case 2:06-md-01749-ger document 102 filed 12/02/2008...

UNITED STATES DISTRICT COURTEASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

IN RE GENERAL MOTORS CORP.SECURITIES AND DERIVATIVELITIGATION

--------------- /

MDLNo.1749Master Case No. 06-md-1749Hon. Gerald E. RosenThis Document Relates to:2:06-cv-12258-GER2:06-cv-12259-GER

MOTION FOR (I) AWARD OF ATTORNEYS' FEESAND REIMBURSEMENT OF EXPENSES, AND

(II) AWARDS TO LEAD AND NAMED PLAINTIFFS

GRANT & EISENHOFER P.A.Jay W. EisenhoferJames 1. SabellaBrenda F. Szydlo485 Lexington Avenue, 29th FloorNew York, NY 10017(646) [email protected]

LABATON SUCHAROW LLPJonathan M. PlasseRichard T. JoffeBruce E. Stanton140 BroadwayNew York, NY 10005(212) [email protected]

Co-Lead Counsel for Lead Plaintiffs

ELWOOD SIMON & ASSOCIATESElwood S. Simon355 S. Old Woodward Avenue, Suite 250Birmingham, MI 48009(248) [email protected]

DIAZ REUS & TARG LLPAlexander Reus100 SE Second Street, Suite 2610Miami, FL 33131(786) [email protected]

Counsel for Plaintiffs

Case 2:06-md-01749-GER Document 102 Filed 12/02/2008 of 39

Pursuant to Rule 23 of the Federal Rules of Civil Procedure, the undersigned respectfully

move for an award of attorneys' fees to Co-Lead Counsel Labaton Sucharow LLP and Grant &

Eisenhofer P.A. as well as other Plaintiffs' Counsel (collectively, "Plaintiffs' Counsel"), and for

reimbursement of litigation expenses incurred in the course of their representation of the

plaintiffs in this action. In addition, the undersigned also respectfully move for a costs award to

Lead Plaintiffs Deka Investment GmbH ("Deka Investment") and Deka International S.A.,

Luxembourg ("Deka International") (together, "Deka" or "Lead Plaintiffs"), in the amount of

$184,205, and to the seven other Named Plaintiffs in the amount of $1 ,000 each, for time spent

in the prosecution of this action.

1. As discussed in detail in the accompanying memorandum of law, the requested

award of attorneys' fees and reimbursement of expenses is fair and reasonable under all

applicable legal standards, including prevailing Sixth Circuit law, and has been fully endorsed by

the Lead Plaintiffs. The request for reimbursement to the Lead and Named Plaintiffs is also fair

and reasonable and consistent with the applicable caselaw as well as the provisions of the Private

Securities Litigation Reform Act.

2. Accordingly, for the reasons set forth in the accompanying memorandum of law,

it is respectfully submitted that the Court should enter an order

(a) awarding Co-Lead Counsel attorneys' fees of 19% of the Gross Settlement Fund, plus

interest;

(b) awarding reimbursement of Co-Lead Counsels' litigation costs and expenses in the

amount of $1,524,929.02, plus interest;

(c) awarding Lead Plaintiffs reimbursement in the amount of $184,205, and awarding the

seven other Named Plaintiffs reimbursement in the amount of $1,000 each;

1


(d) ordering that such amounts shall be payable immediately upon award; and

(e) granting such other and further relief as the Court deems Co-Lead Counsel and Lead

Plaintiffs are entitled.

Dated: December 2,2008

GRANT & EISENHOFER P.A.

By lsi James 1. SabellaJay W. EisenhoferJames 1. SabellaBrenda F. Szydlo485 Lexington Avenue, 29th FloorNew York, NY 10017(646) [email protected]

Respectfully submitted,

LABATON SUCHAROW LLP

By lsi Jonathan M. PlasseJonathan M. PlasseRichard T. JoffeBruce E. Stanton140 BroadwayNew York, NY 10005(212) [email protected]


ELWOOD SIMON & ASSOCIATES

By lsi Elwood S. SimonElwood S. Simon355 S. Old Woodward Avenue, Suite 250Birmingham, MI 48009(248) [email protected]

DIAZREUS & TARGLLP

By lsi Alexander ReusAlexander Reus100 SE Second Street, Suite 2610Miami, FL 33131(786) [email protected]


2


UNITED STATES DISTRICT COURTEASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

IN RE GENERAL MOTORS CORP.SECURITIES AND DERIVATIVELITIGATION

_______________ 1

MDL No. 1749Master Case No. 06-md-1749Hon. Gerald E. RosenThis Document Relates to:2:06-cv-12258-GER2:06-cv-12259-GER

MEMORANDUM OF LAW IN SUPPORT OF MOTIONFOR (I) AWARD OF ATTORNEYS' FEES

AND REIMBURSEMENT OF EXPENSES, AND(II) AWARDS TO LEAD AND NAMED PLAINTIFFS

GRANT & EISENHOFER P.A.Jay W. EisenhoferJames 1. SabellaBrenda F. Szydlo485 Lexington Avenue, 29th FloorNew York, NY 10017(646) [email protected]

LABATON SUCHAROW LLPJonathan M. PlasseRichard T. JoffeBruce E. Stanton140 BroadwayNew York, NY 10005(212) [email protected]

Co-Lead Counsel for Lead Plaintifft

ELWOOD SIMON & ASSOCIATESElwood S. Simon355 S. Old Woodward Avenue, Suite 250Birmingham, MI 48009(248) [email protected]

DIAZREUS & TARGLLPAlexander Reus100 SE Second Street, Suite 2610Miami, FL 33131(786) [email protected]

Counsel for Plaintifft


STATEMENT OF ISSUES PRESENTED

Pursuant to Local Rule 7.1 (c)(2), Lead Plaintiffs identify the following issues presented:

1. Whether the Court should award Co-Lead Counsel attomeys' fees of nineteen percent(19%) of the common fund recovered for the Class;

2. Whether the Court should award reimbursement of litigation costs and expenses thatCo-Lead Counsel have reasonably and necessarily incurred in successfullyprosecuting the claims in this action, in the amount of $1 ,524,929.02; and

3. Whether the Court should make awards to Lead Plaintiffs and the other seven NamedPlaintiffs, for their time spent in the prosecution of this case.


STATEMENT OF CONTROLLINGOR MOST APPROPRIATE AUTHORITY

Pursuant to Local Rule 7.l(c)(2), Lead Plaintiffs identify the following controlling or

most appropriate authority for the relief sought:

1. Federal Rule of Civil Procedure 23

2. In re Cardizem CD Antitrust Litig., 218 F.R.D. 508 (E.D. Mich. 2003)

3. In re Delphi Corp. Sec., Deriv. & "ERISA" Litig., 248 F.R.D. 483 (E.D. Mich. 2008)

4. In re Rio Hair Naturalizer Prods. Liab. Litig., MDL No. 1055, 1996 U.S. Dist.

LEXIS 20440 (B.D. Mich. Dec. 20, 1996)

ii


TABLE OF CONTENTS

TABLE OF AUTHORITIES iv

INTRODUCTION 1

ARGUMENT 5

I. PLAINTIFFS' COUNSEL ARE ENTITLED TO A REASONABLEPERCENTAGE OF THE COMMON FUND RECOVERED 5

A. Standard for Approval of Attorneys' Fees in Sixth CircuitCommon Fund Cases 5

B. Evaluation of Sixth Circuit Factors Confirms That theRequested Fee is Reasonable 9

1. The Value of the Benefit Rendered to the Class 10

2. Society's Stake in Rewarding Attorneys Who Produce SuchBenefits in Order to Maintain an Incentive to Others .13

3. Whether the Services Were Undertaken on a Contingent Fee Basis 14

4. The Value of the Services on an Hourly Basis 16

5. The Complexity of the Litigation .19

6. The Professional Skill and Standing of Counsel on Both Sides 20

C. The Lack of Objections to the Fee Request FurtherConfirms Its Reasonableness 22

II. CO-LEAD COUNSEL ARE ENTITLED TO REIMBURSEMENTFOR THEIR REASONABLE LITIGATION EXPENSES 23

III. THE LEAD AND OTHER NAMED PLAINTIFFS' TIME SPENTPROSECUTING THIS CASE WAS DIRECTLY RELATED TOTHEIR REPRESENTATION OF THE CLASS AND IS REASONABLE,AND THEREFORE SHOULD BE REIMBURSE 24

CONCLUSION 26

iii


TABLE OF AUTHORITIES

Affiliated Ute Citizens v. United States,406 U.S. 128 (1972) 14

Basic Inc. v. Levinson,485 U.S. 224 (1988) 14

Bateman Eichler, Hill Richards, Inc. v. Berner,472 U.S. 299 (1985) 14

Bebchick v. Wash. Metro. Area Transit Comm 'n,805 F.2d 396 (D.C. Cir. 1986) 7

Brotherton v. Cleveland,141 F. Supp. 2d 907 (S.D. Ohio 2001) 6

Camden I Condo. Ass'n v. Dunkle,946 F.2d 768 (lIth Cir. 1991) 7

Clevenger v. Dillards, Inc.,No. C-I-02-558, 2007 U.S. Dist. LEXIS 17464 (W.D. Ohio Mar. 9,2007) 6, 16, 17

Eltman v. Grandma Lee's, Inc.,No. 82 Civ. 1912, 1986 U.S. Dist. LEXIS 24902 (E.D.N.Y. May 29,1986) 14

