lead counsel for plaintiffs and the class [additional ... · december 21, 2009 through april 4,...
TRANSCRIPT
JOINT DECLARATION OF JEFF S. WESTERMAN AND MARK C. MOLUMPHY
Lead Case No. SA 10-ML-02145-DOC (RNBx)
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WESTERMAN LAW CORP. JEFF S. WESTERMAN (94559) [email protected] JORDANNA G. THIGPEN (232642) [email protected] 1925 Century Park East, Suite 2100 Los Angeles, CA 90067 Telephone: (310) 698-7450 Facsimile: (310) 201-9160 COTCHETT, PITRE & MCCARTHY, LLP JOSEPH W. COTCHETT (36324) [email protected] MARK C. MOLUMPHY (168009) [email protected] San Francisco Airport Office Center 840 Malcolm Road Suite 200 Burlingame, CA 94010 Telephone: (650) 697-6000 Facsimile: (650) 697-0577 Lead Counsel for Plaintiffs and the Class [Additional Counsel Listed on Signature Page]
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
SOUTHERN DIVISION
IN RE: MEDICAL CAPITAL SECURITIES LITIGATION This document relates to: Case No. SA-CV-09-1048 DOC (RNBx)
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Lead Case No. SA-10-ML-02145 DOC (RNBx) DECLARATION OF JEFF S. WESTERMAN AND MARK C. MOLUMPHY IN SUPPORT OF (1) NOTEHOLDER PLAINTIFFS’ MOTION FOR ORDER GRANTING FINAL APPROVAL OF CLASS ACTION SETTLEMENT, ENTERING FINAL JUDGMENT, AND APPROVING PLAN OF ALLOCATION, AND (2) CLASS COUNSEL’S MOTION FOR AWARD OF ATTORNEY’S FEES AND REIMBURSEMENT OF EXPENSES DATE: June 24, 2013 TIME: 10:00 a.m. CTRM.: 9D JUDGE: Hon. David O. Carter
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i JOINT DECLARATION OF JEFF S. WESTERMAN AND MARK C. MOLUMPHY
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TABLE OF CONTENTS
Page
I. PRELIMINARY STATEMENT ..................................................................... 2
II. SUMMARY OF PLAINTIFFS’ ALLEGATIONS......................................... 6
III. PLAINTIFFS’ PROSECUTION OF THE CASE .......................................... 7
A. The Filing of the Initial Complaints ..................................................... 7
B. Appointment of Interim Co-Lead Counsel ........................................... 8
C. The Consolidated Complaint ................................................................ 8
D. The Initial Status Conference and Defendants’ Motion to Stay Discovery .............................................................................................. 9
E. Discovery Commences ......................................................................... 9
F. Defendants’ First Motions to Dismiss ................................................ 10
G. The Second Amended Consolidated Complaint ................................. 10
H. Plaintiffs’ Discovery Efforts Proceed ................................................. 10
I. The Motion to Modify the Court’s MDL Coordination Order ........... 11
J. Defendants’ Second Motions to Dismiss ............................................ 11
K. The Third Amended Consolidated Complaint .................................... 12
L. The McCoy Settlement and Plaintiffs’ Efforts On Behalf of the Class .................................................................................................... 12
M. Plaintiffs’ Motion for Class Certification ........................................... 13
N. Plaintiffs’ Second Motion to Compel Regarding the Production of Fed. R. Civ. P. 30(b)(6) Depositions .............................................. 15
O. Class Notice ........................................................................................ 15
P. Plaintiffs’ Request for Status Conference ........................................... 16
Q. Ongoing Issues Pertaining to the SEC Action .................................... 16
R. The Parties Enter Into Mediation ........................................................ 17
S. BNYM Files Second Motion to Stay Discovery ................................ 18
T. The Fourth Amended Consolidated Complaint .................................. 18
U. Defendants’ Failure to Respond to Discovery Requires a Third Motion to Compel ............................................................................... 18
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V. Discovery Efforts Throughout The Case ............................................ 19
W. BNYM and Plaintiffs Agree to a Settlement ...................................... 20
X. The Court Rules Plaintiffs Have Standing To Pursue Their Claims Against Wells Fargo ............................................................... 21
Y. The Parties Conduct Expert Discovery ............................................... 21
Z. The Court Decides Summary Judgment Motions on the Merits ........ 21
AA. Settlement Is Reached On The Eve of Trial, In Mediation Sessions With Judge Phillips .............................................................. 22
BB. Preliminary Approval of the Settlement and Mailing and Publication of the Notice .................................................................... 23
IV. THE PROPOSED SETTLEMENT WITH WELLS FARGO IS FAIR, REASONABLE, AND ADEQUATE ........................................................... 24
A. The Strength of Plaintiffs’ Case, When Balanced Against the Risk, Expense, Complexity, and Likely Duration of Further Litigation, Supports Approval of the Settlement ................................ 24
1. Complexity of Proof of Liability and Damages ....................... 24
2. Expense and Duration of Further Litigation ............................. 27
B. Lead Plaintiffs Have Engaged in Sufficient Formal and Informal Discovery and Have Conducted a Thorough Investigation to Identify the Strengths and Weaknesses of Their Case and the Propriety of Settlement .................................................. 28
C. The Recommendations of Experienced Counsel after Extensive Litigation and Arm’s-Length Settlement Negotiations Favor Approval of the Settlement ................................................................. 29
D. The Risks of Maintaining the Class Action Through Trial Favor Settlement ............................................................................................ 29
E. The Settlement Amount Supports the Settlement ............................... 30
F. The Reaction of the Class Members to the Proposed Settlement Supports the Settlement ...................................................................... 31
V. THE PLAN OF ALLOCATION IS FAIR AND REASONABLE ............... 31
VI. CLASS COUNSEL’S REQUESTED FEE AND EXPENSE AWARD IS FAIR AND REASONABLE .................................................................... 32
A. A Percentage Fee of 20% of the Wells Fargo Settlement Fund, and an Actual Percentage of 17.4% of the Total Class Recovery, is Reasonable And Below The Ninth Circuit’s Benchmark .......................................................................................... 34
1. The Result Achieved ................................................................ 34
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2. Risks of Litigation .................................................................... 35
3. Skill Required ........................................................................... 36
4. Contingent Nature of Fee ......................................................... 38
5. Awards in Similar Cases ........................................................... 39
B. Class Counsel’s Lodestar Also Justifies the Fee ................................ 39
C. The Reaction of the Class Supports Approval .................................... 40
D. Expenses Are Reasonable and Were Necessarily Incurred ................ 40
VII. CONCLUSION ............................................................................................. 42
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We, JEFF S. WESTERMAN AND MARK C. MOLUMPHY, declare as
follows:
1. Jeff S. Westerman and Mark C. Molumphy are, respectively,
attorneys with Westerman Law Corp. (“WLC”) and Cotchett, Pitre & McCarthy,
LLP (“Cotchett”), Co-Lead Counsel for Plaintiffs and the Class in the above-
captioned litigation (the “Class Action” or the “Action”).
2. Westerman has been actively involved in the prosecution of this
Action, is familiar with its proceedings, and has personal knowledge of the matters
set forth herein based upon his active supervision and participation in all material
aspects of the Action, both at his prior service at Milberg LLP, former Co-Lead
Counsel for Plaintiffs and the Class, and, since January 17, 2013, at WLC.
3. Molumphy has been actively involved in the prosecution of this
Action, is familiar with its proceedings, and has personal knowledge of the matters
set forth herein based upon his active supervision and participation in all material
aspects of the Action. Unless otherwise indicated, the statements in this
declaration are based on the personal knowledge of Westerman and Molumphy,
and if called to do so, we could and would testify competently thereto.
4. As Co-Lead Counsel, we submit this declaration in support of
Plaintiffs’ motion, pursuant to Rules 23 and 54 of the Federal Rules of Civil
Procedure, for final approval of the settlement of this Action as to Defendant Wells
Fargo Bank, N.A. (the “Class Settlement” or the “Settlement”) and the Plan of
Allocation of settlement proceeds (the “Settlement Motion”), and in support of
Class Counsel’s motion for an award of attorneys’ fees and reimbursement of
expenses (the “Fee and Expense Motion”). We are also submitting separate
declarations detailing the attorneys’ fees and expenses incurred by our respective
firms.
5. The Stipulation of Settlement filed April 30, 2013 (the “Wells Fargo
Settlement Agreement”, ECF No. 605) provides for a total payment of
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$105,000,000. Of that, the Class portion is $83,517,000 in cash, which has been
deposited in escrow and is earning interest for the benefit of the Class (the “Class
Settlement Fund”). The balance is for the benefit of noteholders in two related
actions. A true and correct copy of the Stipulation of Settlement is attached hereto
as Exhibit 1.1
6. The Settlement resolves all claims asserted by Plaintiffs and the Class
in this litigation against Defendant Wells Fargo Bank, N.A. (“Wells Fargo”).
Plaintiffs previously reached a settlement with the Bank of New York Mellon
(“BNYM”) which is set for a hearing on final approval on June 24, 2013.
7. This declaration describes the claims asserted, the principal
proceedings to date, the legal services provided by Co-Lead Counsel and
Plaintiffs’ firms on the Executive Committee (collectively, “Class Counsel”), and
the Settlement.2 This declaration also demonstrates why the Settlement and Plan
of Allocation are fair, reasonable, and adequate, and in the best interests of the
Class, and why the application for award of attorneys’ fees and reimbursement of
expenses for the combined Class recoveries against Wells Fargo and BNYM in this
case is reasonable and should be approved by the Court.
I. PRELIMINARY STATEMENT
8. This Action was carefully investigated before it was filed and has
been vigorously litigated since its commencement on September 11, 2009, a period
of over three and one-half years.
9. In order to successfully prosecute this Action and bring it to this
favorable conclusion, Class Counsel also (a) thoroughly investigated, with the
assistance of in-house investigators, the facts underlying the allegations in the 1 All capitalized terms not defined herein shall have the same meanings as set forth in the Wells Fargo Settlement Agreement. 2 The current members of the Executive Committee are Milberg LLP; Minami Tamaki LLP; Law Office of Michael D. Liberty; and Aitken*Aitken*Cohn. From December 21, 2009 through April 4, 2013, Milberg LLP, where Westerman was a partner, served as Court-appointed Co-Lead Counsel for Plaintiffs and the Class.
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Fourth Amended Consolidated Complaint for Breach of Contract (the
“Complaint”); (b) thoroughly researched the law pertinent to the claims and
defenses asserted; (c) analyzed issues of trust liability and damages in this Action
and consulted with experts regarding corporate trust practices and the calculation
of damages; (d) litigated two complex motions to dismiss, defeating Defendants’
challenge to prior versions of the Complaint; (e) prepared responses to Defendants’
discovery requests and prepared and propounded discovery requests upon
Defendants; (f) served subpoenas on 27 non-parties for documents relevant to the
Action, and negotiated with those non-parties concerning the scope of their
document production; (g) successfully obtained discovery in the United States
District Court for the District of Colorado from a third party after that party refused
to provide discovery; (h) reviewed approximately 1.7 million pages of documents
produced by Defendants and non-parties, including much of Medical Capital’s
business records for a period of almost five years; (i) took the depositions of over
30 persons with knowledge relevant to the case; (j) closely monitored all activity in
the parallel S.E.C. proceeding, and the broker securities action, that could have had
an impact on the Class and its claims, and appeared in federal district court in
Texas to protect Class interests related to the securities broker settlement; (k)
successfully obtained certification of the Class over vigorous challenges by
Defendants concerning the propriety of class certification and the commonality of
the Class, including Defendants’ appeal to the Ninth Circuit; (l) vigorously and
successfully opposed the Receiver’s plan of distribution to the extent that it
negatively impacted the Class’s claims against the Defendants; (m) successfully
defended Plaintiffs’ standing to pursue their claims, in the face of motions filed by
both the Receiver and Defendants alleging that Plaintiffs had no independent
standing; (n) successfully defended and prosecuted cross motions for summary
judgment on the merits; (o) conducted full expert discovery, including the
exchange of expert reports and depositions of experts on issues of trust liability and
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damages; (p) engaged in extensive pre-trial preparation, including the
identification and exchange of thousands of exhibits and deposition designations,
witness preparation, jury instructions, and motions in limine; (q) prepared for and
attended five sessions of mediation of this Action before two private mediators,
with many subsequent conversations with the mediators and opposing counsel, and
successfully negotiated, at arm’s length, a favorable settlement with Wells Fargo
for the Class, which included extensive post-mediation negotiations over the
specific terms of the Settlement; (r) received preliminary approval of the BNYM
and Wells Fargo Settlements from this Court; (s) established a website for regular
updates and information for the Class regarding the case; (t) communicated with
Class members who contacted Class Counsel, including those who contacted for
regular updates; and (u) communicated regularly with all named class
representatives, regarding all of the issues, facts and circumstances in this Action,
and received their approval to settle this Action with Wells Fargo.
