Hardy v. Embark Technology, Inc. f/k/a Northern Genesis Acquisition Corp. II
- Jacquelyn Corley
- 3:22-cv-02090
- U.S. District Court · Northern District of California
- 3
In Hardy v. Embark, Judge Corley ordered more settlement information and continued the final-approval hearing.
The plaintiffs, the proposed settlement class, the defendants, and the settlement administrator were affected by the order. The plaintiffs must provide supplemental information, and the settlement and fee hearings were continued.
What happened
Hardy v. Embark Technology, Inc. is a proposed securities class action involving people who bought Embark or Northern Genesis stock. The parties reached a settlement, and the plaintiffs asked the court to approve it finally.
The court said it lacked enough information to evaluate the notice process, the difference between the estimated and notified class sizes, the validity of submitted claims, the claims rate, and expected class-member recoveries. It ordered the plaintiffs to file a supplemental brief addressing those issues.
Judge Jacquelyn Corley continued the hearing on final settlement approval and the plaintiffs’ request for attorneys’ fees and costs to March 14, 2024. The order did not grant or deny final approval.
The detailed version
- Hardy v. Embark Technology, Inc. f/k/a Northern Genesis Acquisition Corp. II · No. 3:22-cv-02090
- Jacquelyn Corley
- Jan. 30, 2024
Background
The plaintiffs brought a proposed securities class action asserting claims under Sections 11 and 15 of the Securities Act of 1933 and Sections 14(a) and 20(a) of the Securities Exchange Act of 1934. The proposed class consists of people who purchased stock in Embark Technologies, Inc., or its predecessor, Northern Genesis Acquisition Corp. II. While the defendants’ motion to dismiss was pending, the parties agreed to settle the claims. The court granted preliminary approval of the settlement on September 26, 2023. The plaintiffs then moved for final approval of the settlement.
Court’s analysis
Under Federal Rule of Civil Procedure 23(e), a class-action settlement requires court approval after a fairness hearing and a determination that the settlement is fair, reasonable, and adequate. The court concluded that the pending motion did not provide enough information to evaluate the settlement because the claims-administration process was still ongoing.
The court identified four information gaps:
- The settlement administrator estimated that the class could contain approximately 100,000 members, but reported providing notice to 12,402 potential class members. The motion did not explain the difference.
- The administrator had received 1,497 claims but was still reviewing them for required documentation and duplicate submissions. The number of valid claims was therefore unclear.
- The motion did not address the claims rate or provide the range of claims rates in similar cases based on counsel’s or the administrator’s experience.
- Because claim processing was incomplete, the motion did not provide information about class members’ expected recoveries under the allocation plan. The court said that information was necessary to evaluate the settlement’s reasonableness.
Order
The court ordered the plaintiffs to submit a supplemental brief addressing these issues by February 29, 2024. The parties could stipulate to another date if the deadline did not allow enough time to complete claim processing and provide the requested information.
Judge Jacquelyn Corley continued the hearing on the motion for final approval of the settlement and the plaintiffs’ motion for attorneys’ fees and costs to March 14, 2024, at 9:00 a.m., by videoconference. The opinion is an order requesting additional information and continuing the hearings; it does not state that the court granted or denied final settlement approval.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.