Fournier v. PFS Invs.,997 F. Supp. 828 (E.D. Mich. 1998), adopted, 997 F. Supp. 830 (E.D. Mich. 1998) ..... passim

Gluck v. CellStar Corp.,976 F. Supp. 542 (N.D. Tex. 1997) 25

Goldberger v. Integrated Res., Inc.,209 F.3d 43 (2d Cir. 2000) 7

Gottlieb v. Barry,43 F.3d 474 (10th Cir. 1994) 7

Harman v. Lyphomed, Inc.,945 F.2d 969 (7th Cir. 1991) 7

In re Adelphia Communications Sec. Litig..No. 03 MDL 1529 (LMM) (S.D.N.Y. Nov. 16,2006) 6

IV


In re Aetna Inc. Sec. Litig.,MDL No. 1219,2001 U.S. Dist. LEXIS 68 (E.D. Pa. Jan. 4, 2001) .21

In re Am. Bank Note Holographies,127 F. Supp. 2d 418 (S.D.N.Y. 2001) 24

In re BankAmerica Corp. Sec. Litig.,210 F.R.D. 694 (E.D. Mo. 2002) .26

In re Beverly Hills Five Litig.,639 F. Supp. 915 (E.D. Ky. 1986) .20

In re Cardizem CD Antitrust Litig.,218 F.R.D. 508 (B.D. Mich. 2003) passim

In re Cendant Corp. Prides Litig.,51 F. Supp. 2d 537 (D.N.J. 1999),vacated and remanded, 243 F.3d 722 (3d Cir. 2001) 18

In re Charter Communs. Sec. Litig.,MDL No. 1506,2005 WL 4045741 (E.D. Mo. June 30, 2005) .18, 26

In re Cincinnati Gas & Electric Co. Sec. Litig.,643 F. Supp. 148 (S.D. Ohio 1986) .12, 13

In re Delphi Corp. Sec., Deriv. & "ERISA" Litig.,248 F.R.D. 483 (B.D. Mich. 2008) passim

In re DPL Inc., Sec. Litig.,307 F. Supp. 2d 947 (S.D. Ohio 2004) passim

In re EVCI Career Colleges Holding Corp. Sec. Litig.,2007 U.S. Dist. LEXIS 57918 (S.D.N.Y. July 27,2007) 18

In re F&M Distribs., Inc. Sec. Litig.,No. 95-CV-71778-DT, 1999 U.S. Dist. LEXIS 11090 (E.D. Mich. June 29, 1999) ....... passim

In re Freddie Mac Sec. Litig.,MDL 1584, Lead Case No. 03 Civ. 4261 (mS) (S.D.N.Y. Oct. 26, 2006) 6

In re GMC Pick-Up Truck Fuel Prods. Liab. Litig.,55 F.3d 768 (3d Cir. 1995) 7

In re Ikon Office Solutions, Inc.,194 F.R.D. 166 (E.D. Pa. 2000) 15, 21

In re Kmart Corp. Sec. Litig.,No. 95-CV-75584, 1998 U.S. Dist. LEXIS 23092 (E.D. Mich. Oct. 30, 1998) 6

v


In re Lucent Techs., Inc. Sec. Litig.,327 F. Supp. 2d 426 (D.N.J. 2004) 6

In re Prudential Ins. Co. ofAmerica Sales Practices Litig.,962 F. Supp. 450 (D.N.J. 1998) 18,19

In re Revco Sec. Litig,No. 89cv593, 1992 U.S. Dist. LEXIS 7852 (N.D. Ohio May 6,1992) 7

In re Rio Hair Naturalizer Prods. Liab. Litig.,MDL No. 1055, 1996 u.s. dist. LEXIS 20440 (E.D. Mich. Dec. 20, 1996) passim

In re Rite Aid Corp. Sec. Litig.,362 F. Supp. 2d 587 (E.D. Pa. Mar. 24, 2005) 18, 19,20

In re Rite Aid Corp. Sec. Litig.,396 F.3d 294 (3d Cir. 2005) 16

In re Sulzer Orthopedics, Inc.,398 F.3d 778 (6th Cir. 2005) 7

In re Telectronics Pacing Sys.,186 F.R.D. 459 (S.D. Ohio 1999),rev'd, 221 F.3d 870 (6th Cir. 2000) 7

In re Telectronics Pacing Sys., Inc.,137 F. Supp. 2d 1029 (S.D. Ohio 2001) 6, 14

In re Thirteen Appeals Arising Out ofthe San Juan DuPont Plaza Hotel Fire Litig.,56 F.3d 295 (1st Cir. 1995) 7

In re u.s. Bioscience Sec. Litig.,Civ. A. No. 92-0678, 1994 WL 485935 (E.D. Pa. May 23, 1994) 11

In re Washington Pub. Power Supply Sys. Sec. Litig.,19 F.3d 1291 (9th Cir. 1994) 7

In re Waste Mgmt., Inc. Sec. Litig.,No. 99-2183 (S.D.N.Y. Apri129, 2002) .18

In re WorldCom, Inc. Sec. Litig.,388 F. Supp. 2d 319 (S.D.N.Y. 2005) 6

In re Xcel Energy, Inc., Sec., Derivative & "ERISA" Litig.,364 F. Supp. 2d 980 (D. Minn. 2005) 18, 24, 26

Johnston v. Comerica Mortgage Corp.,83 F.3d 241 (8th Cir. 1996) 7

VI


I(ircholTv. J?lynn,786 F.2d 320 (7th Cir. 1986) 8

Maley v. Del Global Techs. Corp.,186 F. Supp. 2d 358 (S.D.N.Y. 2002) 11

Manners v. Am. Gen. Life Ins. Co.,No. Civ. 3-98-0266, 1999 U.S. Dist. LEXIS 22880 (M.D. Tenn. Aug. 11, 1999) 7

New England Employees Pension J?und v. J?ruit of the Loom,234 F.R.D. 627 (W.D. Ky. 2006) 2, 6

Rawlings v. Prudential-Bache Props., Inc.,9 F.3d 513 (6th Cir. 1993) 5, 7, 8

Ressler v. Jacobson,149 F.R.D. 651 (M.D. Fla. 1992) 11

Shaw v. Toshiba Am. Info. Sys., Inc.,91 F. Supp. 2d 942 (E.D. Tex. 2000) 6

Tellabs, Inc. v. Makor Issues & Rights, Ltd.,_U.S. _,127 S. Ct. 2499 (2007) .14, 15

Varljen v. HJ Meyers & Co.,No. 97 Civ. 6742,2000 U.S. Dist. LEXIS 16205 (S.D.N.Y. Nov. 8,2000) 24, 25

Weiss v. Mercedes-Benz ofN Am.,899 F. Supp. 1297 (D.N.J. 1995) 19

Welmon v. Chicago Bridge & Iron Co., N V.,No. 06-1283 (JES), slip op. (S.D.N.Y. June 3, 2008) 26

Statutes and Rules

15 U.S.C. §78u-4(a)(4) 4

15 U.S.C. §78u-4(a)(6) 5

Miscellaneous

John C. Coffee, Jr., "Understanding the Plaintiffs' Attorney: The Implications ofEconomic Theory for Private Enforcement ofthe Law Through Class and DerivativeActions," 86 Colum. L. Rev. 669 (1986) 9

MANUAL FOR COMPLEX LITIGATION (4th) § 14.121 (2004) 6

S. Rep. No. 104-98 (1995) and H.R. Conf. Rep. No. 104-359 at 35 (1995),reprinted in 1995 U.S.C.C.A.N. 679, 691, 735 (1995) 6

vii


The undersigned respectfully submit this memorandum of law in support of their motion

for an award of attorneys' fees and reimbursement of expenses to Plaintiffs' Counsel and for an

award to Lead and Named Plaintiffs. Specifically, it is requested that the Court award:

(i) attorneys' fees of nineteen percent (19%) of the settlement fund recovered for the Class, or

$57.57 million (the "Fee Award"); and (ii) reimbursement of litigation costs and expenses that

Co-Lead Counsel have reasonably and necessarily incurred in successfully prosecuting the

settled claims in this action, in the amount of$1,524,929.02 ("Expenses"); (iii) interest accrued

on the Fee Award and Expenses; and (iv) to Lead Plaintiffs Deka Investment GmbH ("Deka

Investment") and Deka International S.A., Luxembourg ("Deka International") (together, "Deka"

or "Lead Plaintiffs") a total of $184,205, and (vi) to the other seven Named Plaintiffs $1,000

each.!

INTRODUCTION

When determining fee applications in common fund securities cases, courts in the Sixth

Circuit follow the majority view of courts across the nation, awarding attorneys' fees as a

percentage of the common fund recovered for the class, plus reasonable and necessary expenses

incurred in prosecuting the case. Not surprisingly, Congress expressly allowed this methodology

when it enacted the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). See 15

I Simultaneous with this filing, Lead Plaintiffs are submitting their memorandum of law in support of their motionfor (i) certification ofthe class for settlement purposes, (ii) final approval ofthe settlement, and (iii) final approvalof the plan of allocation (the "Settlement Memorandum"). Co-Lead Counsel also are submitting the JointDeclaration of Jonathan M. Plasse and James J. Sabella in support of the proposed Settlement, plan of allocation andaward of attorneys' fees and reimbursement of litigation expenses (the "Joint Declaration"). The Joint Declarationdescribes, inter alia, the history of the case through the submission ofthe Settlement to the Court; the nature oftheclaims asserted in the action; the motion practice and discovery undertaken in the action; the negotiations leading tothe Settlement; the value of the Settlement to the class, as compared to the risks and uncertainties of continuedlitigation; and the terms ofthe plan of allocation described in the Notice (the "Plan of Allocation" or "Plan") fordetermining how to allocate and distribute the Settlement proceeds and the factors upon which that Plan is based.The Settlement Memorandum discusses, inter alia, the legal standards applicable in this case for approval of theSettlement, the complexity and risks associated with continuing to litigate the action as compared to the value of theSettlement, and the fairness of the Settlement. Rather than repeating the matters set forth in the Joint Declaration

(Cont'd)

1


U.S.C. §78u-4(a)(6).