10. The Settlement represents an excellent result for the Class. It is the
product of over three years of extensive investigation, aggressive litigation and
negotiation, and takes into account the significant risks specific to this case. The
Settlement was also the result of a mediation process conducted with the assistance
of the Hon. John W. Kennedy (Ret.) and the Hon Layn Phillips (Ret.), both former
judicial officers and experienced mediators. It was negotiated by experienced
counsel for the Class and Wells Fargo with a firm understanding of both the
strengths and weaknesses of their clients’ respective claims and defenses.
11. The Settlement confers an immediate and substantial benefit on the
Class and eliminates the significant risk of continued litigation under
circumstances where a favorable outcome was uncertain. As Co-Lead Counsel, we
respectfully submit that, under these circumstances, the Settlement is an
outstanding result, is in the best interest of the Class, and should be approved as
fair, reasonable, and adequate. We also respectfully ask the Court to approve the
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Plan of Allocation of settlement proceeds.
12. Finally, we ask the Court to award attorneys’ fees in the amount of
20% of the Wells Fargo Class Settlement Fund, or $16,703,400.00, and
reimbursement of expenses incurred to date of $78,130.96. When combined with
the 15% fee requested from the BNYM recovery, the total attorneys’ fees
requested are only 17.4% of the entire class recovery in this case. The percentage
fee request is well within the range of percentages frequently awarded in these
types of actions, and below the Ninth Circuit benchmark. It is also justified by the
substantial benefits conferred on the Class – which is believed to be one of the
largest indenture trust recovery in United States history – as well as the substantial
risks undertaken, the quality of representation, and the nature and extent of legal
services performed.
13. To date, the members of the Class support the Settlement and Class
Counsel’s fee and expense request. Pursuant to the Court’s Order Preliminarily
Approving Class Action Settlement, Approving Proposed Notice, and Scheduling
Fairness Hearing (the “Preliminary Approval Order”) (Dkt. 611), the Notice of
Pendency of Class Action and Proposed Settlement, Motion For Attorneys’ Fees,
and Settlement Fairness Hearing (the “Long Form Notice”) was sent to more than
9,000 Class members on or around May 24, 2013. See Declaration of Stefanie
Gardella of Kurtzman Carson Consultants LLC (“Gardella Decl.”) filed herewith, ¶
5. Additionally, on June 5, 2013, the Summary Notice of the Settlement (the
“Summary Notice”) was published in the Legal Section of USA Today. See
Gardella Decl. ¶ 8. The Long Form Notice and Summary Notice were also placed
on the dedicated Class Action website, www.medicalcapitalclass.com. See id. ¶ 9.
The Long Form Notice apprised Class members of the terms of the Settlement, the
proposed Plan of Allocation of settlement proceeds, and Class Counsel’s
application for attorneys’ fees and expenses, as well as their right to object.
Although the deadline to file objections to the proposed Settlement is July 15,
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2013, to date we are aware of only one objection that has been submitted to the
Court relating to the amount of requested attorneys’ fees and expenses, and one
objection relating to an aspect of the proposed Plan of Allocation. We are unaware
of any objections to the Settlement. In the meantime, there were numerous
contacts from class members seeking to ensure their inclusion in the Class, or
asking general questions. Plaintiffs intend to address all comments to the proposed
Settlement, Plan of Allocation, and request for attorneys’ fee and expenses in the
reply brief, which will be filed after the deadline for objections.
14. The following is a summary of the nature of Plaintiffs’ claims, the
principal events that occurred during the course of this Action, and the legal
services provided by Class Counsel.
II. SUMMARY OF PLAINTIFFS’ ALLEGATIONS
15. This is a breach of contract action brought by Plaintiffs on behalf of
themselves and all persons or entities who purchased or otherwise acquired notes
issued by one or more of Medical Provider Financial Corporation (“MP”) II, III,
and IV and Medical Provider Funding Corporation (“MP”) V and VI (collectively,
the “SPCs”) and did not receive some or all of their principal or interest payments.
The Action involves claims against BNYM and Wells Fargo for breaches of
contract relating to their performance as indenture trustees for the SPCs. The
allegations are set forth in the Complaint.
16. This action stems from an alleged fraudulent Ponzi scheme in the
offer and sale of notes perpetrated by Medical Capital Holdings, Inc. (“MCH”),
Medical Capital Corporation (“MCC”), and those companies’ officers (collectively
referred to as “Medical Capital”). See Securities and Exch. Comm. v. Medical
Capital Holdings, Inc., et al., Case No. SACV 09-0818 (RNBx) (filed July 16,
2009) (the “SEC Action”). On or about August 18, 2009, the Court entered an
order in the SEC Action appointing Thomas A. Seaman as permanent receiver (the
“Receiver”) for MCH and its affiliates (the “Receivership Entities”).
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17. The core of Plaintiffs’ allegations, all of which Defendants continue to
deny, is that Defendants breached certain duties that they had under the Note
Issuance and Security Agreements (“NISAs”) that each Defendant executed with
particular SPCs. BNYM executed separate NISAs with MP II, MP IV, and MP VI.
Wells Fargo executed NISAs with MP III and MP V. Plaintiffs further allege that,
as a result of Defendants’ breaches, millions of dollars in funds that were held in
trust for Plaintiffs’ benefit were wrongfully disbursed. Plaintiffs allege that
Defendants breached the contracts and failed to perform their duties under the
NISAs.
18. Plaintiffs allege that Defendants failed to recognize and/or failed to
call Events of Default under the terms of the NISAs as early as they should have,
and failed to act prudently following the occurrence of Events of Default, as was
required under the heightened standard of care required both by the contracts and
by general industry custom and practice. Plaintiffs allege that even after
Defendants belatedly recognized the occurrence of Events of Default, Defendants
continued to perform their contractual duties negligently and in bad faith.
19. Defendants have consistently denied, and continue to deny, the
allegations of Plaintiffs’ Complaint.
III. PLAINTIFFS’ PROSECUTION OF THE CASE
A. The Filing of the Initial Complaints
20. On September 11, 2009, Masonek, et al. v. Wells Fargo Bank, et al.,
Case No. SA-CV-09-01048 DOC (RNBx) (“Masonek”), was filed in the United
States District Court for the Central District of California, Southern Division, as a
breach of contract class action on behalf of persons who purchased notes issued by
one or more of the SPCs and did not receive some or all of their principal and/or
interest. Following the filing of this action, four additional related actions were
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filed in this Court.3
21. By order dated October 21, 2009, the Court consolidated three of the
cases under the caption Masonek, et al v. Wells Fargo Bank, et al., Case No. SA-
CV-09-0148 DOC (RNBx).
B. Appointment of Interim Co-Lead Counsel
22. On October 21, 2009, the Court appointed Cotchett, Pitre & McCarthy
LLP (“Cotchett”) as Interim Lead Class Counsel pursuant to Fed. R. Civ. P.
23(g)(3), and appointed an Executive Committee to work under the direction of
Interim Lead Class Counsel. On December 21, 2009, following a motion by
Milberg LLP (“Milberg”) to be appointed Interim Co-Lead Counsel, and the
stipulation by counsel, the Court appointed Milberg to be Co-Lead Counsel with
Cotchett and appointed Aitken, Aitken & Cohn to the Executive Committee,
pursuant to Fed. R. Civ. P 23(g)(3).4
C. The Consolidated Complaint
23. On January 20, 2010, Milberg and Cotchett filed an Amended
Consolidated Complaint, consolidating the claims in a fourth related case of
Rapoport v. The Bank of New York Mellon, Case No. SA-CV-09-01267 DOC
(RNBx), with the Masonek action. The Amended Consolidated Complaint alleged
various claims including breach of contract.
3 Toungaian v. Wells Fargo Bank, National Association, et al., No. SACV09-1122 DOC (RNBx); Braunstein v. Wells Fargo Bank, National Association, et al., No. SACV09-1137 DOC (RNBx); Berlin v. Wells Fargo Bank, National Association, et al., No. CV09-6928 DOC (RNBx); and Rapoport v. The Bank of New York Mellon, Case No. SA-CV-09-01267 DOC (RNBx). 4 The Court signed the Order on December 21, 2009, but it was not entered until February 2, 2010.
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D. The Initial Status Conference and Defendants’ Motion to
Stay Discovery
24. On June 14, 2010, the Court held its first status conference to discuss
the various actions related to Medical Capital. Due to previous transfers made by
the Multi-District Litigation Panel, the Court issued an order on June 30, 2010 that
divided the actions into the “Broker-Dealer Actions” and the “Trustee Actions,”
based on the claims made by the plaintiffs in each action. The consolidated
Masonek action was placed into the “Trustee Actions” category, along with the
individual actions of Bain, et al v. Wells Fargo Bank, N.A., et al., Case No. SA-
CV-010-0548 DOC (RNBx) (the “Bain Action”) and Douglas Co. Individual
Practice Assoc., Inc., et al. v. Medical Capital Holdings, et al., Case No. SA-CV-
10-0549 DOC (RNBx).5 Interim Co-Lead Counsel was appointed lead counsel for
the Trustee Actions for discovery purposes.
25. Plaintiffs served their first document requests on Defendants on April
6, 2010. Defendants responded on May 10, 2010 with objections, asserting that no
discovery should take place until the pleadings were resolved and Defendants’
motions to dismiss were adjudicated. Defendants filed a motion to stay discovery
on June 4, 2010. Plaintiffs opposed Defendants’ motion, and filed a motion to
compel production. Defendants’ motion was heard on July 12, 2010. On August
5, 2010, the Court denied Defendants’ motion and ordered discovery to proceed.
E. Discovery Commences
26. Defendants’ document production commenced on September 16,
2010. Defendants made a “rolling” production of thousands of documents, and
Plaintiffs began reviewing those documents. Ultimately, Defendants and non-
parties produced over 280,000 documents totaling over 1.7 million pages.
5 On May 3, 2010, the Douglas County action was transferred back to the District of Oregon and ultimately remanded to Oregon state court.
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F. Defendants’ First Motions to Dismiss
27. Defendants filed motions to dismiss the Amended Consolidated
Complaint on January 19, 2010. In those motions, Defendants argued that the
Amended Consolidated Complaint (1) failed to allege actionable breaches of
contract; (2) failed to allege breach of fiduciary duty and aiding and abetting
breach of fiduciary duty; and (3) failed to allege claims for unjust enrichment and
unfair competition.
28. Plaintiffs filed their opposition to Defendants’ Motion to Dismiss on
March 8, 2010, addressing the issues raised by Defendants.
29. On August 31, 2010, this Court granted the motions to dismiss,
dismissing the claims for breach of contract and the tort-based claims, but granting
Plaintiffs leave to amend. Masonek Dkt. 166.
G. The Second Amended Consolidated Complaint
30. On September 30, 2010, Plaintiffs filed the Second Amended
Consolidated Complaint. Plaintiffs added substantial new details concerning
Medical Capital’s operations and its interactions with Wells Fargo, based on their
investigation, interviews with witnesses, and review of Medical Capital and
Defendants’ business records.
H. Plaintiffs’ Discovery Efforts Proceed
31. Plaintiffs served Medical Capital Receiver Thomas Seaman with a
subpoena on September 14, 2010, seeking documents related to Medical Capital’s
operations and accounting records, as well as the services provided by the
Defendants to Medical Capital and its SPCs. However, the Receiver did not
comply by the deadline of September 24, 2010, and took the position that he was
excused from compliance, requiring Plaintiffs to file a motion to compel
production on October 4, 2010. After a hearing before the Discovery Special
Master Hon. William F. McDonald (Ret.), Plaintiffs and the Receiver agreed to the
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terms of the Receiver’s production. Lead Counsel held numerous discussions with
counsel for the Receiver to (1) resolve disagreements over the scope of these
requests; (2) negotiate the types of responsive electronic documents the Receiver
would produce; and (3) negotiate the parameters for searching for responsive hard-
copy documents. Plaintiffs’ counsel also visited the Receiver’s warehouse and
offices to physically review and obtain relevant hard-copy documents.
I. The Motion to Modify the Court’s MDL Coordination
Order
32. The individual action known as Abbate, et al v. Wells Fargo Bank,
N.A., et al., Case No. SA-CV-10-06561 DOC (RNBx) (the “Abbate Action”) was
transferred to the Central District on September 13, 2010 and consolidated with the
other Trustee Action cases in In re Medical Capital Sec. Litig. (“MDL”). Pursuant
to the Court’s June 14, 2010 Coordination Order, Lead Counsel in Masonek was
lead counsel for discovery purposes. Plaintiffs in the Abbate Action filed a motion
to modify the Court’s Order on December 3, 2010, which Plaintiffs and
Defendants opposed. The Court denied the Abbate Plaintiffs’ motion and declined
to modify its earlier Order.
