Xu v. FibroGen, Inc.
- Edward Chen
- 3:21-cv-02623
- U.S. District Court · Northern District of California
- 3
In Xu v. FibroGen, Inc., Judge Chen approved the class-settlement allocation plan, overruled one objection, and reserved judgment and fees for later.
Settlement Class Members, the person who objected to the Plan of Allocation, and the parties involved in the class action.
What happened
Xu v. FibroGen, Inc. involved a proposed plan for distributing settlement proceeds among members of a securities class action. The court found that notice was effective, the class response was favorable, and the settlement was fair, reasonable, and adequate.
The court approved the Plan of Allocation as a fair and reasonable way to distribute the net settlement proceeds. It overruled the only objection, finding it procedurally invalid and without merit, including because the objector had not established standing. The court also noted that there was one request to opt out.
Judge Edward M. Chen ordered immediate entry of the allocation decision. The court stated that it would issue a later order addressing final judgment and attorney’s fees after reviewing the class-claims accounting and distribution process.
The detailed version
- Xu v. FibroGen, Inc. · No. 3:21-cv-02623
- Edward Chen
- May 28, 2024
Background
The court considered the lead plaintiffs’ motion for final approval of the class action settlement and Plan of Allocation after a settlement hearing held on May 16, 2024. The court found that notice of the hearing and proposed allocation plan had been mailed or emailed to identifiable Settlement Class Members, published in Investor’s Business Daily, transmitted over PR Newswire, and provided online.
The court stated that the settlement was fair, reasonable, and adequate, and that notice to the class was effective. The class’s reaction was favorable: one person requested exclusion from the settlement and one objection was filed. The settlement amount was $28.5 million, deposited into an interest-bearing escrow account for the benefit of claimants.
Objection
The court considered the objection under Rule 23(e)(5) of the Federal Rules of Civil Procedure and overruled it. The court found that the objection was procedurally invalid and without merit because the objector had not established standing. The court also rejected the objection’s substantive arguments. It concluded that compensating shareholders for shares they merely held, rather than shares they purchased or sold, was not consistent with the claims asserted under the Securities Exchange Act. It further concluded that the settlement did not need to compensate taxes, commissions, fees, or every possible loss, and that the settlement provided a favorable recovery in light of litigation risks and comparable securities class actions. Finally, the court found that the objection misunderstood the settlement because claimants would receive interest earned on the settlement funds.
Ruling
The court approved the Plan of Allocation, finding it fair and reasonable in all respects to the Settlement Class. The court directed the Clerk to enter the order immediately because there was no just reason for delay. It stated that it would issue a further order addressing final judgment and attorney’s fees after receiving and considering an accounting of class claims and the distribution process. Judge Edward M. Chen signed the order on May 28, 2024.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.