As recognized by this Court, fee awards typically range from 20% to 50% of the COlmnon

fund. In re Rio Hair Naturalizer Prods. Liab. Litig., MDL No. 1055, 1996 u.s. Dist. LEXIS

20440, at *50 (E.D. Mich. Dec. 20, 1996) (Rosen, 1.); accord In re Delphi Corp. Sec., Deriv. &

"ERISA" Litig., 248 F.R.D. 483, 502-03 (E.D. Mich. 2008) (Rosen, 1.). See also New England

Health Care Employees Pension Fund v. Fruit ofthe Loom, Inc., 234 F.R.D. 627,633 (W.D. Ky.

2006).

Here, Co-Lead Counsel seeks approval of a 19% fee - a fee below the typical range

recognized as reasonable and approved by this Court and by this Circuit - and reimbursement

of$1,524,929.02 in litigation expenses reasonably and necessarily incurred in connection with

the prosecution of this action.

In summary, Co-Lead Counsel submit that the requested fee should be granted for the

following reasons:

1. The Outstanding Recovery Obtained. The settlement is for $303 million ($277

million paid on behalf of GM, $26 million from Deloitte). It is obviously a "mega-type"

settlement, and one of the largest securities class action settlements achieved in cases in this

District and this Circuit. The Settlement Amount is particularly impressive because:

• It was obtained relatively early in the proceedings and prior to the resolution of the

Defendants' pending motions to dismiss. These motions raised a number of serious defenses,

including whether applicable statutes of limitations or repose had run on many of the claims,

scienter, materiality and loss causation. By settling now, class members avoid both the risk

and the Settlement Memorandum, Co-Lead Counsel respectfully incorporates those documents herein.

2


of having the case being dismissed or significantly narrowed, as well as years of potential

delay if the litigation had gone through formal discovery, more motion practice, and appeals.

• At the time the Settlement was agreed to, GM was already facing significant financial

difficulties, making it reluctant to spend money on a settlement that could otherwise be

delayed and possibly avoided. Only a portion of the Settlement Amount was funded by

insurance.

• Unlike other high-profile cases (i.e. the Delphi securities litigation), GM was not

subject to any government prosecutions, and therefore Plaintiffs' Counsel had to develop

their evidence and theories on their own, without the assistance of any government pleadings,

discovery or trial testimony. Indeed, Defendants here argued that the lack of a Government

prosecution was evidence of their innocence.

• Also unlike Delphi, prior to the Settlement, GM was not in bankruptcy, and was not

under any pressure to settle so that it could achieve a bankruptcy reorganization plan.

Given the obstacles to the settlement, the size of the settlement and the speed with which

it was obtained must in large part be attributed to the exceptional efforts and skill of the Co-Lead

Counsel.

2. Contingent Nature of Representation. Plaintiffs' Counsel prosecuted this case

purely on a contingent basis, and assumed all the risks of litigation without any assurance of any

payment for their services.

3. Amount of Time Expended. As set forth in the Joint Declaration, this Settlement

is the product of an aggressive, sophisticated, and focused prosecution. Plaintiffs' Counsel

constantly strove to avoid expending unnecessary time and effort in litigating the case. For

example, Plaintiffs' Counsel, through targeted discovery, were able to become sufficiently

3


informed of the merits of their claims and thereby negotiate a settlement without resort to the

frequent practice of spending years and years reviewing documents and taking depositions. As is

now obvious, the prompt resolution of these claims enabled Co-Lead Counsel to negotiate a

settlement with GM before the Company, and indeed the entire economy, suffered a massive

economic collapse.

Plaintiffs' Counsel submit they should be rewarded for prosecuting the case in a manner

resulting in a prompt and successful resolution, thereby avoiding the devastating impact of this

Fall's economic collapse. Moreover, the type of multiple of Plaintiffs' Counsels' lodestar sought

here has been awarded in comparable cases.

4. Support of the Lead Plaintiffs and the Class. Lead Plaintiffs, sophisticated

institutional investors appointed pursuant to the PSLRA to represent the interests of all class

members, have reviewed and fully consent to the Fee and Expense Award. Moreover, despite

the fact that over 829,124 notices have been mailed to the Class, which notices detailed the

nature of the Fee and Expense Application, no class member has, to date, objected to that

application.2 The Class's overwhelming positive response represents a significant endorsement

of the Fee and Expense Application.

For these reasons and those set forth below, Plaintiffs' Counsel submits that the requested

award of attorneys' fees and reimbursement of expenses is fair and reasonable and should be

granted.

Furthermore, it is requested that the Court award $184,205 to the Lead Plaintiffs and

$1,000 each to the seven other Named Plaintiffs to reimburse them for time spent prosecuting the

2 The last date for objections is December 8.

4


case. Such an award is expressly permitted by the PSLRA, see 15 U.S.c. §78u-4(a)(4), and,

under the applicable case law, the amount requested is reasonable, considering the time spent by

the Lead and Named Plaintiffs on the case.

ARGUMENT

I. PLAINTIFFS' COUNSEL ARE ENTITLED TO A REASONABLEPERCENTAGE OF THE COMMON FUND RECOVERED

A. Standard for Approval of Attorneys' Fees in Sixth CircuitCommon Fund Cases

"[I]t is well established that 'a lawyer who recovers a common fund for the benefit of

persons other than himself or his client is entitled to a reasonable attorney's fee from the fund as

a whole.'" In re Cardizem CD Antitrust Litig. , 218 F.R.D. 508,531-32 (E.D. Mich. 2003)

(Edmunds, J.) (quoting Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980)). In common fund

cases, the Sixth Circuit has held that "a court must make sure that counsel is fairly compensated

for the amount of work done as well as for the results achieved." Rawlings v. Prudential-Bache

Props., Inc., 9 F.3d 513,516 (6th Cir. 1993). The standard for attorneys' fees awards in

common fund cases in the Sixth Circuit is that they be "reasonable under the circumstances."

Id.; see Cardizem, 218 F.R.D. at 531; Rio Hair, 1996 U.S. Dist. LEXIS 20440, at *50.

In a securities fraud case such as this one, what is "reasonable" must be viewed in light of

the PSLRA. The PSLRA requires that a reasonable fee be calculated as a percentage of the

common fund recovered for the Class. In enacting the PSLRA, Congress declined to adopt the

lodestar method for calculating attorneys' fees in securities class actions,3 choosing instead to

specifically provide that "[t]otal attorneys' fees and expenses awarded by the court to counsel for

the plaintiff class shall not exceed a reasonable percentage of the amount of any damages and

5


prejudgment interest actually paid to the class." 15 U.S.c. § 78u-4(a)(6), PSLRA § 21D(a)(6)

(emphasis added); In re WarldCarn, Inc. Sec. Litig., 388 F. Supp. 2d 319,355 (S.D.N.Y. 2005)

(recognizing "the PSLRA's express contemplation that the percentage method will be used to

calculate attorneys' fees in securities fraud class actions").

Plaintiffs' Counsels' requested fee is consistent with the express language of the PSLRA,

Sixth Circuit authority, and this Court's attorneys' fees awards precedents. Indeed, this

requested fee falls below "the 20-30% range of reasonable attorneys' fees generally awarded in

this Circuit." Cardizern, 218 F.R.D. at 532; see Delphi, 248 F.R.D. at 502-03 (fees of 18% and

20% fall below "the range of percentage fee awards generally accepted in this District"); In re F

& M Distribs., Inc. Sec. Litig., No. 95-CV-71778, 1999 U.S. Dist. LEXIS 11090, at *8-10 (E.D.

Mich. June 29,1999); In re Krnart Corp. Sec. Litig., No. 95-CV-75584, 1998 U.S. Dist. LEXIS

23092, at *21 (E.D. Mich. Oct. 30, 1998); Rio Hair, 1996 U.S. Dist. LEXIS 20440, at *50. 4

Likewise, the MANUAL FOR COMPLEX LITIGATION (4th) § 14.121 (2004) observes that the typical

range is 25% to 30% of the fund. Furthermore, Lead Plaintiffs have explicitly approved Co-

3 See S. Rep. No.104-98 at 12 (1995), and H.R. Conf. Rep. No.1 04-359 at 35 (1995), reprinted in 1995u.S.C.C.A.N. 679, 691,735 (1995).