J. Defendants’ Second Motions to Dismiss
33. On October 20, 2010, Defendants filed their second round of motions
to dismiss. Defendants continued to argue that Plaintiffs’ claims lacked factual
support and could not be sustained on various legal grounds. Plaintiffs opposed
the motions, arguing that the Second Amended Consolidated Complaint contained
numerous specific facts and contained legally sufficient grounds for all claims.
34. On February 2, 2011, the Court held a hearing and tentatively granted
in part and denied in part Defendants’ motions. On February 7, 2011, the Court
adopted its tentative ruling, stating that Plaintiffs’ claim for “breach of contract
based on their unchallenged status as third party beneficiaries” was no longer
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subject to dismissal, in part because “Plaintiffs have alleged sufficient facts to
create a plausible claim that Defendants breached their duties under the NISAs.”
MDL ECF No. 143. Specifically, the Court held:
In other words, the NISAs obligated Defendants to act with due care
in, for instance, examining the “certificates and opinions ... required to
be furnished to [them]” in order to “determine whether or not they
conform[ed] as to form ... or whether or not they contain[ed] the
statements required ....” NISA § 5.06(a)(ii).
Id. at 7. The Court also found that Plaintiffs sufficiently identified and alleged
many specific examples of Defendants’ breaches, such as the acceptance of non-
conforming formulas in the NCCR calculations, the failure to obtain opinions of
counsel, and bad faith reliance on Medical Capital’s certifications, which
constituted plausible allegations to support a claim for Defendants’ breach of
contract. Accordingly, the Court denied Defendants’ motion to dismiss the breach
of contract claim on those grounds.
K. The Third Amended Consolidated Complaint
35. On March 1, 2011, Plaintiffs filed their Third Amended Consolidated
Complaint, which conformed their allegations to the scope of the Court’s order on
the motions to dismiss. Defendants answered this Complaint.
L. The McCoy Settlement and Plaintiffs’ Efforts On Behalf of
the Class
36. On January 26, 2011, the Court transferred the Broker-Dealer Actions
in In re Medical Capital Sec. Litig. to the Northern District of Texas for settlement
negotiations (referred to for those purposes as McCoy, et al. v. Securities America,
et al., Case No. 11-cv-00191-F). Although the parties in the McCoy action reached
a settlement, Plaintiffs closely monitored the class action approval proceedings and
discovered that the proposed settlement contained objectionable language
regarding contribution, offset, and judgment credits that could negatively impact
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the Noteholder Class. For example, the proposed settlement terms could be read to
unlawfully reduce Noteholders’ total recovery based on Defendants’ asserted
application of contribution and comparative equitable indemnity rights in breach of
contract actions. Plaintiffs filed an objection to the settlement and appeared in
Dallas to successfully argue at the hearing, preventing that language from being
included in the Settlement Order in McCoy.
M. Plaintiffs’ Motion for Class Certification
37. On April 13, 2011, Plaintiffs filed their motion for class certification.
Plaintiffs submitted extensive briefing and argued that all of the requirements of
Rules 23(a) and 23(b)(3) were met. Plaintiffs further argued that Interim Class
Counsel should be appointed as Class Counsel pursuant to Rule 23(g).
38. Following the filing of the motion for class certification, counsel for
Defendants sought documents from all the proposed class representatives as part of
their effort to oppose that motion. Defendants also took the depositions of all
seven proposed class representatives in Chico, San Francisco, and Los Angeles.
Co-Lead Counsel prepared all seven witnesses and defended them at the
depositions.
39. On May 19, 2011, Defendants filed their opposition to class
certification, claiming that Plaintiffs lacked commonality and that individual
issues, such as dates of breach and damages, predominated. Defendants’
opposition was extensive, and included evidence from Plaintiffs’ document
productions and depositions.
40. On June 7, 2011, Plaintiffs filed their Reply in Support of Their
Motion for Class Certification. Lead Plaintiffs asserted that the Complaint alleged
one overarching course of conduct by Defendants and that their performance under
the NISAs affected all Noteholders in the same manner. Plaintiffs also argued that
Steven Masonek, Robert Ludlow, John Toungaian, Joann Hosking, Kathleen
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Darrow, Peter Braunstein, and Michel Rapoport were adequate and typical class
representatives, citing their deposition testimony and other evidence, and that Co-
Lead Counsel was qualified to prosecute the action on behalf of the Class.
41. On June 20, 2011, moments before the class certification hearing was
to begin, the United States Supreme Court issued its ruling in Wal-Mart Stores,
Inc., v. Dukes, 131 S. Ct. 2541 (U.S. 2011), regarding class certification and the
Ninth Circuit’s application of Rule 23. The Court ordered the parties to submit
supplemental briefs on the applicability of Dukes to Plaintiffs’ motion and to return
to Court on June 23, 2011.
42. On July 26, 2011, the Court granted Plaintiffs’ motion and certified a
Class consisting of:
All persons or entities who purchased or otherwise acquired notes
issued by one or more of Medical Provider Financial Corporation II,
III, and IV and Medical Provider Funding Corporation V and VI
(collectively, the “SPCs”) and did not receive some or all of their
principal or interest payments. Excluded from the Class are: (i) the
Defendants herein, and their subsidiaries, parents, affiliates, and
controlled persons or entities, as well as their family members,
employees and representatives; and (ii) Medical Capital Holdings,
Inc., Medical Capital Corporation, Medical Tracking Services, Inc.,
and the SPCs, and their subsidiaries, parents, affiliates, and controlled
persons or entities, including specifically all of their past or present or
directors (including Sidney M. Field and Joseph J. Lampariello) as
well as their family members, employees and representatives.
Order Granting Class Certification, MDL ECF No. 240. The Court rejected
Defendants’ arguments that individual issues of fact and law predominated, and
that irreconcilable conflicts of interest existed among noteholders. The Court also
appointed Milberg and Cotchett as Class Counsel.
43. On August 9, 2011, Defendants promptly petitioned under Federal
Rule of Civil Procedure 23(f) to appeal the Court’s order. On August 22, 2011,
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Plaintiffs filed their opposition to Defendants’ petition. Plaintiffs argued, inter
alia, that the Court properly determined that Plaintiffs’ claims were common, that
Dukes was inapplicable to the facts presented, and that there were no substantial
grounds for a difference of opinion that would warrant review by the Ninth Circuit.
Defendants filed a request for a reply brief, which the Ninth Circuit permitted. On
October 18, 2011, the Ninth Circuit denied Defendants’ petition, affirming this
Court’s July 26, 2011 Order.
N. Plaintiffs’ Second Motion to Compel Regarding the
Production of Fed. R. Civ. P. 30(b)(6) Depositions
44. Plaintiffs noticed the depositions of Defendants’ 30(b)(6) Witnesses
relating to their corporate trust practices. On July 22, 2011, following months of
negotiations with Defendants, and while the parties proceeded with document
discovery, Plaintiffs filed their second motion to compel such depositions, which
Defendants opposed. This motion was heard on August 23, 2011, and Special
Master McDonald granted Plaintiffs’ request to take the Rule 30(b)(6) depositions.
In November 2011, Plaintiffs issued new deposition notices, identifying 25 topics.
The depositions ultimately proceeded on February 7, 2012 (Wells Fargo) and
February 10, 2012 (BNYM), and Plaintiffs obtained important information and
admissions relating to Defendants’ interactions with Medical Capital, the
organization of their trust departments and staff members assigned to the Medical
Capital account, and various possible breaches of the NISA obligations.
O. Class Notice
45. On December 5, 2011, after conferring with Defendants, Plaintiffs
applied for approval of class notice by direct mail, by print publication, and by an
informational website. The Court approved Plaintiffs’ application on December 8,
2011. Class Notice was subsequently mailed to all Class Members, published in
USA Today, and posted on a website specifically created for this case
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(www.medicalcapitalclass.com), along with other important court documents. The
website remains active to this day.
P. Plaintiffs’ Request for Status Conference
46. Plaintiffs attempted to negotiate a trial schedule with Defendants,
without success. Accordingly, on January 13, 2012, Plaintiffs filed a Request for
Status Conference Re: Trial Date and asked to set a trial schedule. Defendants
then agreed to a trial schedule, and the parties filed the Stipulated Trial Schedule
on February 7, 2012.
Q. Ongoing Issues Pertaining to the SEC Action
47. The Medical Capital Receiver was appointed temporarily on August
3, 2009 and permanently on August 18, 2009. He took possession of all the assets
of Medical Capital Holdings and affiliated entities, including the SPCs and the
Collateral securing Plaintiffs’ notes.
48. On November 28, 2011, the Receiver filed a Proposed Plan of
Distribution. Plaintiffs filed General and Specific Objections to the Receiver’s
Proposed Plan of Distribution on January 30, 2012, on behalf of the Class. First,
Plaintiffs argued that the Receiver’s reference to “related actions” and his intent to
“participate” in them was improper as it exceeded the scope of powers afforded by
the Court. Plaintiffs also opposed Defendants’ attempt to obtain access to funds
held by the Receiver, and Defendants’ attempt to obtain indemnity costs and
expenses. Plaintiffs also filed Specific Objections on the part of individual class
representatives. Each of Plaintiffs’ objections was resolved to their satisfaction
following a hearing and presentation of Plaintiffs’ objections.
49. In April 2012, Plaintiffs also began negotiating with the Receiver for
production of certain accounting-related documents, to avoid having to recreate
Medical Capital’s accounting history, and to conserve resources for the Class. Due
to the extensive negotiations between Co-Lead Counsel and counsel for the
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Receiver, Plaintiffs were able to obtain access to Medical Capital’s accounting
records, which were essential to reconstructing the transactions at issue.
50. In May 2012, Plaintiffs learned that the Receiver and Defendants had
engaged in settlement negotiations impacting the Class claims. On May 8, 2012,
Plaintiffs filed an ex parte application for an expedited status conference under
Fed. R. Civ. P. 1 and 23(d) to obtain more information regarding the purported
settlements.
51. The Court held a status conference on May 16, 2012. It ordered all
parties, as well as counsel for the individual Bain and Abbate actions, to participate
in a joint mediation session. It also set a briefing schedule for the parties’ planned
motions, in the event that mediation was unsuccessful.
52. On June 11, 2012, the Receiver filed a motion for approval of his
settlements with the Defendants, asking the Court to find that as a matter of law,
Plaintiffs lacked standing to pursue their claims. Defendants filed a separate
motion for summary judgment asking the Court to find that Plaintiffs lacked
standing. Plaintiffs filed their own motion for summary adjudication on June 11,
2012, asking the Court to find that Plaintiffs did have standing to pursue their
claims, consistent with the three years of litigation in the action.
R. The Parties Enter Into Mediation
53. At the Court’s direction, the parties to the Trustee Actions (i.e., the
Class Action, the Bain Action and the Abbate Action) entered mediation in an
effort to resolve the case. The parties retained the Hon. John Kennedy (Ret.) of
JAMS to serve as the mediator. Prior to the mediation, the parties sent extensive
mediation briefs to Judge Kennedy. The first mediation session took place on July
11, 2012. Although this mediation session did not conclude with a settlement
agreement, it created great progress towards that goal and set the stage for a later
second mediation session.
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54. Over the next few weeks, the mediation process involved individual
discussions between the parties. Judge Kennedy also conducted individual, in
person, meetings with each of the parties in Los Angeles. After these separates
sessions, the parties returned again for a joint session on August 27, 2012.
Although these mediation sessions did not conclude with a settlement agreement,
they again set the stage for the ultimate Settlement of the Action with BNYM.
Judge Kennedy continued to have discussions with counsel as the parties engaged
in their separate briefing for the summary judgment motions.
S. BNYM Files Second Motion to Stay Discovery
55. On June 22, 2012, BNYM filed another motion to stay discovery and
to modify the scheduling order, pending disposition of the Receiver’s motion for
approval of settlement. Class counsel negotiated with BNYM, and the parties
ultimately stipulated to a limited discovery stay covering the period of mediation
only.
T. The Fourth Amended Consolidated Complaint
56. On September 25, 2012, Plaintiffs and Defendants stipulated to the
filing of the Fourth Amended Consolidated Complaint. This Complaint
incorporated additional specific facts regarding Defendants’ failure to declare
Events of Default, and the triggers for Default under the NISAs. These new
allegations permitted Plaintiffs to pursue and seek damages based on the
alternative theory that Defendants failed to act on Events of Default prior to 2008.
U. Defendants’ Failure to Respond to Discovery Requires a
Third Motion to Compel
57. With the discovery cutoff of October 19, 2012 approaching, Plaintiffs
served their final set of discovery on September 4, 2012, including Interrogatories
and Requests for Admission. Defendants responded only with objections.
Accordingly, on October 24, 2012, Plaintiffs filed a motion to compel, alleging
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that the discovery was designed to narrow the issues for trial and streamline the
voluminous document production that Defendants had made. Ultimately, after
extensive negotiations, Defendants provided substantive responses, including
several binding admissions relating to alleged breaches of the NISAs that were
subsequently utilized in the summary judgment motions.
