Puddu v. NYGG, LTD.

Background

The court considered plaintiffs’ motions for final approval of a class-action settlement and for attorneys’ fees, reimbursement of litigation expenses, and incentive awards. The settlement involved claims concerning alleged misrepresentations in 6D Global Technologies, Inc.’s public filings and statements. The settling defendants identified in the opinion were 6D Global Technologies, Inc., Teyjune Kang, Mark Szynkowski, and Terry McEwen.

Class Certification

For settlement purposes only, the court finally certified a class consisting of people who purchased or acquired 6D securities between June 16, 2014, and September 10, 2015. The definition excluded defendants, specified current and former officers and directors and other released persons, certain related people and entities, and people who timely requested exclusion.

The court found that the class satisfied Federal Rule of Civil Procedure 23(a)’s requirements of numerosity, commonality, typicality, and adequate representation. It also found that common questions predominated and that a class action was superior under Rule 23(b)(3). The common issue was whether the alleged misrepresentations artificially inflated 6D’s stock price. The court noted that approximately 19.5 million shares not held by defendants were outstanding at the end of the class period.

Notice and Settlement Approval

Class members received notice by email when an address was available, by postcard otherwise, and through a notice published on GlobeNewswire. The claims administrator posted longer notice materials and claim forms on its website. The court concluded that the notice fairly explained the settlement, allocation plan, fee request, expense request, incentive awards, and procedures for objections and exclusion.

Applying the required fairness analysis, the court found the settlement procedurally fair because it followed negotiations involving experienced counsel, meaningful investigation, years of litigation, and three unsuccessful mediations. The court also found it substantively fair, reasonable, and adequate. It considered the complexity and expense of continued securities litigation, the absence of objections or opt-outs, the investigation and litigation already completed, the risks of proving liability and damages, the risk of maintaining class certification through trial, defendants’ ability to pay more, and the settlement’s value compared with the risks of continued litigation.

As of the claims deadline, 415 claim forms had been submitted and 180 were considered valid. The recognized losses for those valid claims totaled $3,436,987, and the court described the approximate recovery as 6.05% of those recognized losses. The court also approved the plan of allocation, which distributed the fund to class members on a per-share basis.

Fees, Expenses, and Incentive Awards

The court approved class counsel’s request for attorneys’ fees equal to one-third of the settlement fund, or $133,333.33, plus a proportionate share of interest earned on the fund. It also approved reimbursement of $52,663.79 in expenses, including costs for financial experts, investigators, court filings, appellate proceedings, and mediation. Finally, it approved an incentive award of $1,500 for each lead plaintiff.

Disposition

Judge Alison J. Nathan determined that the settlement was fair, reasonable, and adequate. The court granted both plaintiffs’ motion for final approval of the class-action settlement and plaintiffs’ motion for attorneys’ fees, expense reimbursement, and awards to the plaintiffs. The court stated that it would enter the proposed partial final judgment and the proposed order awarding fees, expenses, and plaintiff awards.