4 This District does not stand alone in recognizing this range of reasonable percentage fees. In fact, district courtsthroughout the Sixth Circuit have reached similar conclusions. See, e.g., Clevenger v. Dillards, Inc., No. C-1-02558,2007 U.S. Dist. LEXIS 17464, at *3 (W.D. Ohio Mar. 9,2007) (29%); Fruit ofthe Loom, 234 F.R.D. at 634(25%); In re DPL Inc., Sec. Litig., 307 F. Supp. 2d 947,951 (S.D. Ohio 2004) (20%); In re Telectronics PacingSys., Inc., 137 F. Supp. 2d 1029, 1046 (S.D. Ohio 2001) (28%); Brotherton v. Cleveland, 141 F. Supp. 2d 907,910(S.D. Ohio 2001) (20%); Fournier v, PFS Invs., 997 F. Supp. 828, 832-33 (E.D. Mich. 1998), adopted, 997 F. Supp.830 (E.D. Mich. 1998) (20%).

Furthermore, the percentage fee requested here is also fair and reasonable when measured against fees awarded inso-called "mega-fund" cases. See, e.g., In reAdelphia Communications Sec. Litig.. No. 03 MDL 1529 (LMM)(S.D.N.Y. Nov. 16,2006) (unreported decision approving a $97.3 million attorneys' fee award in a case involving$455 million in total settlements); In re Freddie Mac Sec. Litig, , MDL 1584, Lead Case No. 03 Civ. 4261 (JES)(S.D.N.Y. Oct. 26, 2006) (unreported decision approving an $82 million attorneys' fee award, 20% of the $410million settlement); Shaw v. Toshiba Am. Info. Sys" Inc., 91 F. Supp. 2d 942, 981 (E.D. Tex. 2000) (approvingattorneys' fees and expenses award of over $150 million); In re Lucent Techs., Inc. Sec. Litig., 327 F. Supp. 2d 426,439-41 (D.N.I. 2004) (17% fee awarded on recovery of $517 million) (compiling cases).

6


Lead Counsels' request herein for attorneys' fees in an amount of 19% of the common fund

recovered for the Class.

Under the Sixth Circuit's flexible approach, courts have discretion to apply either the

percentage-of-the-fund or lodestar method. See Rawlings, 9 F.3d at 516-17; Cardizem, 218

F.R.D. at 532. However, while the method of calculation is left to the sound discretion of the

district court upon consideration of the circumstances of the particular case, the Sixth Circuit has

observed a "trend towards adoption of a percentage of the fund method in [common fund]

cases." Rawlings, 9 F.3d at 515; see In re Sulzer Orthopedics, Inc., 398 F.3d 778, 780 (6th Cir.

2005); Delphi, 248 F.R.D. at 502. Thus, courts in the Sixth Circuit have a "preference for the

percentage-of-the-fund method in common fund cases." Cardizem, 218 F.R.D. at 532; see F&M,

1999 U.S. Dist. LEXIS 11090, at *8; Rio Hair, 1996 U.S. Dist. LEXIS 20440, at *50 (observing

that "more commonly, fee awards in common fund cases are calculated as a percentage of the

fund created"); Fournier, 997 F. Supp. at 832-33. 5

5 Other district courts across the Sixth Circuit have likewise adopted the percentage-of-the-fund method forcalculating attorneys' fees. See, e,g., DPL, 307 F. Supp. 2d at 951 ("Herein, the award of attorneys' fees must bedriven by the results obtained by Plaintiffs' counsel. As the Sixth Circuit noted in Rawlings, 'the percentage of thefund method more accurately reflects the results achieved'" (citing Rawlings, 9 F.3d at 516)); In re TelectronicsPacing Sys., 186 F.R.D. 459, 483 (S.D. Ohio 1999), rev'd another grounds, 221 F.3d 870 (6th Cir. 2000) ("thepreferred method in common fund cases has been to award a reasonable percentage of the fund to Class Counsel asattorneys' fees"); Manners v, Am. Gen. Life Ins. Co., No. Civ. 3-98-0266, 1999 U.S. Dist. LEXIS 22880, at *86-87(M.D. Tenn. Aug. 11, 1999) ("[t]he preferred approach to calculating attorneys' fees to be awarded in a commonbenefit case is as a percentage of the class benefit"); In re Revco Sec. Ling, No. 89cv593, 1992 U.S. Dist. LEXIS7852, at *8-10 (N.D. Ohio May 6, 1992) ("the size of a common fund is an objective yardstick by which the benefitconferred upon the class can be measured").

In addition to the Sixth Circuit, most other Circuits endorsed the percentage of the fund method in common fundcases. See, e.g., In re Thirteen Appeals Arising Out ofthe San Juan DuPont Plaza Hotel Fire Ling., 56 F.3d 295,304-08 (1st Cir. 1995); Goldberger v. Integrated Res., Inc" 209 F.3d 43,47 (2d Cir. 2000); In re GMC Pick-UpTruck Fuel Prods, Liab. Litig., 55 F.3d 768,821-22 (3d Cir. 1995); Harman v. Lyphomed, Inc., 945 F.2d 969,975(7th Cir. 1991); Johnston v. Comerica Mortgage Corp" 83 F.3d 241, 246 (8th Cir. 1996); In re Washington Pub.Power Supply Sys. Sec. Litig., 19 F.3d 1291, 1296 (9th Cir. 1994); Gottlieb v. Barry, 43 F.3d 474,483 (lOth Cir.1994); Camden I Condo. Ass 'n v. Dunkle, 946 F.2d 768, 774 (11th Cir. 1991); Bebchickv. Wash. Metro. AreaTransit Comm 'n, 805 F.2d 396,406 (D.C. Cir. 1986).

7


The percentage-of-the-fund method is preferred over the lodestar method in common

fund cases because, as Magistrate Judge Morgan observed in Fournier:

The lodestar method should arguably be avoided in situations where such acommon fund exists because it does not adequately acknowledge (1) the resultachieved or (2) the special skill of the attorney(s) in obtaining that result. Courtsand commentators have been skeptical of applying the formula in common fundcases .... [M]any courts have strayed from using lodestar in common fund casesand moved towards the percentage of the fund method which allows for a moreaccurate approximation of a reasonable award for fees.

Id. at 831-32 (internal citations omitted).6 In Cardizem, Judge Edmunds reached the same

conclusion, noting "(1) the lodestar method is too cumbersome and time-consuming of the

resources of the Court; and (2) more importantly, the percentage of the fund approach more

accurately reflects the result achieved," and concluding that "the percentage-of-the-fund method

is consistent with the majority trend." 218 F.R.D. at 532. 7

In addition to the language of the PSLRA and the Eastern District precedent addressing

fee awards in class actions, the circumstances of this case fully support use of the percentage-of-

the-fund method. First, rather than trying to draw out the litigation in order to increase their

lodestar, while preparing to take their case to trial if necessary, Co-Lead Counsel aggressively

exploited the opportunity provided by Judge Rosen's appointment of a mediator, pushing for,

under difficult financial and other circumstances, and obtaining an exceptionally large settlement

6 In Rawlings, the Sixth Circuit also recognized several shortcomings ofthe lodestar method: "the lodestar methodhas been criticized for being too time consuming of scarce judicial resources. District courts must pore over timesheets, arrive at a reasonable hourly rate, and consider numerous factors in deciding whether to award a multiplier.With the emphasis it places on the number of hours expended by counsel rather than the results obtained, it alsoprovides incentives for overbilling and the avoidance of early settlement." 9 F.3d at 516-17. On the other hand, thepercentage of the fund method "establishes reasonable expectations on the part of plaintiffs' attorneys as to theirexpected recovery" and "encourages early settlement, which avoids protracted litigation." Id. at 516.

7 The percentage of the fund method "automatically aligns interests oflawyer and client," by providing plaintiffs'counsel with a strong incentive to effectuate the maximum possible recovery in the shortest amount of timenecessary under the circumstances. KirchofJv. Flynn, 786 F.2d 320,325-26 (7th Cir. 1986). The percentage of thefund method also reduces the burden on the Court, "because it relies on incentives rather than costly monitoring."

(Cont'd)

8


at a comparatively early stage in the proceedings. See Rawlings, 9 F.3d at 516-17; Fournier, 997

F. Supp. at 831 ("recognition of alternatives to protracted litigation and creative resolution

should be encouraged as a matter of public policy." (citation omitted)). Lead Plaintiffs, through

Co-Lead Counsel, negotiated a settlement for the Class that maximized the ratio of the size of the

recovery compared to the delay of the recovery and the risk of not recovering. Second, pursuant

to the Court's instructions, Co-Lead Counsel limited the combined lodestar of all of Plaintiffs'

Counsel, by prosecuting this action through an efficient division of labor at several separate law

firms representing both individual and corporate Plaintiffs (including Lead Plaintiffs) and the

Class. See Joint Decl. ~ 73; Fournier, 997 F. Supp. at 833 (reasonableness ofpercentage fee

request supported by fact that attorneys "utilized their time in an efficient manner by splitting

responsibility to maximize the value of their services and reduce hours"). Third, Co-Lead

Counsel worked for some three years on a fully contingent basis, expending well over $1 million

in out-of-pocket expenses and thousands of hours of attorney and staff time, with no guarantee of

ever getting any of it back. And finally, Lead Plaintiffs, who played an active part in the

litigation and settlement negotiations, see Phillips Decl. ~~ 14-15, 20 and Obermann Decl. ~~ 3-

5, and, thus, are knowledgeable regarding the quality and quantity of work done by Co-Lead

Counsel, fully endorse Co-Lead Counsel being paid on a percentage basis of 19%. Obermann

Decl. ~ 10.