V. Discovery Efforts Throughout The Case
58. Class Counsel held numerous meet and confer discussions with the
Defendants and non-parties, especially the Receiver (as discussed above), to
negotiate the scope of discovery. Despite the discovery disagreements between
Plaintiffs, the Defendants, and other non-parties, Class Counsel was adept in
working with counsel to work through these disagreements to the maximum extent
possible. As a result, while disputes were raised with the Court-appointed
Discovery Master, they were kept at a minimum and Class Counsel was able to
devote time and resources to assembling and reviewing the massive amount of
documentary evidence produced for useful information to prove a case at summary
judgment and trial.
59. Further, given how Medical Capital records were maintained, Class
Counsel ultimately reviewed hundreds of boxes of hard-copy documents that were
made available for inspection by the Receiver in order to identify documents that
were relevant to the parties’ claims. Class Counsel also continued to negotiate
with the Receiver for the production of documents that were maintained in
electronic format. Class Counsel had analyzed tens of thousands of documents that
were obtained from the Receiver, as well as other documents produced in
discovery by Defendants and non-parties, and had obtained deposition testimony
relating to this evidence, when they negotiated with both Defendants to settle the
Action.
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60. Defendants served their own discovery requests as well. On
September 14, 2010 and August 31, 2012, Defendants served their requests for
production of documents and interrogatories to Plaintiffs. The Defendants also
took the depositions of all proposed Class Representatives in May 2011. Class
Counsel and counsel for Defendants engaged in extensive negotiations over these
discovery requests. These issues included, inter alia, (1) the relevance of
Plaintiffs’ trading history in non-Medical Capital securities; (2) the production of
Plaintiffs’ non-Medical Capital trading records; and (3) the production of
Plaintiffs’ investment policies and procedures.
61. Class Counsel began taking depositions in August 2010. In all (and
excluding expert depositions which occurred after the Settlement), Class Counsel
took the depositions of over 30 people with knowledge relevant to the case,
including the key Wells Fargo personnel working on the Medical Capital account,
as well as the Medical Capital staff working with Wells Fargo. Class Counsel also
prepared for and appeared at 12 depositions noticed by Defendants, including all
seven of the class representatives and 5 third parties. These depositions involved
significant effort on Class Counsel’s part to collect relevant documents, prepare
questions, and analyze and evaluate the resulting testimony.
W. BNYM and Plaintiffs Agree to a Settlement
62. Throughout the Fall of 2012, Plaintiffs and BNYM continued to
negotiate settlement with Judge Kennedy’s assistance, at the same time they were
conducting discovery and briefing the Receiver and Trustees’ respective motions
for approval of settlement and summary judgment, which were set for hearing on
December 4, 2012. On Friday, November 30, 2012, counsel for Plaintiffs and
BNYM appeared for another mediation with Judge Kennedy, and made substantial
progress. Indeed, over the weekend, Plaintiffs negotiated and reached an
agreement in principle with BNYM. On Tuesday, December 4, 2012, Plaintiffs
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and BNYM informed the Court of the settlement and asked that the hearing be
continued pending approval by the Abbate plaintiffs. On December 21, 2012, as
the parties appeared in Court for the hearing on the summary judgment motions
and the Receiver’s motion for approval of his settlements with Defendants, BNYM
and Plaintiffs in the Trustee Actions executed a term sheet setting forth the
essential terms of the “Global Settlement” between the parties.
X. The Court Rules Plaintiffs Have Standing To Pursue Their
Claims Against Wells Fargo
63. Unlike BNYM, Wells Fargo did not reach settlement with the Class
and, instead, decided to move forward with the hearing on its motion asserting that
Noteholders’ lacked standing to bring suit and were bound by the Receiver’s
proposed settlement. The resolution of this motion was obviously a seminal
moment in the action, and if granted in Wells Fargo’s favor, would result in zero
recovery by the Class. After extensive briefing, the Court issued a ruling on the
parties’ cross-motions on standing and the Receiver’s motion for settlement,
finding that Plaintiffs did have standing to pursue their claims, and that the
Receiver and Wells Fargo could not settle Plaintiffs’ independent claims.
Y. The Parties Conduct Expert Discovery
64. With Plaintiffs’ standing to sue reaffirmed, the Plaintiffs’ and Wells
Fargo proceeded to expert discovery. Both sides designated prominent experts in
the fields of indenture trusts and damages, who then exchanged detailed reports
and rebuttal reports. The experts were then deposed at length about their opinions.
Z. The Court Decides Summary Judgment Motions on the
Merits
65. After the close of discovery, and with just months now before trial,
the Plaintiffs’ and Wells Fargo each prepared and filed cross-motions for summary
judgment on the merits, addressing issues such as breach, materiality, damages and
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causation. The filings were extensive, and included detailed citations to the
evidentiary record assembled through three years of investigation and discovery, as
well as expert analysis. On March 11, 2013, just one month before trial, the Parties
returned to Court for the summary judgment hearings. The Court heard extensive
argument from both sides, taking the motions under submission. Thereafter,
Plaintiffs continued to prepare for trial, filing motions in limine, a joint exhibit list,
and a proposed pre-trial conference order, as well as serving third party subpoenas.
Plaintiffs also prepared oppositions to Wells Fargo’s motions in limine, which
included arguments to preclude both of Plaintiffs’ expert witnesses and much of its
damages case. Wells Fargo also filed a motion to de-certify the Class, citing recent
Supreme Court precedent.
66. On April 1, 2013, the Parties returned to Court for the Pre-Trial
Conference. At the Conference, the Court issued its orders denying Wells Fargo’s
motion for summary judgment, and granting partial summary judgment in
Plaintiffs’ favor and Wells Fargo’s favor on certain discrete alleged breaches. The
Court also heard argument on motions in limine and confirmed that it was moving
forward with a new trial date on April 30, 2013.
67. To this end, the Court required the Parties to appear the following day,
April 2, 2013, with their proposed jury instructions and verdict forms. On that day,
the Court and the Parties conferred at length about instructions and the verdict
forms, and further presented oral argument on motions in limine. The Court set a
further hearing on April 8 and 9, 2013, on Wells Fargo’s motion to exclude expert
testimony, and directed both parties to bring their experts to court for live
examination related to their qualifications and scope of testimony.
AA. Settlement Is Reached On The Eve of Trial, In Mediation
Sessions With Judge Phillips
68. On March 28, 2013, the Plaintiffs and Wells Fargo met for a
mediation with the Hon. Layn R. Phillips in Southern California. The mediation
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did not result in a settlement.
69. On Saturday, April 6, 2013, following the Court’s summary judgment
orders and just prior to its hearing on expert qualifications the following Monday,
the Parties appeared for a second mediation with Judge Philips. As before, this
was a full-day, global session, which included counsel for the Bain and Abbate
plaintiffs.
70. Over the next two days, the Parties reached an agreement in principle,
and informed the Court of a likely deal on April 8, 2013. The specific terms of the
Settlement were negotiated over the next few weeks and the Agreement was
executed on April 25, 2013. The Settlement calls for a cash payment by Wells
Fargo of $105 million to Noteholders, including a payment of $83,517,000 to the
Class Members, and for Wells Fargo to release its claims against the Medical
Capital estate of an estimated value of $25 million.
BB. Preliminary Approval of the Settlement and Mailing and
Publication of the Notice
71. On May 1, 2013, Lead Plaintiffs filed their unopposed Ex Parte
Application for Preliminary Approval of Settlement, seeking entry of an Order: (1)
preliminarily approving the settlement of the Action, as memorialized in the Wells
Fargo Settlement Agreement, which was attached as an exhibit; (2) approving the
form of the Notices of Settlement, which were attached to the Settlement
Agreement; and (3) scheduling a hearing to determine whether the Settlement
should be given final approval and to establish dates for dissemination of the
Notices and other relevant deadlines.
72. On May 6, 2013, the Court entered the Preliminary Approval Order
and directed Co-Lead Counsel to mail the Long Form Notice to all Class members
at their last known addresses, to publish the Summary Notice in USA Today, and to
publish both the Long Form Notice and Summary Notice on the Class Action
website, www.medicalcapitalclass.com. The Court also appointed the firm of
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Kurtzman Carson Consultants LLC (“KCC”) as the Settlement Administrator, with
responsibility for supervising and administering the Settlement.
73. As described in the Declaration of Stefanie C. Gardella, filed
herewith, KCC subsequently mailed the Long Form Notice to all Class Members at
their most recent mailing addresses, caused the Summary Notice to be published in
USA Today, and posted both notices on the designated website. See Gardella
Decl. at ¶ 5, 8, 9.
74. The Settlement and Summary Notices (“Notices”), which were in the
form approved by the Court, notified Class members of the terms of the
Settlement, the Plan of Allocation of the Settlement proceeds, and Class Counsel’s
intention to apply for an award of attorneys’ fees of up to twenty percent (20%) of
the Class Settlement Fund and for reimbursement of their expenses up to $400,000.
75. The Notices also informed Class members of their right to object to
the Settlement, the Plan of Allocation, or the application for attorneys’ fees and
expenses, and provided that any objection had to be filed by July 16, 2013. Class
Plaintiffs intend to respond to any objections or responses by Class Members in
their reply brief, which will be filed after the objection deadline has passed.
IV. THE PROPOSED SETTLEMENT WITH WELLS FARGO IS FAIR, REASONABLE, AND ADEQUATE
A. The Strength of Plaintiffs’ Case, When Balanced Against
the Risk, Expense, Complexity, and Likely Duration of
Further Litigation, Supports Approval of the Settlement
1. Complexity of Proof of Liability and Damages
76. Based on the evidence adduced to date, Plaintiffs believe that it would
be possible to prove that Wells Fargo materially breached the NISAs by
performing negligently and in bad faith, causing damage to Plaintiffs. Wells
Fargo, however, has adamantly denied any liability and has asserted from the
outset of the Action that it possesses defenses to Plaintiffs’ claims.
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77. Plaintiffs’ claims survived two motions to dismiss, a Rule 23(f)
petition, two motions for summary judgment, and a motion from the Receiver for
approval of settlement that would have resulted in the dismissal of Plaintiffs’
claims. However, there was still the risk with motion practice associated with
experts, trial, and even decertification of the Class. If the case went to trial, there
is no guarantee of a verdict in favor of the Plaintiffs and the Class and, even if a
jury verdict was won, that the judgment would survive an appeal or that the verdict
would be for a greater amount than the proposed settlement.
78. At trial, Plaintiffs faced considerable risks in establishing the essential
elements of their claims. One of the primary elements of a claim for breach of
contract that a plaintiff must prove is causation. In this case, Wells Fargo has
consistently argued that even if it did breach the NISAs, which it denies, its
breaches were not the actual or proximate cause of Plaintiffs’ losses. Although
Plaintiffs believe that they would be able to establish the element of causation at
trial, there remained a substantial risk that a jury would find favor with Wells
Fargo’s arguments. Further, the administration of indenture trusts is a highly
technical and complex subject, and there is a risk that a jury would not understand
Plaintiffs’ arguments that the breaches and negligent and bad faith performance
that Wells Fargo rendered actually caused Plaintiffs’ losses.
79. Plaintiffs also faced considerable risk in proving that Wells Fargo
materially breached the NISAs, which is an essential element of a claim for breach
of contract. The element of breach in indenture trust actions is sometimes difficult
to prove because it often turns, in large part, on the question of materiality of the
defendant’s breaches, and confronting the defendant’s arguments that its
interpretation of the terms was consistent with industry practice. Here, Wells
Fargo argued throughout this litigation that it did not breach the NISAs, and even if
it did, such breaches were not material. Although Plaintiffs believe that they
would ultimately be able to establish the materiality of Wells Fargo’s extensive
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breaches, there remained a considerable risk that a jury would accept Wells
Fargo’s arguments that Medical Capital’s breaches were not material, and thus,
there was no need to declare an Event of Default and give notice to the
Noteholders. Moreover, because a finding of bad faith involves an evaluation of
the defendant’s subjective behavior, there was a large risk that a jury would accept
that any errors made by Wells Fargo in its management of the Medical Capital
accounts were the result of judgment calls that were made by Wells Fargo in good
faith.
80. Proof of breach also would have posed risks to Plaintiffs at trial.
Wells Fargo moved in limine to exclude Plaintiffs’ indenture trust expert’s
testimony under the Daubert test, and the Court had set an evidentiary hearing to
consider his testimony. Wells Fargo may have been able to produce its own
indenture trust expert. Even if Plaintiff’s expert evidence was admitted, it remains
unclear what the jury’s reaction would have been to dueling experts.
81. Further, Lead Plaintiffs faced significant risks in establishing
damages. The determination of damages is a complicated process and expert
testimony is almost always necessary to establish the existence and amount of
actual damages. The damage assessments of the parties’ respective experts would
no doubt be polar opposites. To the extent Wells Fargo could prevail on issues
relating to liability or show that any assumption made by Plaintiffs’ experts were
inappropriate or show that any portion of the damages resulted from factors other
than those alleged in the Complaint, Plaintiffs’ claimed damages could be
significantly reduced.
