not increase the overall settlement.

The court considered the settlement under Federal Rule of Civil Procedure 23, which requires a class settlement to be fair, reasonable, and adequate. One class member opted out, and no class member objected to the settlement or allocation plan. The court found that the settlement’s value, the risks and expense of continued litigation, the extensive discovery, the experience of counsel, the notice process, and the scope of the release supported approval. It also found no evidence of collusion or conflicts of interest.

Settlement Approval

The court granted final approval of the settlement and the plan of allocation. The settlement required defendants to pay $129 million for distribution to class members and released claims related to the allegations in the consolidated amended complaint and purchases of Granite stock during the class period. The release did not cover claims related to a separate shareholder derivative action. The court also found the settlement notice adequate under Rule 23, the Private Securities Litigation Reform Act, and due process.

Attorney’s Fees and Expenses

Class counsel requested a fee equal to 16.33% of the settlement fund, and intervenor counsel requested a larger total fee. The court applied the percentage method with a lodestar cross-check. A lodestar is an estimate based on reasonable hours worked multiplied by reasonable hourly rates.

After deducting attorney’s expenses from the common fund, the court awarded total attorney’s fees of $20,921,494.16. Class counsel received $19,921,494.16, and intervenor counsel received $1 million. The court concluded that class counsel were primarily responsible for obtaining the $129 million settlement, while intervenor counsel made a meaningful but limited contribution by increasing the recovery for class members with both Section 10(b) and Section 11 claims. The court awarded $763,958 in expenses to BFA and $119,115.13 in expenses to Robbins Geller.

The court denied Nasseri’s request for a $12,875 incentive award. It stated that Nasseri would personally benefit from the intervention and had not represented a certified class in the state-court action. The court denied as moot objections to his declaration.

Motion to Seal

Intervenor counsel sought to seal descriptions of its billing work, asserting that disclosure could reveal research or litigation strategy. The court found that explanation insufficient under the court’s local rules and denied the motion to seal. The court stated that class members were entitled to know the justification for fees paid from their recovery.

Disposition

Final approval was granted to the extent stated. The court dismissed all of the plaintiff’s claims with prejudice as provided in the settlement agreement, granted approval of the notice and allocation plan, and authorized class counsel and Epiq to administer and distribute the net settlement proceeds. The court granted the request to retain exclusive jurisdiction over the settlement, agreement, order, and final judgment for six months after entry of judgment. The intervenor counsel’s motion to seal was denied, and the specified attorney’s fees and expenses were awarded.