B. Evaluation of Sixth Circuit Factors Confirms That theRequested Fee is Reasonable

Courts in the Sixth Circuit evaluate the reasonableness of a requested fee using six

factors: (1) the value of the benefit rendered to the class; (2) society's stake in rewarding

John C. Coffee, Jr., "Understanding the Plaintiffs' Attorney: The Implications ofEconomic Theory for PrivateEnforcement ofthe Law Through Class and Derivative Actions," 86 Colum. L. Rev. 669, 724-25 (1986).

9


attorneys who produce such benefits in order to maintain an incentive to others; (3) whether the

services were unde11aken on a contingent fee basis; (4) the value of the services on an hourly

basis; (5) the complexity of the litigation; and (6) the professional skill and standing of counsel

involved on both sides. Delphi, 248 F.R.D. at 503; Cardizem, 218 F.R.D. at 533; Rio Hair, 1996

U.S. Dist. LEXIS 20440, at *53 (citing Smillie v. Park Chern. Co., 710 F.2d 271,275 (6th Cir.

1983)). As demonstrated below, each of these factors supports the requested fee award.

1. The Value of the Benefit Rendered to the Class

In common fund cases, the primary factor in determining a reasonable fee is the result

achieved on behalf of the class. Delphi, 248 F.R.D. at 503; DPL, 307 F. Supp. 2d at 951

("Herein, the award of attorneys' fees must be driven by the results obtained by Plaintiffs'

counse1."). Without a doubt, Co-Lead Counsel in this case have rendered a substantial benefit to

the Class that fully supports the requested fee. See Rio Hair, 1996 U.S. Dist. LEXIS 20440, at

*53.

Here, the recovery of $303 million for the Class represents a sizable proportion of the

losses suffered by the Class. Lead Plaintiffs' expert had initially estimated maximum damages

of $4.7 billion. Using that figure, the settlement represents just under 7% of total damages.

Defendants damages consultant strongly contested Plaintiffs' analysis, and estimated class-wide

damages at significantly lower amounts. As Defendants' estimate was provided in the context of

the confidential Mediation and Defendants have not authorized Lead Plaintiffs to disclose such

figure, it cannot be disclosed here. Thereafter, after giving credit to the strongest criticisms

raised by Defendants, Lead Plaintiffs' expert reduced his damages estimate to about $3.5 billion.

Using this intermediate damage figure, the settlement amounts to almost 9% of total damages.

10


This is an excellent recovery and strongly favors the requested award of attorneys' fees,

especially considering that:

(i) The settlement is all cash;

(ii) The Class's ability to recoup its losses from GM was impeded by the fact that GMwas and still is facing severe financial difficulties;

(iii) The Class's ability to recoup its losses from GM was further impeded by the factthat GM lacked insurance sufficient to cover more than a portion of thesettlement amount ultimately obtained from GM, cf In re u.s. Bioscience Sec.Litig., Civ. A. No. 92-0678, 1994 WL 485935, at *21 (E.D. Pa. May 23, 1994)(fee request supported by fact that "risk that no insurance funds would be madeavailable for settlement purposes" was "significant obstacle[] to settlement");

(iv) The Settlement was reached relatively early in the litigation, and without GMwaiting to learn the outcome of the motions to dismiss that already had beenbriefed;

(v) The prompt resolution of this litigation avoids the risks associated with GM'spresent and future financial problems;

(vi) GM was not under any financial pressure to settle at this juncture, but rather had astrong incentive, due to its cash shortages, to delay making any payment as longas possible;

(vii) Lead Plaintiffs did not have the benefit of any parallel SEC and DO] case againstthe Defendants, see Maley v. Del Global Techs. Corp., 186 F. Supp. 2d 358,371(S.D.N.Y. 2002) (approving fee of33% where "Plaintiffs' Class Counsel did not'piggy back' on any prior governmental action related to [defendant]"); Ressler v.Jacobson, 149 F.R.D. 651, 654 (M.D. Fla. 1992) (approving fee of30% wherePlaintiffs' counsel "litigated the action and obtained this excellent result withoutthe benefit of any active assistance from any governmental agency");

(viii) Absent the Settlement, Lead Plaintiffs would face the risks attendant to this actionand securities litigation generally, including having to establish loss causation,materiality, reliance, and scienter, and would also face the risk that GM mightdeclare bankruptcy, thwarting any effort to enforce any judgment ultimatelyawarded against it.

Even without taking the above referenced special circumstances into account, the

estimated recovery of Class damages here compares favorably to recoveries obtained generally

in securities fraud class actions. For instance, in awarding a 30% fee in In re F&M Distribs.,

11


Inc. Sec. Litig., 1999 U.S. Dist. LEXIS 11090, the court noted that a recovery of one-third of the

estimated damages was "excellent." Id, at *17 (citing authorities estimating average recoveries

at 7-11 %, 12%, and 25% of claimed losses); see also Delphi, 248 F.R.D. at 503. DPL, 307 F.

Supp. 2d at 951-52, noted the following observations by some of the nation's foremost class

action scholars:

CD Columbia Law School Professor Samuel Issacharoff declared that the averagesecurities fraud class action settles for less than 15% of damages suffered bythe class;

• National Economic Research Associates, Inc.' s study of settlements ofsecurities fraud cases reported that (i) for settlements of over $50,000,000, themedian settlement represented 5.2% of investor losses, and (ii) the averagesettlement in securities fraud class actions was $7,700,000;

III Harvard Law School Professor Arthur Miller discussed a CornerstoneResearch study showing that the median settlement in post-PSLRA securitiesfraud settlements from December 1995 until mid-2002 was $5,800,000;

• Columbia Law School Professor John Coffee, Jr. declared that, according tothe studies he reviewed, securities fraud class actions typically settle forbetween 3% and 6.2% of investor losses; and

III According to Cornerstone Research, Securities Class Action Settlements:2007 Review and Analysis, at 6, for all securities class action settlements since1996 in cases with damages in excess of $500 million, the median settlementis less than 2% of damages.

In contrast to these authorities, the Settlement here for $303 million far exceeds the $5.8

million median settlement by more than fifty-fold, and, using Defendants' experts' analysis,

provides the Class a much greater portion of their estimated damages than the 2%,3%,5.2%,

6.2% averages referred to above. In light of the acute difficulties faced in these negotiations, the

fact that the recovery far exceeds these statistics is especially telling.

Moreover, the Settlement comes at a relatively early stage of the case. The timely receipt

of settlement proceeds enhances the value of the settlement to the Class. See Fournier, 997 F.

12


Supp. at 832 ("recognition of alternatives to protracted litigation and creative resolution should

be encouraged as a matter of public policy" (citation omitted)); In re Cincinnati Gas & Electric

Co. Sec. Litig., 643 F. Supp. 148, 151 (S.D. Ohio 1986) ("We note, too, that this case is one in

which settlement was pursued early on, a tactic that merits encouragement, as does counsel's

exceptional negotiating skill."). Absent this relatively early settlement, there exists the strong

possibility that GM, as its financial condition deteriorated further, would have reconsidered its

position as to whether or not to settle.

Furthermore, as set forth in the accompanying Settlement Memorandum, the Settlement

is an outstanding recovery under any circumstances. Co-Lead Counsel submit that, in light of

the risks of continued litigation and GM's precarious financial situation, and also considering the

time value of money and the probability of lengthy litigation in the absence of a settlement, the

Settlement is an exceptional result, one that could not have been achieved without the effort,

persistence, skills, and experience of Co-Lead Counsel. This factor strongly supports the 19%

requested fee.

2. Society's Stake in Rewarding Attorneys Who Produce SuchBenefits in Order to Maintain an Incentive to Others

In evaluating the reasonableness of a fee request, the Court considers society's stake in

rewarding attorneys who produce a common benefit for class members in order to maintain an

incentive to others. Cardizem, 218 F.R.D. at 534; Rio Hair, 1996 U.S. Dist. LEXIS 20440, at

*54 ("[A]ttorneys who take on class action matters enabling litigants to pool their claims provide

a huge service to the judicial process."). Accordingly, "[s]ociety's stake in rewarding attorneys

who can produce such benefits in complex litigation such as in the case at bar counsels in favor

of a generous fee." F&M, 1999 U.S. Dist. LEXIS 11090, at *18; see Cardizem, 218 F.R.D. at

534 ("Encouraging qualified counsel to bring inherently difficult and risky but beneficial class

13


actions like this benefits society."). The district court's analysis of this factor in Telectronics is

instructive:

[I]n litigating this case, Class and Plaintiffs Counsel expended significantresources of both time and monies ... We believe that, without such a class action,small individual claimants would lack the resources to litigate a case of thismagnitude. Attorneys who take on class action matters serve a benefit to societyand the judicial process by enabling such small claimants to pool their claims andresources.

137 F. Supp. 2d at 1042-43. 8

Here, as in Telectronics, Co-Lead Counsels' efforts in prosecuting this action provide a

substantial benefit to society. This fact is evidenced by the declarations of Lead Plaintiffs in

support of the Fee Request. Obermann Dec!. ~~ 3,9-10. Deka is a major institutional investor

serving thousands of clients. Moreover, Deka is in a position to make an educated appraisal of

the fee request, because Deka played an active role in supervising the litigation and settlement of

this case. Obermann Dec!. ~~ 4-5 and Joint Dec!. ~ 66. Therefore, Lead Plaintiffs' approval

weighs heavily in favor of approval of the fee requested.