82. As with proving breach, proof of damages also would have posed
significant risks to Plaintiffs at trial. As with the indenture trust expert, Plaintiffs
faced motions in limine by Wells Fargo to exclude Plaintiffs’ damages expert’s
testimony under the Daubert test and risked a decision that his methodologies
might not be admissible. Even if such evidence was admitted, the reaction of a
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jury to battling expert testimony is unpredictable and could have resulted in no
damages or only a fraction of the amount of damages Plaintiffs sought.
83. The Settlement is a good result when weighed against these risks of
continuing to litigate. Very difficult issues concerning both liability and damages
remained unresolved in the Action. As discussed above, Wells Fargo continued to
argue, among other things, that: Plaintiffs would not be able to establish that Wells
Fargo caused Plaintiffs’ damages, Plaintiffs would not be able to prove that Wells
Fargo’s breaches, if any, were material, and Plaintiffs would not be able to prove
damages. A jury might agree with such arguments. Moreover, in order to prove
their allegations, Plaintiffs would have to rely on testimony from former Medical
Capital employees and current and former Wells Fargo employees about matters
that occurred up to eight years ago. The duration of this litigation posed a major
risk that witnesses’ memories would fade, as was the case during depositions.
Additionally, many Wells Fargo employees were not able to speak with personal
knowledge of any of Medical Capital’s breaches. Finally, it was unclear how a
jury would react to the Plaintiffs, who purchased Medical Capital Notes with
extensive disclosures about potential risks and, in some cases, received principal
and/or interest payments for some length of time.
2. Expense and Duration of Further Litigation
84. Wells Fargo has demonstrated a commitment to defend this case
through and beyond trial, if necessary, and is represented by well-respected and
highly capable counsel. If not for the Settlement, the case would have continued to
be fiercely contested by all parties, and the expense and time of continuing
litigation would have been substantial. Also, as set forth herein, the Receivership
proceeding added a significant additional complication to the litigation.
85. Plaintiffs’ claims would require extensive expert testimony. The
Settlement, if approved, avoids the time and expense that would be necessary in
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order to present expert testimony at trial, and to process and rebut Wells Fargo’s
experts.
86. The trial was expected to last several weeks, but could have extended
much further. Substantial time and expense would be expended in preparing and
trying the case. The trial itself would be long, expensive, and uncertain.
87. Even if Plaintiffs prevailed and obtained a substantial judgment after
trial, there is little doubt that Wells Fargo would appeal. The appeals process
would likely span several years, during which the Class would receive no
distribution from any damage award. In addition, an appeal from any verdict
would carry the risk of reversal, in which case the Class would receive no recovery
even after having prevailed on the claims at trial. This would add considerably to
the expense and duration of the Action.
88. At this juncture, the $83,517,000 Settlement results in an immediate
and substantial tangible recovery, without the considerable risk, expense and delay
of trial and post-trial litigation.
B. Lead Plaintiffs Have Engaged in Sufficient Formal and Informal Discovery and Have Conducted a Thorough Investigation to Identify the Strengths and Weaknesses of Their Case and the Propriety of Settlement
89. As detailed herein, Plaintiffs engaged in a large amount of formal and
informal discovery before reaching settlement with Wells Fargo, as well as
virtually all pre-trial preparation. Class Counsel also analyzed trust industry
standards and damages in this Action and consulted with experts regarding both in
preparation of their case. Moreover, the parties prepared for and participated in
extensive settlement negotiations, including mediation with two highly
experienced former Judges, where the strengths and weaknesses of the parties’
respective claims and defenses were fully explored. With regard to the Complaint,
Defendants’ two motions to dismiss, Plaintiffs’ motion for class certification,
Defendants’ two motions for summary judgment, and the Receiver’s motion for
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approval of settlement, Class Counsel conducted substantial research into the law
pertinent to the claims and defenses asserted.
90. Thus, at the time the Settlement was negotiated, Class Counsel had a
full understanding of the strengths and weaknesses of the Plaintiffs’ claims, as well
as the difficulties they would have faced in obtaining a more favorable result after
continued litigation. This factor supports approval of the Settlement.
C. The Recommendations of Experienced Counsel after
Extensive Litigation and Arm’s-Length Settlement
Negotiations Favor Approval of the Settlement
91. Co-Lead Counsel, having carefully considered and evaluated, inter
alia, the relevant legal authorities and evidence to support the claims asserted
against Wells Fargo; the likelihood of prevailing on these claims; the risk, expense,
and duration of continued litigation; and the likely appeals and subsequent
proceedings necessary if Lead Plaintiffs did prevail against Wells Fargo at trial,
have concluded that the Settlement is a highly favorable result for the Class.
Moreover, the Settlement is the product of serious, informed, non-collusive
negotiations after more than three years of litigation. Therefore, significant weight
should be attributed to the belief of experienced counsel that the Settlement is in
the best interest of the Class.
D. The Risks of Maintaining the Class Action Through Trial
Favor Settlement
92. The Court conducted a thorough and reasoned analysis and certified
the Class on July 26, 2011. However, under Rule 23, a court may exercise its
discretion to re-evaluate the appropriateness of class certification at any time.
While Plaintiffs believe that nothing has changed since the certification order that
would undermine the Court’s decision to certify the Class, Wells Fargo would
certainly take any steps necessary to reverse or modify that ruling as appropriate,
based on its perception of a material change in the law. Indeed, Wells Fargo had
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filed such a motion to decertify based on a recent Supreme Court decision and
argued that Plaintiffs could not establish liability and damages on a class-wide
basis at trial. This motion was pending when Settlement was reached.
E. The Settlement Amount Supports the Settlement
The amount of the Class Settlement, $83,517,000, is substantial by any
measure. At the time that Plaintiffs opposed the Receiver’s proposed settlement,
Plaintiffs’ damages expert James Skorheim estimated that Noteholders who held
notes issued by the SPCs for which Wells Fargo served as indenture trustee (MP
III and MP V) suffered potentially recoverable damages of about $375-400 million
based on an Event of Default analysis. See Noteholders’ Joint Objection to
Receiver’s Motion For Approval of Settlement With Wells Fargo and Bank of
New York Mellon (Dkt. 842 in the SEC Action) at 35. The amount of this Global
Settlement with Wells Fargo ($105 million) represents between 26% and 28% of
those estimated recoverable losses. Mr. Skorheim’s alternative calculation of
damages based on allegedly improperly disbursed Administrative Fees was just
over $73 million, i.e., less than what the Noteholders will recover from the
Settlement.
93. If the case against Wells Fargo had proceeded to trial, Wells Fargo
would have certainly argued that it was not liable at all for Noteholders’ losses,
and that even if it was held liable, recoverable damages were substantially lower
than Plaintiffs’ estimates. Wells Fargo would have undoubtedly introduced expert
testimony supporting its argument for minimal (or zero) damages, setting up a
“battle of the experts” between the parties. While Class Counsel obviously
disagree with Wells Fargo’s damages estimates, the Court or a jury could have
agreed with Wells Fargo’s arguments (in whole or in part), which could have
substantially reduced the amount of damages that Plaintiffs ultimately obtained
from Wells Fargo. Thus, the Settlement amount represents a substantial portion of
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the damages that were potentially recoverable from Wells Fargo, and is fair,
reasonable and adequate compensation for Noteholders’ losses.
F. The Reaction of the Class Members to the Proposed
Settlement Supports the Settlement
94. The complete absence of objections to the Settlement strongly
supports final approval. Notice of the Class Settlement was mailed to all Class
members and published in USA Today (and the designated website) on or around
May 24, 2013 and June 5, 2013. See Gardella Decl. ¶¶ 5, 8, 9. The deadline for
submitting objections is July 15, 2013. To date, not a single Class member has
objected to the Class Settlement, while many have called to ensure they are in the
Class and ask general questions. Only a few Class members have responded with
certain objections concerning the Plan of Allocation or the requested attorneys’
fees and expenses. While Class Plaintiffs intend to address any objections in their
reply brief to be filed after the objection deadline, we summarize a few of our
primary points below.
V. THE PLAN OF ALLOCATION IS FAIR AND REASONABLE
95. The Plan of Allocation here reflects the allegations that Wells Fargo’s
material breaches of contract led to Medical Capital’s inability to pay Noteholders
the amounts of principal and interest that they were contractually entitled to
receive. The Plan, developed by Class Counsel, tracks the plan that was proposed
by the Receiver and approved by the Court in the SEC Action relating to the
distribution of amounts recovered by the Receiver. SEC Action Dkts. 844, 880.
Like the Receiver, Class Counsel has proposed a Plan of Allocation based on a
straightforward calculation of each Class member’s “MIMO” losses – i.e., the total
amount that each Class member invested to purchase notes issued by MP II, MP
III, MP IV, MP V, and MP VI, minus the amounts that the Class member received
in interest and returned principal. The “MIMO” approach is based on the premise
that where investors are all victims of the same fraud, as Noteholders were here, it
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is fair to require that all recover as much of their principal as possible before any
recover additional interest or profits. Not only did the Receiver present, and the
Court approve this, but we view it as the fair approach in this Ponzi scenario where
the interest payments received by earlier investors were funded from principle
payments by later investors. This fairness goal is best achieved by calculating
claims on a net or MIMO basis, and numerous courts in this Circuit have
recognized the appropriateness of the MIMO approach.
96. Under the proposed Plan of Allocation, each Class member’s
recognized loss will also be reduced, dollar-for-dollar, by any amounts received by
the Class member (net of attorneys’ fees) from any broker litigation or arbitration
initiated by or on behalf of the Class member, as determined based on data, if
available, received by the Receiver. Again, this same reduction was approved by
this Court with respect to distribution of Receivership Estate proceeds, and Co-
Lead Counsel believe the reduction is appropriate and in line with the premise that
Class Members recover their principal before any recover interest or profits,
especially here where there are not sufficient funds to satisfy each Class Members’
unpaid principal. SEC Action Dkt. 844 at 2, 880. The adjustment for third-party
broker recoveries is also consistent with arguments in this case that contractual
damages should be offset by any funds collected from other sources, given that the
recoveries are to compensate for the same investment losses, i.e., the result of
Noteholder investments in Medical Capital. Each Class member will receive his or
her pro rata share of the funds based on the calculation of recognized losses. This
type of allocation plan is a reasonable approach.
VI. CLASS COUNSEL’S REQUESTED FEE AND EXPENSE AWARD IS FAIR AND REASONABLE
97. The substantial recovery of $105,000,000 for all Noteholders,
including $83,517,000 in cash (plus accrued interest) obtained for the benefit of the
Class, was achieved through the skill, work, dedication and effective advocacy of
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Class Counsel, who overcame numerous procedural and legal hurdles. Since
approval of this Settlement would mark the end of this case, a payment for services
rendered in achieving such a result, one of the largest recoveries against an
indenture trustee in United States history, Class Counsel seek an award of
attorneys’ fees based on their work during the entire case. We previously
requested 15% of the $90,675,600 BNYM Class recovery and now request 20% of
the $83,517,000 Wells Fargo Class recovery, which would result in an overall
blended fee of 17.4% of the total Class recovery in this case. We also request
reimbursement of expenses in addition to, and not duplicative of, the expenses
previously requested from the BNYM settlement. Class Counsel’s efforts over the
duration of this Action have been without compensation of any kind and their fee
and cost expenditures have been wholly contingent upon the result achieved. As
discussed in the BNYM fee application, our 15% fee request at that time provided
us with a negative multiplier of .77 based on our then-current lodestar. In other
words, we continued to prepare the case against Wells Fargo for trial with the risk
that we may not obtain a positive verdict or Settlement.
98. Class Counsel’s application seeks an award of fees and expenses for
Co-Lead Counsel, WLC and CPM, as well as the following other firms that
assisted in the prosecution of the Action on the Class’s behalf as members of the
Court-appointed Executive Committee: Milberg LLP, Aitken*Aitken*Cohn;
Minami Tamaki LLP, and the Law Offices of Michael Liberty. Each of these
firms has separately filed herewith declarations which discuss the work performed,
the number of hours worked through June 15, 2013, and the expenses reasonably
incurred in connection with the litigation. Co-Lead Counsel sought throughout this
litigation to avoid duplication of effort by counsel, and required that Class Counsel
maintain and provide reports of their ongoing time and expenses. Moreover, Class
Counsel have reviewed their time records and eliminated certain entries in the
exercise of billing judgment.
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99. Class Counsel and their staff combined expended 39,423.10 hours in
the prosecution of this Action with a resulting lodestar of $18,572,025.75.
Attached hereto as Exhibit 2 is a summary of Class Counsel’s lodestar in this case.
The requested fee of 20% of the Wells Fargo Class Settlement Fund, or 17.4% of
the entire Class recovery, results in a multiplier of 1.63 of that lodestar.
100. As discussed herein, as well as in the Fee and Expense Motion filed
herewith, the requested fee is fair and reasonable when considered under the
applicable standards in the Ninth Circuit and the range of awards in class actions in
this Circuit and courts nationwide. Class Counsel believe that the Settlement is the
result of their innovative and tireless efforts, their dedication to the interests of the
Class, and their demonstrated intent, willingness and resources to prosecute the
case through trial and subsequent appeals. In a case asserting claims based on
complex legal and factual issues, which were opposed by highly skilled and
experienced defense counsel, Class Counsel succeeded in securing an excellent and
certain recovery for the Class. Moreover, the expenses for which Class Counsel
seek reimbursement are reasonable in amount and were necessarily incurred for the
successful prosecution of the Action.
A. A Percentage Fee of 20% of the Wells Fargo Settlement
Fund, and an Actual Percentage of 17.4% of the Total Class
Recovery, is Reasonable And Below The Ninth Circuit’s
Benchmark
1. The Result Achieved
101. The Settlement here creates an $83,517,000 Class Settlement Fund to
compensate Class members. Combined with the $90,675,600 BNYM Settlement,
there is a total Class recovery of $174,192,600, or $219 million for the Noteholders
in all three of the related actions. This is an exceptional result that was achieved as
a direct result of the skill and tenacity of Class Counsel’s investigation of the
issues, prosecution of this Action, and persistent settlement negotiations on behalf
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of the Class. This case was hard fought. Class Counsel defeated Defendants’
motion to dismiss, won class certification, and successfully litigated against
Defendants’ Rule 23(f) petition to the Court of Appeals for the Ninth Circuit.
Subsequently, Class Counsel opposed Wells Fargo’s initial motion for summary
judgment and the Receiver’s own proposed motion claiming that the Class had no
standing. Class Counsel then opposed Wells Fargo’s motion for summary
judgment or partial summary adjudication on the merits, as well as the legion of
pre-trial motions that followed. The Settlement was the result of arm’s length
negotiations entered only after months of complicated discovery and trial
preparation. The settlement negotiations were conducted with the assistance of
Judge Kennedy and Judge Phillips, highly respected mediators and former judicial
officers.
102. The Settlement will provide immediate compensation to the Class and
will avoid the substantial risks of less or no recovery.
2. Risks of Litigation
103. As discussed herein, substantial risks and uncertainties in this type of
litigation, and in this case in particular, made it far from certain that a recovery
would be obtained, let alone over $83.5 million for the Class from Wells Fargo and
over $219 million for all Noteholders from both Defendants. This breach of
contract action was especially difficult and uncertain, with no assurance that the
Action would survive BNYM or Wells Fargo’s attacks on the pleadings, motions
for summary judgment, trial and appeal. Class Counsel successfully navigated
through those considerable risks and obtained a favorable settlement for the Class
from both Defendants.
104. Class Counsel faced significant risk at the outset of the case. In its
motions to dismiss the Complaint, Wells Fargo and BNYM made strong
challenges to every aspect of Plaintiffs’ claims, particularly with regard to the
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allegations of causation, which is inherently difficult to establish in any breach of
contract action. Even after the Court sustained Plaintiffs’ claims, Wells Fargo and
BNYM asserted that the Plaintiffs had no standing to pursue their claims,
essentially making a third motion to dismiss. Finally, Wells Fargo filed a motion
for summary judgment on the merits, a motion for decertification, and numerous
pre-trial motions. Plaintiffs’ counsel overcame all of these challenges sufficiently
to prevail over Wells Fargo’s arguments and bring this case to the edge of trial.
105. Class Counsel also overcame substantial risks to class certification.
The potential denial of class certification posed an enormous risk because it would
have effectively denied relief to all members of the proposed class except for the
named plaintiffs. Here, Wells Fargo and BNYM opposed class certification on
multiple grounds, arguing, inter alia, that Class Counsel had not adequately
established that common issues predominated over individualized issues because
there were “hundreds, if not thousands” of breaches alleged and Class Members
purchased Notes issued by the SPCs at varying times.
106. Class Counsel also overcame other risks posed by this litigation,
including considerable risks posed by the receivership proceeding and the
Receiver’s contention that the Class lacked standing to sue Wells Fargo and
BNYM.
107. In sum, this highly complex case has been extensively litigated and
vigorously contested over an extended period of time. Despite the difficulty of the
issues raised, counsel secured an excellent result for the Class.
3. Skill Required
108. Class Counsel are experienced and skilled practitioners in the fields of
class actions and complex litigation. See Firm Résumés attached to Declarations
of Mark C. Molumphy, Jeff S. Westerman, David E. Azar, Wylie Aitken, Derek C.
Howard, and Michael D. Liberty, previously filed with the Court. Dkts. 597-602.
Case 8:10-ml-02145-DOC-RNB Document 625 Filed 06/24/13 Page 40 of 46 Page ID #:28944
37 JOINT DECLARATION OF JEFF S. WESTERMAN AND MARK C. MOLUMPHY
Lead Case No. SA 10-ML-02145-DOC (RNBx)
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109. As a result of their efforts, Class Counsel were able to plead detailed
allegations and defeat Wells Fargo’s and BNYM’s motions to dismiss, motions for
summary judgment, and a petition to the Ninth Circuit. Class Counsel also
demonstrated the quality of their work in successfully obtaining certification of the
Class and, ultimately negotiating Settlements with Wells Fargo and BNYM
totaling over $174 million on behalf of the Class.
110. The scope and quality of the work performed by Class Counsel are
also reflected in the substantial and difficult discovery conducted. By the time
discovery commenced in this Action, Medical Capital was already in receivership,
and Wells Fargo’s and BNYM’s work on the SPCs had ceased. Accordingly,
Class Counsel had to obtain and review business records from a business that no
longer existed and that had no employees to perform a search. While Class
Counsel served a subpoena on the Receiver, as he assumed Medical Capital’s
operations and was in possession of Medical Capital’s documents, the Receiver did
not assist Class Counsel’s efforts in identifying the relevant records and essentially
required Class Counsel to search, review and analyze years of business records on
its own, many kept only in hard copy form (and not electronically). Undaunted,
Class Counsel engaged in extensive negotiations with counsel for the Receiver to
obtain access to those documents, performed searches at the document warehouse,
and created an electronic database of documents so that key evidence could be
identified and reviewed. Class Counsel’s discovery efforts were also complicated
by Wells Fargo’s and BNYM’s discovery positions, including several motions to
stay discovery throughout the pendency of the case. Co-Lead Plaintiffs issued and
served subpoenas on more than 25 other non-parties, some of whom were non-
responsive and required extensive motion practice to obtain compliance. At the
time of the Settlement, Class Counsel had received and reviewed over 280,000
documents.
Case 8:10-ml-02145-DOC-RNB Document 625 Filed 06/24/13 Page 41 of 46 Page ID #:28945
38 JOINT DECLARATION OF JEFF S. WESTERMAN AND MARK C. MOLUMPHY
Lead Case No. SA 10-ML-02145-DOC (RNBx)
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111. Wells Fargo and BNYM were vigorously represented by two of the
country’s leading defense firms, Munger, Tolles & Olson and Gibson Dunn &
Crutcher. The ability of Class Counsel to obtain a favorable settlement for the
Class in the face of formidable legal opposition further reflects the high quality of
Class Counsel’s work.
4. Contingent Nature of Fee
112. Class Counsel undertook this Action on a contingent basis, assuming
a significant risk that the Action would yield no recovery and leave them
uncompensated. Unlike counsel for Wells Fargo and BNYM, who are paid an
hourly rate and paid for their expenses on a regular basis, Class Counsel have not
been compensated for any time or expense since this case began in 2009,
expending almost 39,500 hours equating to over $18.5 million in lodestar in
obtaining this result for the Class, knowing that if their efforts were not successful,
no fee would be paid.
113. The significant outlay of case and personnel resources by Class
Counsel has been completely at risk and wholly dependent upon a substantial
recovery for the Class in the face of highly skilled defense lawyers, representing a
client with virtually unlimited resources. Counsel are aware of many hard-fought
litigations where, after years of litigation, no recovery was made because of the
discovery of facts unknown when the case was commenced, changes in the law
during the pendency of the case, or a decision of a judge or jury following a trial
on the merits. See Fee and Expense Motion at Section III.B.4. In light of the
significant risks to establishing liability and damages that were present in this case,
as discussed above, and Class Counsel’s significant commitment of time and
resources despite these risks, the contingent nature of counsel’s representation
favors approval of the requested fee.
Case 8:10-ml-02145-DOC-RNB Document 625 Filed 06/24/13 Page 42 of 46 Page ID #:28946
39 JOINT DECLARATION OF JEFF S. WESTERMAN AND MARK C. MOLUMPHY
Lead Case No. SA 10-ML-02145-DOC (RNBx)
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5. Awards in Similar Cases
114. The Ninth Circuit has recognized that attorneys’ fees awarded under
the percentage method ordinarily range from 20% to 30% of the fund, and has
established 25% of the settlement amount as the appropriate benchmark for a fee
award. See Fee and Expense Motion at Section III.B.5. Class Counsel’s requested
20% fee here, which results in an overall fee for the case of 17.4%, is below the
benchmark for the Ninth Circuit. The requested 17.4% total fee is consistent with,
or lower than, other recent fee awards in the Ninth Circuit on comparable common
fund settlements. The Class Representatives support this request.
B. Class Counsel’s Lodestar Also Justifies the Fee
115. Although Class Counsel seek approval of a fee based on a percentage
of the Class recovery, their requested fees are also reasonable based on their
lodestar.
116. Courts in the Ninth Circuit have approved a multiplier of an attorneys’
lodestar in common fund cases, taking into account the risk of nonpayment. See
Fee and Expense Motion at Section III.C. Here, the total lodestar of Plaintiffs’
Counsel, derived by multiplying the hours worked by each firm’s attorneys and
support staff by their current hourly rates, equals $18,572,025.75. The requested
fee amount of 20% of the Wells Fargo Settlement, when combined with the prior
15% fee award requested from the BNYM Settlement, would result in a multiplier
of 1.63 of the total lodestar to date.
117. The hourly rates of Class Counsel that were used to generate the
lodestar are reasonable and appropriate. Reasonable hourly rates are determined
by reference to the prevailing market rates charged by attorneys of comparable
skill and experience in the community. Considering the relevant legal community
to be the national market for class action firms with the skill and resources to
undertake litigation of this magnitude is appropriate, and Defendants retained firms
of similar national scope, including the Los Angeles office of Munger, Tolles &
Case 8:10-ml-02145-DOC-RNB Document 625 Filed 06/24/13 Page 43 of 46 Page ID #:28947
40 JOINT DECLARATION OF JEFF S. WESTERMAN AND MARK C. MOLUMPHY
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Olson, and the New York and Los Angeles offices of Gibson Dunn & Crutcher.
118. In sum, the requested attorneys’ fees are well within the range of what
courts in this Circuit and throughout the country commonly award in complex
Class actions such as this one and the requested 20% fee here, resulting in an
actual 17.4% total, is reasonable and fair under both the percentage and lodestar
methodologies.
C. The Reaction of the Class Supports Approval
119. The Long Form Notice had been sent to over 9,000 Class members
and the Summary Notice was published in the Legal Section of USA Today. See
Gardella Decl. ¶¶ 5, 8. The Long Form Notice and Summary Notice were also
posted to the Class Action website. See id. ¶ 9. Class members were informed in
the Long Form Notice that Class Counsel were moving the Court for attorneys’
fees in an amount up to 20% of the Class Settlement Fund and for reimbursement
of their expenses up to $400,000. Class Members were also advised of their right
to object to the fee and expense request, and that such objections were required to
be filed with the Court and served on counsel no later than July 16, 2013.
120. As of the date of this brief, Co-Lead Counsel have received numerous
class member inquires, mentioned above, but only one objection to their fee and
expense request out of the 9,000 Class Members who received notice. The low
rate of objections from Class members weighs heavily in favor of Class Counsel’s
fee and expense request.
D. Expenses Are Reasonable and Were Necessarily Incurred
121. Class Counsel also request reimbursement of expenses they
reasonably incurred in connection with the prosecution of this Action. Class
Counsel have incurred expenses totaling $1,161,462.30. Plaintiffs previously
requested reimbursement of $1,083,331.34 from the BNYM settlement. In the
event that request is approved, Class Counsel only request reimbursement for their
Case 8:10-ml-02145-DOC-RNB Document 625 Filed 06/24/13 Page 44 of 46 Page ID #:28948
41 JOINT DECLARATION OF JEFF S. WESTERMAN AND MARK C. MOLUMPHY
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remaining outstanding costs of $78,130.96. These expenses are set forth in the
declarations of counsel filed herewith, along with a detailed accounting of
expenses. Attached hereto as Exhibit 3 is a summary of Class Counsel’s expenses
in this case from inception to June 15, 2013. In addition, Class Counsel request a
cost reserve in the amount of $300,000 to pay for notice and administration
expenses incurred but not yet billed by KCC, as well as expected future expenses.