8 The federal securities laws are remedial in nature and, in order to effectuate their statutory purpose of protectinginvestors and consumers, private lawsuits should be encouraged. See Tellabs, Inc. v. Makar Issues & Rights, Ltd.,_U.S. _, -,127 S. Ct. 2499, 2504 (2007); Basic Inc. v. Levinson, 485 U.S. 224 (1988); Bateman Eichler,Hill Richards, Inc. v. Berner, 472 U.S. 299 (1985); Affiliated Ute Citizens v. United States, 406 U.S. 128 (1972);Superintendent a/Ins. v. Bankers Life & Cas. Co., 404 U.S. 6,12 (1971). Indeed, the ultimate effectiveness of theseremedies may largely depend on the efficacy of the representative litigation device. The significant role privatelitigation plays in enforcing our securities laws was described in Eltman v. Grandma Lee's, Inc.:

Private lawsuits serve to further the objective of the federal securities laws which is to protectinvestors and consumers against fraudulent and other deceptive practices. As a practical matter,those lawsuits can be maintained only if competent counsel can be obtained to prosecute them.Competent counsel can be obtained if reasonable and adequate compensation for their serviceswere awarded if a successful result is achieved. To make certain that the public is represented bytalented and experienced trial counsel, the attorney acting as a 'private attorney general' is vital tothe continued enforcement and effectiveness of the Securities Acts.

No. 82 Civ. 1912, 1986 U.S. Dist. LEXIS 24902, at *25 (E.D.N.Y. May 29, 1986) (citations omitted); see alsoTelectronics, 186 F.R.D. at 484 ("Attorneys who take on class action matters serve a benefit to society and thejudicial process by enabling such small claimants to pool their claims and resources."); Rio Hair, 1996 U.S. Dist.LEXIS 20440, at *54.

14


3. Whether the Services Were Undertaken on a Contingent Fee Basis

Co-Lead Counsel has prosecuted this case on an entirely contingent basis. Courts in the

Sixth Circuit recognize that the attorneys' contingent fee risk "counsels in favor of a generous

fee." F&M, 1999 U.S. Dist. LEXIS 11090, at *18 (recognizing the importance "that [counsel]

undertook this case on a contingent basis, which required them to fund all of the significant

litigation costs while facing the risk of a rejection of their clients' claims on the merits"); In re

Ikon Office Solutions, Inc., 194 F.R.D. 166, 194 (E.D. Pa. 2000) (recognizing inherent,

substantial risk entailed in any contingent fee litigation).

Courts have repeatedly recognized that it is in the public interest to have experienced and

able counsel enforce the securities laws and regulations. As recognized by the Supreme Court

and Congress (through passage of the PSLRA), vigorous private enforcement of the federal

securities laws can only occur if private plaintiffs, particularly institutional investors, take an

active role in protecting the interests of shareholders. See Tellabs, 127 S. Ct. at 2504 ("This

Court has long recognized that meritorious private actions to enforce federal antifraud securities

laws are an essential supplement to criminal prosecutions and civil enforcement actions"). If this

important public policy is to be carried out, courts should award fees that adequately compensate

plaintiffs' counsel, taking into account the risks undertaken in prosecuting a securities class

action.

Co-Lead Counsel undertook this litigation knowing that it was possible that the case

could last for four or five years, or more, and require the expenditure of tens of thousands of

attorney hours and millions of dollars for expenses, and then result in a loss at the summary

judgment stage or at trial. In fact, Co-Lead Counsel incurred over $1.7 million in out-of-pocket

expenses for the benefit of the Class, received no compensation during the three years this action

15


has been pending, and were never guaranteed the payment of any fee or reimbursement of any

expense. Compare Delphi, 248 F.R.D. at 503 (stressing that co-lead counsel in that case

"incurred over $1.47 million in out-of-pocket expenses litigating for the benefit of the Settlement

Class, received no compensation during the more than two years this action has been pending,

and were never guaranteed payment of any fee"). Importantly, due to GM's financial

circumstances, the significant legal hurdles attendant to this litigation, and the absence of any

governmental prosecution against any of the Defendants relating to the circumstances alleged in

the Complaint, this litigation presented the real risk, at least as high if not higher than in Delphi,

that Lead Plaintiffs would be unable to obtain any meaningful recovery.

As a result of extensive, persistent and aggressive efforts in the face of substantial risks

and uncertainties, Co-Lead Counsel achieved a significant recovery herein for the benefit of the

Class. In circumstances such as these, and in consideration of Co-Lead Counsel's hard work,

willingness to endure the risks involved, and the extraordinary result achieved, this factor

counsels in favor of approval of the requested fee. See F&M, 1999 U. S. Dist. LEXIS 11090, at

*18.

4. The Value of the Services on an Hourly Basis

The fourth factor considered by some courts in the Sixth Circuit is a comparison between

the attorneys' fee requested and the lodestar/multiplier calculation, a so-called "lodestar cross

check." However, the cross-check "need entail neither mathematical precision nor bean

counting." In re Rite Aid Corp. Sec. LiUg., 396 F.3d 294, 306 (3d Cir. 2005) (stating that the

"lodestar cross-check does not trump the primary reliance on the percentage of common fund

method."). Moreover, recent district courts decisions in this Circuit have either largely

minimized or wholly ignored the lodestar calculation. See, e.g., Clevenger, 2007 U.S. Dist.

16


LEXIS 17464, at *9-10 (noting that the litigation at issue was not the type that would be litigated

under an hourly fee contract and awarding percentage fee without performing a lodestar

calculation); DPL, 307 F. Supp. 2d at 949 (overruling objection that court should have calculated

a lodestar).

In DPL, for example, the court overruled an objection that it should have used the

lodestar method to calculate fees, 307 F. Supp. 2d at 949, and in declining to perform a lodestar

calculation, opted instead to use the percentage method, awarding 20% of the common fund -

$22 million. Id. at 954. In doing so, the court had enough information to determine a lodestar

calculation: (i) it estimated that counsel expended no more than I, I00 to 2,200 hours on the

litigation; and (ii) it assumed an hourly rate of $350. Id. at 953-54. Had the court calculated a

lodestar with this information, it would have found that a multiplier of28.57 to 57.14 was

required to yield the $22 million fee award. Id. Yet, the court still used the percentage of

recovery method and awarded the 20% fee. The DPL court is not alone in ruling that a lodestar

need not be calculated in all cases. See also Clevenger, 2007 U.S. Dist. LEXIS 17464, at *9-10

(declining, as unnecessary, to perform a lodestar calculation).

In this action, Co-Lead Counsels' total lodestar is $8,334,694.50. 9 The lodestars of the

Murray, Frank: & Sailer firm, the Diaz Reus & Targ firm, Elwood Simon & Associates, Goldman

Scarlato & Karon P.C., and Harold B. Obstfeld P.C. add $3,897,112.00 more to the total, or an

aggregate lodestar of$$12,231,806.25. Joint Decl. ~ 68. In computing this overall lodestar

calculation, Co-Lead Counsel, as well as the other five law firms, charged for their services at

the same rates charged to their clients for non-contingent cases or otherwise charged in similar

9 The lodestar information for five different law firms that allows us to make a total lodestar calculation is containedin individual declarations made by partners or directors of each of these firms. See the Declarations of Jonathan M.

(Cont'd)

17


litigation at or about the time of their application. This lodestar calculation represents over

16,000 hours litigating this complex case over the past three years. Id. ~ 68. Co-Lead Counsel

have acted to avoid duplication of effort among the firms and managed tasks as efficiently as

possible. Id. ~~ 73-74. Accordingly, the Court should recognize all of the time expended by the

numerous attorneys involved in the prosecution of this action. Additionally, the Court should

consider that Co-Lead Counsels' services will still be required to assist in the claims resolution

process, see Cardizem, 218 F.R.D. at 533, but that Co-Lead Counsel will not be seeking any

additional compensation for such services, even if they entail hundreds of hours of work.

Moreover, and as noted above, Plaintiffs' Counsel prosecuted this case in a targeted and

focused manner. They thereby avoided the time-consuming process of extensive document

reviews and depositions, which might have resulted in a smaller lodestar multiple, but would not

necessarily have enhanced the ultimate settlement recovery amount.

Under the lodestar method, the 19% fee requested in this case would require a lodestar

multiplier of approximately 4.7. It is submitted that this lodestar multiplier is reasonable in view

of the difficulties and risks involved in this action and well within the range of multipliers

recognized by courts in similar litigations. See In re EVCI Career Colleges Holding Corp. Sec.

Litig., 2007 U.S. Dist. LEXIS 57918, at *56 n.7 (S.D.N.Y. July 27,2007) ("Lodestar multipliers

of nearly 5 have been deemed 'common' by courts"). 10

Plasse, James J. Sabella, Marvin L. Frank, Alexander Reus, Elwood S. Simon, Paul J. Scarlato, and Harold B.Obstfeld submitted herewith.