122. Class Counsel’s incurred expenses include: (1) fees charged by
experts and consultants; (2) costs of legal and factual research; (3) costs for court
reporters, transcripts and videos; (4) costs for the mediation services provided in
this case; (5) filing and witness fees; (6) hotel and transportation charges; (7) costs
associated with photocopies, reproduction, printing and scanning of documents; (8)
postage and notice costs; (9) telephone and facsimile charges; (10) costs of
messengers and express services; and (11) costs of meals. These expenses were
reasonably incurred in light of the work performed, the legal and factual issues
presented, the vigorous defense mounted by Defendants, and the significant results
obtained.
123. Class Counsel are not seeking reimbursement for all of their incurred
expenses. Rather, the expenses for which Plaintiffs’ Counsel seek reimbursement
are the type routinely charged to hourly paying clients. For example, a large
portion of the litigation expenses related to work performed by Plaintiffs’ testifying
and consulting experts in the areas of indenture trust practice and damages.
124. Other significant expenses were incurred for legal research services,
such as LexisNexis and Westlaw, mediation expenses, and related travel expenses.
Plaintiffs also necessarily incurred expenses for the processing, uploading, and
hosting over 1.7 million pages of documents, many of which were later used in
pleadings, motions and expert reports.
Case 8:10-ml-02145-DOC-RNB Document 625 Filed 06/24/13 Page 45 of 46 Page ID #:28949
42 JOINT DECLARATION OF JEFF S. WESTERMAN AND MARK C. MOLUMPHY
Lead Case No. SA 10-ML-02145-DOC (RNBx)
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VII. CONCLUSION
125. Based on the foregoing, we respectfully request that the Court grant
final approval of (a) the Settlement of this Action; (b) the proposed Plan of
Allocation of settlement proceeds; and (c) Class Counsel’s motion for an award of
attorneys’ fees and reimbursement of expenses.
We declare under penalty of perjury under the laws of the United States that
the above is true and correct. Executed at Burlingame, California by Mr.
Molumphy and Los Angeles, California by Mr. Westerman.
Dated: June 24, 2013
/s/ Mark C. Molumphy /s/ Jeff S. Westerman
Mark C. Molumphy Jeff S. Westerman
Case 8:10-ml-02145-DOC-RNB Document 625 Filed 06/24/13 Page 46 of 46 Page ID #:28950
EXHIBIT 1
Case 8:10-ml-02145-DOC-RNB Document 625-1 Filed 06/24/13 Page 1 of 45 Page ID #:28951
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MARK C. MOLUMPHY (SBN 168009) mmolumphyj(cpmlegal. corn COTCHTTITRE & McCARTHY LLP San Francisco Airport Office Center 840 Malcolm Road, Suite 200 Burlingame, California 94010 Telephone: (650) 697-6000 Facsimile: (650) 697-0577
JEFF S. WESTERMAN (SBN 94559) jwesterman(i) j swlegal . corn
TMWESTERMAN LAW CORP. 1925 Century Park E. Ste. 2100 Los Angeles, CA 90067 Telephone: (310) 698-7450 Facsimile: (310) 201-9160
Co-Lead Counselfor Masonek Plaintiffs and the Class
LAWRENCE C. BARTH (SBN 123002) Lawrence.Barth(mto. corn MUNGER, TOLIES & OLSON, LLP 355 South Grand Avenue, Thirty-Fifth Floor Los Angeles, CA 90071-1560 Telephone: (213) 683-9100 Facsimile: (213) 687-3702
Attorneys for Defendant WELLS PARGO BANK, N.A.
[Additional counsel listed on signature page.]
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
SOUTHERN DIVISION
In re. MEDICAL CAPITAL SECURITIES LITIGATION
This document relates to:
NO. SACV 09-1048 DOC (RNB)
NO. SACV 10-00548 DOC (RNBx)
NO. SACV 10-6561 DOC (RNB)
CASE NO. SA l0-ML-2145 DOC (RNB)
STIPULATION OF SETTLEMENT BETWEEN NOTEHOLDER PLAINTIFFS AND WELLS FARGO BANK, N.A.
STIP OF SETTLEMENT BETWEEN NOTEHOLDER PLAINTIFFS AND WELLS FARGO BANK
Case 8:10-ml-02145-DOC-RNB Document 625-1 Filed 06/24/13 Page 2 of 45 Page ID #:28952
1 Wells Fargo Bank, N.A. ("Wells Fargo"), on the one hand, and plaintiffs in
2 the action captioned Masonek v. Wells Fargo Bank, N.A., Case No. SACV 09-1048
3 DOC (RNBx) (the "Masonek Plaintiffs"), plaintiffs in the action captioned Bain v.
4 Wells Fargo Bank, N.A., et al., Case No. SACV 10-00548 DOC (RNBx) (the "Bain
5 Plaintiffs"), and plaintiffs in the action captioned Abbate v. Wells Fargo Bank, N.A.,
6 Case No. SACV 10-6561 DOC (RNBx) (the "Abbate Plaintiffs" and, together with
7 the Masonek Plaintiffs and the Bain Plaintiffs, the "Plaintiffs"), on the other hand,
8 by and through their respective counsel, in consideration for and subject to the
9 promises, terms, and conditions contained in this Stipulation of Settlement, hereby
10 stipulate and agree, subject to Court approval pursuant to Rule 23 of the Federal
11 Rules of Civil Procedure, as follows. Wells Fargo, the Masonek Plaintiffs, the Bain
12 Plaintiffs, and the Abbate Plaintiffs are collectively referred to herein as the
13 "Parties" and individually as a "Party" to this Stipulation of Settlement.
14 I. RECITALS
15
1. Medical Provider Financial Corporation I ("MP I"), Medical Provider
16 Financial Corporation II ("MP II"), Medical Provider Financial Corporation III
17 ("MP III"), Medical Provider Financial Corporation IV ("MP IV"), Medical
18 Provider Funding Corporation V ("MP V"), and Medical Provider Funding
19 Corporation VI ("MP VI") (collectively, the "MedCap SPCs") are wholly owned
20 subsidiaries of Medical Capital Holdings, Inc. ("MCH"). Each MedCap SPC sold
21 promissory notes (the "Notes") to investors (the "Noteholders"). Medical Capital
22 Corporation ("MCC") served as the administrator for each of the MedCap SPCs.
23
2. Each of MP III and MP V entered into separate Note Issuance and
24 Security Agreements ("NISAs") with Wells Fargo pursuant to which Wells Fargo
25 agreed to serve as indenture trustee for the initial series of Notes sold by that entity.
26 MP III also entered into a supplemental NISA with Wells Fargo whereby Wells
27 Fargo agreed to serve as indenture trustee for a second series of MP III Notes.
28
1 STIP OF SETTLEMENT BETWEEN NOTEHOLDER PLAINTIFFS AND WELLS FARGO BANK
Case 8:10-ml-02145-DOC-RNB Document 625-1 Filed 06/24/13 Page 3 of 45 Page ID #:28953
1 Wells Fargo also served as the disbursing agent for MPI, MPh, MPIII, MPIV,
2 MPV and MPVI.
3
3. Each of MP I, MP II, MP IV and MP VI entered into separate NISAs
4 with The Bank of New York Mellon ("BNYM") pursuant to which BNYM agreed
5 to serve as indenture trustee for the initial series of Notes sold by those entities.
6 MP IV also entered into a supplemental NISA with BNYM whereby BNYM agreed
7 to serve as indenture trustee for a second series of MP IV Notes.
8
4. On or about July 16, 2009, the U.S. Securities and Exchange
9 Commission (the "SEC") brought a Complaint against MCH, MCC, MP VI, Sidney
10 M. Field, and Joseph J. Lampariello, in the United States District Court for the
11 Central District of California, in an action captioned Securities & Exchange
12 Commission v. Medical Capital Holdings, Inc., Case No. SACV 09-818 DOC
13 (RNBx) (the "SEC Action").
14
5. On or about August 18, 2009, the Court entered an order in the SEC
15 Action, appointing Thomas A. Seaman as permanent receiver (the "Receiver") for
16 MCH and its affiliates (the "Receivership Entities").
17
6. On or about September 11, 2009, seven individuals who are holders of
18 Notes issued by MP II, MP III, MP IV, MP V, and MP VI initiated a putative class
19 action lawsuit against Wells Fargo and BNYM in the United States District Court
20 for the Central District of California, in an action captioned Masonek v. Wells
21 Fargo Bank, N.A., Case No. SACV 09-1048 DOC (RNBx). Thereafter, four other
22 putative class action lawsuits were filed in the Central District of California based
23 on substantially the same allegations. Pursuant to an Order issued by the Court on
24 or about October 21, 2009, all of those actions were consolidated into the Masonek
25 v. Wells Fargo Bank, N.A. action (the "Masonek Action" or the "Class Action").
26 The operative complaint in the Masonek Action was filed on or about December
27
17, 2012.
28
2 STIP OF SETTLEMENT BETWEEN NOTEHOLDER PLAINTIFFS AND WELLS FARGO BANK
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1
7. On or about December 17, 2009, more than 100 individuals who
2 purported to be holders of Notes issued by MP II, MP III, MP IV, MP V, and MP
3 VI initiated a mass action lawsuit against Wells Fargo and BNYM in the United
4 States District Court for the Eastern District of California, in an action captioned
5 Bain v. Wells Fargo Bank, NA., Case No. SACV 09-2218 LJO-GSA (the "Bain
6 Action"). On or about April 16, 2010, the United States Judicial Panel on
7 Multidistrict Litigation issued an order transferring the Bain Action to the Central
8 District of California for coordinated pretrial proceedings with the Masonek Action
9 and other related actions. As used herein, "Bain Plaintiffs" refers to all individuals
10 named as plaintiffs in the operative complaint in the Bain Action, filed on or about
11
January 18, 2013.
12
8. On or about November 25, 2009, nearly 1,700 individuals who
13 purported to be holders of Notes issued by MP II, MP III, MP IV, MP V, and MP
14 VI initiated a mass action lawsuit against Wells Fargo and BNYM in the Circuit
15 Court of the 17th Judicial Circuit in and for Broward County, Florida, in an action
16 captioned Abbate v. Wells Fargo Bank, NA., Case No. 09-63927 (the "Abbate
17 Action"). On or about December 29, 2009, the Abbate Action was removed to the
18 United States District Court for the Southern District of Florida and, on or about
19 August 31, 2010, the action was transferred to the Central District of California, in
20 an action captioned Abbate v. Wells Fargo Bank, NA., Case No. SACV 10-6561
21 DOC (RNBx). As used herein, "Abbate Plaintiffs" refers to all individuals named
22 as plaintiffs in the operative complaint in the Abbate Action, filed on or about
23 January 28, 2013.
24
9. The Masonek Action, the Bain Action, and the Abbate Action are
25 collectively referred to herein as the "Noteholder Actions." Counsel for the
26 Plaintiffs in the Noteholder Actions are collectively referred to herein as "Plaintiffs'
27 Counsel."
28
3 STIP OF SETTLEMENT BETWEEN NOTEH OLDER PLAINTIFFS AND WELLS FARGO BANK
Case 8:10-ml-02145-DOC-RNB Document 625-1 Filed 06/24/13 Page 5 of 45 Page ID #:28955
1 io. On or about July 26, 2011, the Court issued an order certifying a class
2 of Noteholders in the Masonek Action. On or about December 8, 2011, the Court
3 approved the form of class notice and class notice plan in the Masonek Action.
4 Pursuant to the class notice plan, class notice was mailed to absent class members
5 on or about January 31, 2012. Class notice and related documents were also
6 published on the website www.medicalcapitalclass.com. Absent class members
7 were given 60 days to opt out of the class�a period that expired on or about March
8
30, 2012.
9 11. The Receiver petitioned the Court for leave to initiate actions against
10 Wells Fargo and BNYM for damages allegedly suffered by the MedCap SPCs. The
11 Court granted such leave on or about October 12, 2010. In or about December of
12 2010, the Receiver entered into tolling agreements with Wells Fargo and BNYM.
13
12. On or about June 7, 2012, the Receiver, Wells Fargo, and BNYM
14 entered into a Settlement Agreement and General Release (the "Receiver
15 Settlement Agreement"). The Receiver Settlement Agreement was conditional,
16 among other things, on the Court’s granting of (i) the Receiver’s motion to approve
17 the settlement (the "Receiver’s Approval Motion"), and (ii) Wells Fargo and
18 BNYM’s motions for summary judgment in each of the Noteholder Actions (the
19 "Summary Judgment Motions").