10 See also In re Charter Comms., Inc., Sec. Litig., MDL No. 1506,2005 U.S. Dist. LEXIS 14772, at *56 (E.D. Mo.June 30, 2005) (finding that a multiplier of 5.61 "falls within the range of multipliers found reasonable for crosscheck purposes by courts in other similar actions, and is fully justified here given the effort required, the hurdlesfaced and overcome, and the results achieved"); In re Rite Aid Corp. Sec. Litig., 362 F. Supp. 2d 587 (B.D. Pa. Mar.24, 2005) (multiplier of 6.96); In re Xcel Energy, Inc., Sec., Derivative & "ERISA" Litig., 364 F. Supp. 2d 980 (D.Minn. 2005) (multiplier of 4.7); DPL, 307 F. Supp. 2d at 953-54 (approving 20% fee which would have, ifcalculated, resulted in lodestar multiplier of28 to 57); In re Cendant Corp. Prides Litig., 51 F. Supp. 2d 537 (D.N.J.1999), vacated and remanded, 243 F.3d 722 (3d Cir. 2001), on remand, No. 98-2819 (D.N.J. June 11,2002)

(Cant 'd)

18


Thus, the lodestar calculation confinns the reasonableness of the 19% fee sought here.

Therefore, this factor, to the extent the Court chooses to consider it, fully suppOlis the requested

fee.

5. The Complexity of the Litigation

Courts in this Circuit also consider the complexity of the litigation in detennining the

reasonableness of an attorneys' fee award. While "most class actions are inherently complex,"

Telectronics, 137 F. Supp. 2d at 1013, this one presented a number of complicated legal and

factual issues. One need only peruse the voluminous briefing on Defendants' motions to dismiss

- including Defendants' reply briefs, which, with pennission of the Court, were far in excess of

the Local Rule's page limit - to see the difficult questions raised by Defendants concerning the

statute of limitations; their defenses to plaintiffs' Securities Act Section 11 and Section 12

claims; the allegations as to scienter; the issues relating to proving materiality and reliance, and

all the elements necessary to obtain class certification; and the Class's ability to demonstrate loss

causation. Moreover, because the alleged misstatements at issue all centrally involved the

question of what constituted the appropriate method of accounting for the given financial results,

and because accounting rules often allow for the exercise of a certain amount ofjudgment,

demonstrating an ability to prove Defendants' liability posed an exceptional challenge for Co-

Lead Counsel. Still further, the complexity of the case increased over time, as additional

misstatements by Defendants were disclosed by new financial Restatements made by GM, such

that Co-Lead Counsel were required to amend the complaint to incorporate claims based on the

(multiplier of 5.28); In re Waste Mgmt., Inc. Sec. Litig., No. 99-2183 (S.D. Tex. April 29, 2002) (multiplier of 5.3);Wyatt v. El Paso Corp., No. 02-2717 (S.D. Tex. Mar. 9,2007) (multiplier of3.5); In re Prudential Ins. Co. ofAmerica Sales Practices Litig., 962 F. Supp. 450 (D.N.I. 1998) (multiplier of 5.1); Roberts v. Texaco, Inc., 979 F.Supp. 185, 197 (S.D.N.Y. 1997) (multiplier of5.5); Weiss v. Mercedes-Benz ofN. Am., 899 F. Supp. 1297,1304(D.N.I. 1995) (awarding fee that resulted in multiplier of 9.3 times hourly rate); aff'd, 66 F.3d 314 (3d Cir. 1995); In

(Cont'd)

19


newly revealed misstatements. See, e.g., In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 305 (3d

Cir. 2005) ("complexity of the accounting matters at issue," and "the shifting factual sands that

required several amended complaints" demonstrate "the matter was a complex one"). Despite

these complexities, Co-Lead Counsel effectively and efficiently litigated this complex action

from its inception to a very successful resolution. The complexity of the issues presented in this

litigation unquestionably supports the requested 19% award. Therefore, the Court should find

that this factor too weighs in favor of awarding Co-Lead Counsel the requested fees.

6. The Professional Skill and Standing of Counsel on Both Sides

Finally, courts in this Circuit evaluate the professional skill and standing of counsel in

determining the reasonableness of a fee request. Delphi, 248 F.R.D. at 504. Here, the skill and

standing of counsel for all parties was of the highest caliber.

Given the complexity of the case and the presence of the numerous contested issues, it

would have been extremely difficult for less skilled counsel to have so successfully represented

the Class.

Each of the Co-Lead Counsel has national standing and is among the most experienced

securities lawyers in the country. See Sabella Decl. Exh. 3; Plasse Decl. Exh. 3. Few other law

firms would have had the experience, professionalism, and knowledge to negotiate a Settlement

of this magnitude at such an eady stage of the litigation. The Settlement is a direct result of Co

Lead Counsels' experience, reputation and ability in these types of cases. As fully discussed in

the Joint Declaration and the Settlement Memorandum, the Settlement was reached only after

extensive prosecution and three full day substantive mediation sessions with Judge Phillips and

Judge Brett. Joint Decl. ~~ 26-37. Moreover, Co-Lead Counsel conducted extensive work with

re Beverly Hills Fire Litig., 639 F. Supp. 915 (E.D. Ky. 1986) (multiplier of 5).

20


accounting and financial experts to evaluate the accounting issues in this case, damages to the

Class, and GM's financial wherewithal. See Joint Decl. ~~ 32,34.

The quality of opposing counsel is also important in evaluating the quality of services

rendered by Plaintiffs' Counsel. See, e.g., Delphi, 248 F.R.D. at 504; In re Aetna Inc. Sec. Litig.,

MDL No, 1219,2001 U.S. Dist. LEXIS 68, *47 (E.D. Pa. Jan. 4, 2001); Ikon Office Solutions,

194 F.R.D. at 195 (observing that "defense counsel has displayed great skill in defending this

complex class action. Their opposition to plaintiffs has been anything but token, and many of

the battles on crucial issues were hard fought."). Defendants have been vigorously represented

by able counsel at some of the nation's largest and most prestigious law firms. For example,

GM's counsel in this litigation, Kirkland & Ellis LLP, was chosen by the American Lawyer

magazine, from among the 200 most successful law firms in the nation, as the "Litigation

Department of the Year" for the year 2007, making Kirkland & Ellis only the fourth law firm

ever to have received that honor. See also Joint Decl. ~ 75; Phillips Decl. ~ 20. Similarly,

Deloitte has been represented in this case by what many would view as an equally prestigious

law firm, Sidley Austin, a global law firm, with more than 1800 lawyers in 16 offices, that serves

clients across the entire spectrum oflaw, from complex cross-border transactions to "bet the

company" litigation. Finally, the three GM director defendants are represented by the Weil,

Gotshal & Manges firm, another legal powerhouse with 1300 lawyers over 20 offices, that the

American Lawyer magazine ranked fourth in the publication's 2008 A-List, considered by many

to be the most prestigious and closely followed law-firm ranking in the U.S. The ability of Co

Lead Counsel to negotiate a very favorable Settlement for the Class in the face of such

formidable legal opposition further evidences the superior quality of their work.

21


In sum, this action demanded a high level of skill at every turn. That skill is measured by

the results achieved for the benefit of the Class under extremely challenging circumstances. See

F&M, 1999 U.S. Dist. LEXIS 11090, at *19 ("The skill and competence of the attorneys for the

Plaintiffs was evident, especially when viewed on the basis of the results that they obtained in

this case[.]"). The professional skill and standing of the representation in this case is beyond

question. This factor weighs in favor of the requested 19% fee award.

C. The Lack of Objections to the Fee Request To Date FurtherConfirms Its Reasonableness

The lack of any objection to a fee is important evidence of the fairness of the requested

fee. Cardizem, 218 F.R.D. at 534. Here, the Notice, mailed to 829,124 potential Class

members, specifically stated that Co-Lead Counsel intended to apply for a fee out of the

Settlement fund of up to 19% and reimbursement of costs and expenses in an amount not to

exceed $1.75 million. I I The Notice informed Class members that they could object to this fee

and expense reimbursement request. To do so, they were required to submit their objections by

December 8, 2008. As of the date hereof, only two members of the Class have submitted an

objection to the Fee Request. 12 This is significant, especially given the substantial number of

sophisticated institutional holders of the OM Securities. See Cardizem, 218 F.R.D. at 534 ("In

light of the composition of the Class, which includes sophisticated, knowledgeable [class

11 A summary notice was also published in The Wall Street Journal, The Detroit Free Press, and The FinancialTimes on October 29,2008, and over the PR Newswire on that same day. Joint Decl. ~ 44. Additionally, allsettlement documents have been available since approximately October 22, 2008 on a settlement website. Id.

12 The objection (Docket Item #99) was filed by Glenn Brewer and Elise Fitzgerald, who also asked for exclusionfrom the Settlement. This would render their objection a nullity, as persons who opt out lack standing to object. Inany event, the objection is without merit. First, their argument that the Settlement provides only a "minimal benefit"to the Class is belied by the fact that they settlement is for more than $300 million. Approximately 80% of thatwould go to the Class, if the Settlement and the fee application are approved. Second, their assertion that the feessought represent a windfall because a settlement is "no-risk' overlooks that Plaintiffs' Counsel worked on this casefor three years, devoting thousands of hours and advancing millions of dollars of expenses, without any assurance

(Cant 'd)

22


members] that have a significant stake in the outcome of this litigation, the absence of objection

is remarkable ...."). "This favorable response lends further supp0l1 to this Court's conclusion

that the requested fee is reasonable and fair." Cardizem, 218 F.R.D. at 534.

II. CO-LEAD COUNSEL ARE ENTITLED TO REIMBURSEMENTFOR THEIR REASONABLE LITIGATION EXPENSES

"Expense awards are customary when litigants have created a common settlement fund

for the benefit of a class." Delphi, 248 F.R.D. at 504 (quoting F&M, 1999 U.S. Dist. LEXIS

11090, at *20). "Under the common fund doctrine, class counsel is entitled to reimbursement of

all reasonable out-of-pocket litigation expenses and costs in the prosecution of claims and in

obtaining settlement, including expenses incurred in connection with document productions,

consulting with experts and consultants, travel and other litigation-related expenses." Cardizem,

218 F.R.D. at 535. 13

Co-Lead Counsel are seeking reimbursement of costs and expenses in an aggregate

amount of $1,524,929.02 for prosecuting this action on behalf of the Class. This amount of

expenses is within the amount that the Notice of Settlement stated would be requested by Co-

Lead Counsel. As set forth in the Declarations of James 1. Sabella and Jonathan M. Plasse, these

expenses were incurred on an ongoing basis for such items as investigator costs, accounting and

damages experts and consultant fees, photocopying of documents, fees for graphics and other

mediation presentation materials, on-line research, messenger service, postage, express mail and

next day delivery, long distance telephone calls and facsimile expenses, transportation, meals,

travel and other incidental expenses directly related to the prosecution of this Action. At all

that they would recover a dime. See pp. 14-16 supra. This is the substantial risk for which the fee compensatesthem.

13 The attorney fee percentage of the settlement fund is calculated based on the "gross" settlement fund, beforepayment of class counsel's litigation costs. See Delphi, 248 F.R.D. at 507.

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times, Co-Lead Counsel strove to minimize these out-of-pocket expenditures as much as

possible, as it was in Co-Lead Counsels' self-interest to do so. The categories of expenses for

which counsel seek reimbursement here are the type of expenses routinely charged to clients

billed by the hour, and have been invariably approved time after time in other securities fraud

class actions. See In re Am. Bank Note Holographies, 127 F. Supp. 2d 418,433 (S.D.N.Y.

2001); Ressler v Jacobson, 149 F.R.D. 651, 657 (M.D. Fla. 1992). Moreover, Lead Plaintiffs

approve this reimbursement request. Obermann Dec!. CU 10. All of these expenses were essential

to the successful resolution of this action, and no class members to date have asserted any

obj ections to counsel being reimbursed for them.

In view of the complex nature of the Action, the litigation expenses incurred were

reasonable and necessary to pursue the best interests of the Class. Accordingly, Co-Lead

Counsel respectfully requests reimbursement for these reasonable expenses. 14

III. THE LEAD AND OTHER NAMED PLAINTIFFS' TIME SPENTPROSECUTING THIS CASE WAS DIRECTLY RELATED TOTHEIR REPRESENTATION OF THE CLASS AND IS REASONABLE,AND THEREFORE SHOULD BE REIMBURSED

"The PSLRA permits the court to order an award to lead plaintiffs for the services they

rendered in a securities class action." In re Xcel Energy, Inc. Sec. Litig., 364 F. Supp. 2d 980,

1000 (D. Minn. 2005). Under the PSLRA, the Court may award "reasonable costs and expenses

(including lost wages) directly relating to the representation of the class to any representative

party serving on behalf of a class." 15 U.S.c. §78u-4(a)(4). Courts have noted that it is

14 Consistent with the Stipulation of Settlement, costs of administering the Net Settlement fund are separate anddistinct from Co-Lead Counsels' litigation costs and expenses. Moreover, Plaintiffs cannot know what the costs ofadministering and distributing the Net Settlement Fund will be until, at a minimum, the deadline for submittingclaims has passed and the Claims Administrator has had time to review the claims submitted. Plaintiffs will seek afinal reimbursement of the expenses related to administration and distribution ofthe Net Settlement Fund aftercompletion of distribution.

24


important to reimburse time and expenses of lead plaintiffs because doing so "encourages

participation of plaintiffs in the active supervision of their counsel." Varljen v. HJ Meyers &

Co., No. 97 Civ. 6742,2000 U.S. Dist. LEXIS 16205, at *14 n.2 (S.D.N.Y. Nov. 8,2000). This

is all the more necessary in cases like this one, where the Lead Plaintiffs are institutional

investors - a result that is encouraged under the PSLRA15 - because institutional investors

lose substantial income when their employees' time is diverted to litigation.

The Notice of the Settlement stated that Class Counsel could move the Court for an

award of payments to the Lead and Named Plaintiffs for reasonable costs and expenses incurred

in their representation of the Class in this litigation and the settlements, in an amount not to

exceed a total of $160,000. As shown in the Declaration of Franz-Josef Oberrnann of Deka

Investment, Lead Plaintiffs expended substantial hours to work with Class Counsel, follow the

litigation, gather and produce documents, work with experts, participate in the mediation, and

consult with Class Counsel on the settlements. The value of the time spent by Deka employees

on this case is at least $184,205, see Oberrnann Decl. ~ 7. Each of the seven other Named

Plaintiffs incurred expenses and spent substantial time working on the case and acting as a Class

Representative, and accordingly, each seeks a reasonable and entirely justifiable award of

$1,000. See the Declarations of Claudia Polvani, Costantino Forlano, 1. Bryan Dewell, Dan

Cleveland, Mark and Ruth Koppelman, Max Marcus Katz, and Karl Stacker on behalf of

Frankfurt Trust Investment GmbH, which are submitted herewith.

The $160,000 figure set forth in the Notice was an error. It was premised on the notion

that the time charges for the Lead Plaintiffs were approximately $150,000. In fact, the value of

15 "The legislative history of the Reform Act is replete with statements of Congress's desire to put control of suchlitigation in the hands of large, institutional investors." Gluck v. CellStar Corp., 976 F. Supp. 542, 548 (N.D. Tex.1997).

25


the time spent by Deka employees on this case is at least $184,205, see Obennann Dec!. ~ 7. To

the extent that the Court concludes that reimbursement from the Settlement Fund to the Lead and

Named Plaintiffs must be limited to the $160,000 figure set forth in the Notice, Plaintiffs'

Counsel would be willing, subject to the Court's approval, to pay to Lead Plaintiffs, out of the

fees awarded to Plaintiffs' Counsel, the difference between $184,205 and the amount awarded to

Lead Plaintiffs from the Settlement Fund.

As Co-Lead Counsel attests, the time spent on this litigation by the Lead and other

Named Plaintiffs was helpful to the litigation, was not excessive and was spent efficiently. Joint

Dec!. ~ 38.

Moreover, the amounts sought here are consistent with amounts awarded to class

representatives in numerous other cases. See, e.g., WeIman v. Chicago Bridge & Iron Co., N v.,

No. 06-1283 (JES), slip op. at 7 (S.D.N.Y. June 3, 2008) (attached hereto as Exhibit 1)

(approving collective award of $62,825 to class representatives); In re Charter Communs. Sec.

Litig., MDL No. 1506,2005 WL 4045741, at *13-14, *25 (E.D. Mo. June 30, 2005) (awarding

lead plaintiff $26,625 as reimbursement for 88.75 hours that it expended for the benefit of the

Class, and collecting other cases); In re BankAmerica Corp. Sec. Litig., 210 F.R.D. 694 (E.D.

Mo. 2002) (approving award totaling $130,000 to class representatives); Xcel Energy, 364 F.

Supp. 2d at 1000 (awarding total of$100,000 to multiple class representatives).

The requested awards to the Settlement Class Representatives are reasonable and

appropriate and therefore should be approved.

CONCLUSION

For the foregoing reasons, the undersigned respectfully requests that the Court:

(i) award attorneys' fees of 19% of the Gross Settlement Fund;

26


(ii) award reimbursement of Co-Lead Counsel's litigation costs and expenses in theamount of$1,524,929.02;

(iii) award interest on the awarded Fees and Expenses at the same rate as is eamed bythe Settlement Fund;

(iv) award $184,205 to Lead Plaintiffs, and $1,000 to each of the other seven NamedPlaintiffs as reimbursement for their time spent prosecuting this case;

(v) order that such amounts shall be payable immediately upon award; and

(vi) grant such other and further relief to which it believes Co-Lead Counsel and LeadPlaintiffs are entitled.

Dated: December 2, 2008

GRANT & EISENHOFER P.A.

By /s/ James 1. SabellaJay W. EisenhoferJames 1. SabellaBrenda F. Szydlo485 Lexington Avenue, 29th FloorNew York, NY 10017(646) [email protected]

Respectfully submitted,

LABATON SUCHAROW LLP

By /s/ Jonathan M. PlasseJonathan M. PlasseRichard T. JoffeBruce E. Stanton140 BroadwayNew York, NY 10005(212) [email protected]


ELWOOD SIMON & ASSOCIATES

By /s/ Elwood S. SimonElwood S. Simon355 S. Old Woodward Avenue, Suite 250Birmingham, MI 48009(248) [email protected]

DIAZ REUS & TARG LLP

By /s/ Alexander ReusAlexander Reus100 SE Second Street, Suite 2610Miami, FL 33131(786) [email protected]


27


CERTIFICATE OF SERVICE

I hereby certify that on this 2nd day of December, 2008, a copy of the foregoing Motion

for (I) Award of Attorneys' Fees and Reimbursement of Expenses, and (II) Awards to Lead

and Named Plaintiffs was filed electronically with the United States District Court, Eastern

District of Michigan, and notice will be sent by operation of the Court's electronic filing system

to all ECF participants.

lsi James 1. Sabella


case 2:06-md-01749-ger document 102 filed 12/02/2008...

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