20
13. The Receiver’s Approval Motion and the Summary Judgment Motions
21 were filed on or about June 11, 2012. On or about June 11, 2012, the Plaintiffs in
22 the Noteholder Actions filed a motion for summary adjudication ("Plaintiffs’
23 Summary Adjudication Motion").
24
14. On or about June 7, 2012, the Receiver filed an action against BNYM
25 and Wells Fargo in the United States District Court for the Central District of
26 California, captioned Thomas A. Seaman v. Wells Fargo Bank, NA., et al., Case
27 No. SACV 12-00926 (CJC)(RNBx) (the "Receiver Action").
28
4 STIP OF SETTLEMENT BETWEEN NOTEHOLDER PLAINTIFFS AND WELLS FARGO BANK
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1
15. While the Receiver's Approval Motion, the Summary Judgment
2 Motions, and Plaintiffs' Summary Adjudication Motion were pending, the Plaintiffs
3 and BNYM undertook extensive arms-length negotiations over the course of many
4 months, and engaged in lengthy mediation sessions and discussions with a
5 respected mediator, Hon. John W. Kennedy, Jr. (Ret.) of JAMS. As a result of
6 those undertakings, BNYM reached an agreement with the Plaintiffs that is set for a
7 Final Approval Hearing on June 24, 2013.
8 16. On February 11, 2013, the Plaintiffs and Wells Fargo filed Cross
9 Motions for Partial Summary Judgment, and Wells Fargo also requested Summary
10 Judgment. The Court issued an order on April 2, 2013 in which it granted and
11
denied the motions in part. While the motions were pending, and after the ruling,
12 Plaintiffs and Wells Fargo conducted settlement discussions with the Hon. Layn R.
13 Philips (Ret.), a respected mediator who assisted the parties in reaching the
14 resolution documented here.
15
17. Plaintiffs' Counsel has carefully considered the highly complex legal
16 and factual issues inherent in litigation against Wells Fargo, and weighed the
17 strength of the Plaintiffs' claims against the substantial uncertainties, delays,
18 expense, and other risks inherent in such litigation. In light of those factors and
19 others, Plaintiffs' Counsel has concluded that it is desirable and in the best interests
20 of the Plaintiffs to settle at this time upon the terms set forth in this Stipulation of
21
Settlement. The Plaintiffs, after consulting with their counsel and advisors, have
22 determined that the terms and conditions of this Stipulation of Settlement are fair,
23 reasonable, and adequate.
24
18. Wells Fargo vigorously denies all allegations of wrongdoing, fault,
25
liability, or damage of any kind to the Plaintiffs, and vigorously denies that it acted
26 improperly in any way in performing its role as indenture trustee under the NISAs
27 or as disbursing agent for entities affiliated with MCH. Wells Fargo believes that
28 the Noteholder Actions and the Receiver Action are without merit. Nevertheless,
5 OF SETTLEMENT BETWEEN NOTEHOLDER PLAINTIFFS AND WELLS FARGO BANK
Case 8:10-ml-02145-DOC-RNB Document 625-1 Filed 06/24/13 Page 7 of 45 Page ID #:28957
1
Wells Fargo also has considered the risks and potential costs of litigation, on the
2 one hand, and the benefits of the proposed settlement, on the other hand, and
3 desires to settle now upon the terms and conditions set forth in this Stipulation of
4
Settlement.
5 19. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, the
6 settlement of the claims of the Masonek Plaintiffs and the Class Members is subject
7 to Court approval. The settlement of the claims of the Bain Plaintiffs and the
8 Abbate Plaintiffs, on the other hand, does not require Court approval under Rule 23.
9 Now therefore, it is hereby agreed, by and between the Parties, and subject to
10 the approval of the Court of the Settlement as it relates to the Class Action, upon
11 the terms and conditions enumerated below, that any and all actions, causes of
12 action, suits, debts, covenants, contracts, controversies, agreements, promises,
13 damages, judgments, executions, claims, and demands whatsoever relating to or
14 arising from Wells Fargo's performance under the NISAs and its role as disbursing
15 agent for entities affiliated with MCH will be fully and finally compromised,
16 settled, and released.
17 II. DEFINITIONS
18 In addition to the foregoing defined terms, for purposes of this Stipulation of
19 Settlement and all Exhibits hereto, the following terms shall have the meanings as
20 set forth below:
21 20. "Abbate Counsel" means the law firms of Greenspoon Marder P.A.
22 and Schwartz and Janzen, LLP, who have any and all authority and capacity
23 necessary to execute this Stipulation of Settlement and bind all of the Abbate
24 Plaintiffs as if each of those individuals had personally executed this Stipulation of
25
Settlement.
26 21. "Abbate Final Order and Judgment" means an order and judgment
27 dismissing the Abbate Action with prejudice, substantially in the form attached
28 hereto as Exhibit F.
6 STIP OF SETTLEMENT BETWEEN NOTEHOLDER PLAINTIFFS AND WELLS FARGO BANK
Case 8:10-ml-02145-DOC-RNB Document 625-1 Filed 06/24/13 Page 8 of 45 Page ID #:28958
1 22. "Bain Counsel" means the law firm of Perkins, Mann & Everett.
2 23. "Bain Final Order and Judgment" means an order and judgment
3 dismissing the Bain Action with prejudice, substantially in the form attached hereto
4 as Exhibit E.
5 24. "Class" means, as defined by the Court:
6 All persons and entities who purchased or otherwise acquired
7 notes issued by one or more of MP II, MP III, MP IV, MP V,
8 and MP VI and did not receive some or all of their principal or
9 interest payments. Excluded from the Class are: (i) Defendants
10 Wells Fargo and BNYM, and their subsidiaries, parents,
11 affiliates, and controlled persons or entities, as well as their
12 family members, employees and representatives; and (ii) MCH,
13 MCC, Medical Tracking Services, Inc., and MP II, MP III, MP
14 IV, MP V, and MP VI, and their subsidiaries, parents, affiliates,
15 and controlled persons or entities, including specifically all of
16 their past or present officers or directors (including Sidney M.
17 Field and Joseph J. Lampariello), as well as their family
18 members, employees and representatives.
19 25. "Class Action Final Order and Judgment" means an order and
20 judgment fully and finally approving the Settlement in the Class Action and
21 dismissing the Class Action with prejudice, substantially in the form attached
22 hereto as Exhibit D.
23 26. "Class Member(s)" means any member of the Class who did not elect
24 exclusion or opt out from the Class and who did not otherwise receive Court
25 approval for his or her untimely request to opt out or be excluded from the Class.
26 27. "Class Counsel" means, collectively, Co-Lead Class Counsel and
27 Class Counsel Executive Committee (defined below).
28
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1 28. "Class Counsel Executive Committee" means the law firms of Milberg
2 LLP, Minami Tamaki, Law Office of Michael D. Liberty, and
3 Aitken* Aitken* Cohn, or as ordered by the Court.
4 29. "Co-Lead Class Counsel" means the law firms of Cotchett, Pitre &
5 McCarthy LLP and Westerman Law Corp., or as ordered by the Court.
6 30. "Court" means the United States District Court for the Central District
7 of California.
8 31. "Defense Counsel" means the law firm of Munger, Tolles & Olson
9 LLP.
10 32. "Effective Date" means the date on which the Final Orders and
11 Judgments (defined below) in the Noteholder Actions become "Final." As used in
12 this Stipulation of Settlement, "Final" means after all of the following conditions
13 have been satisfied:
14 a. the Final Orders and Judgments have been entered;
15
b. (i) if reconsideration and/or appellate review is not sought from
16 any of the Final Orders and Judgments, the expiration of the time for the filing or
17 noticing of any motion for reconsideration, appeal, petition, and/or writ; or (ii) if
18 reconsideration and/or appellate review is sought from any of the Final Orders and
19 Judgments: (A) the date on which the Final Orders and Judgments are affirmed and
20 are no longer subject to judicial review, or (B) the date on which the motion for
21 reconsideration, appeal, petition, or writ is dismissed or denied and the Final Orders
22 and Judgments are no longer subject to judicial review; or (iii) in the event that the
23 Court enters an order and final judgment in a form other than that provided above
24 ("Alternative Judgment") and none of the Parties elect to terminate this Settlement,
25 the date that such Alternative Judgment becomes Final and no longer subject to
26 judicial review; and
27 C. execution and delivery by Wells Fargo and the Receiver (with
28 copies to the Parties) of all of the documents called for by Paragraph 59.
8 STIP OF SETTLEMENT BETWEEN NOTEHOLDER PLAINTIFFS AND WELLS FARGO BANK
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33. "Fairness Hearing" means the hearing that is to take place after the
entry of the Preliminary Approval Order and after the Notice Date for purposes of:
(a) entering the Class Action Final Order and Judgment and dismissing the Class
Action with prejudice; (b) determining whether the Settlement should be approved
as fair, reasonable, adequate and in the best interests of the Class; and (c) to rule
upon application(s) by Class Counsel for an award of attorneys' fees.
34. "Final Orders and Judgments" means, collectively, the Class Action
Final Order and Judgment, the Bain Final Order and Judgment, the Abbate Final
Order and Judgment, and, if the Court determines that California Code of Civil
Procedure Section 877.6, et seq, applies, the Good Faith Settlement Order; provided
however, that the terms of Paragraph 32(b) hereto shall not apply to the Good Faith
Settlement Order. For avoidance of doubt and by way of illustration only, in the
event that an appeal is taken from the Good Faith Settlement Order but no appeal
has been taken from any other order and judgment that comprises the Final Orders
and Judgments and the time for appeal of such other orders and judgments has
expired, then the pendency of the appeal from the Good Faith Settlement Order
shall not delay the Effective Date.
35. "Good Faith Settlement Motion" means the motion to be filed by
Wells Fargo in the SEC Action seeking a declaration of good faith settlement and a
"bar order" as set forth in Paragraph 89 of this Stipulation of Settlement.
36. "Good Faith Settlement Order" means the Order entered by the Court
granting the Good Faith Settlement Motion substantially in the form attached hereto
as Exhibit G.
37. "Litigation Managers" means any and all litigation managers of the
Abbate Action, including but not limited to: Waverton Group, LLC and its
members, managers, employees and agents; and Signature Advisors LLC and its
principal David Rentz.
9 STIP OF SETTLEMENT BETWEEN NOTEHOLDER PLAINTIFFS AND WELLS FARGO BANK
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1 38. "Long Form Notice" means the long form notice of settlement,
2 substantially in the form attached hereto as Exhibit B.
3 39. "Notice Date" means the date that the Long Form Notice and/or
4 Summary Notice is initially mailed or published (as appropriate).
5 40. "Medical Capital" means MCH and all of its subsidiaries and affiliates
6 including but not limited to MCC, the MedCap SPCs, and the Receivership
7
Entities.
8 41. "Preliminary Approval Order" means the Order Preliminarily
9 Approving Class Action Settlement, Approving Proposed Notice, and Scheduling
10 Fairness Hearing, substantially in the form attached hereto as Exhibit C.
11
42. "Released Claims" means all claims, rights, debts, demands, causes of
12 actions, suits, dues, sums of money, accounts, bonds, bills, covenants, contracts,
13 controversies, agreements, promises, judgments, variances, executions, obligations,
14 damages, losses, fees, costs, rights, matters, and issues, whether based on federal,
15 state, local, statutory, or common law, or any other law, rule, or regulation, or
16 whether based in equity, whether suspected or unsuspected, fixed or contingent,
17 accrued or un-accrued, liquidated or un-liquidated, matured or un-matured, class or
18 individual in nature, that have been, might have been, or could be asserted (or
19 threatened, alleged, or litigated) at law, in equity, or otherwise, at any time, in any
20 capacity, that were asserted or that could have been asserted in the Noteholder
21 Actions, the Receiver Action, or in any court of competent jurisdiction or other
22 tribunal or adjudicative body by anyone, which arise out of, touch upon, or relate in
23 any way whatsoever to Medical Capital, the NISAs, the Notes, or the
24 administration of the NISAs and all related agreements, from the beginning of time
25 through the date of entry of the Final Orders and Judgments.
26 43. "Released Parties" means (a) Wells Fargo's parent corporation,
27 subsidiaries, and affiliates, (b) all current and former directors, officers, and
28 employees of Wells Fargo and its parent corporation, subsidiaries, and affiliates,
10 STIP OF SETTLEMENT BETWEEN NOTEHOLDER PLAINTIFFS AND WELLS FARGO BANK
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but only in their capacity as such directors, officers, and employees, and (c) all
2 other agents and attorneys of Wells Fargo and its parent corporation, subsidiaries,
3 and affiliates, but only with respect to actions taken or omissions made by such
4 agents and attorneys on behalf of these entities in connection with Wells Fargo's
5 exercise of its rights and performance of its obligations under the NISAs, and as
6 disbursing agent for any and all entities affiliated with MCH. Released Parties do
7 not include (i) Mayer Hoffman McCann P.C., CBIZ, Inc., CBIZ MHM, LLC, CBIZ
8 Orange County, CBIZ San Diego or any of their past or present subsidiaries,
9 affiliates, parents, successors, and predecessors, (ii) the current or former directors,
10 officers, and employees of Mayer Hoffman McCann P.C. CBIZ, Inc., CBIZ MHM,
11 LLC, CBIZ Orange County, CBIZ San Diego or any of their past or present
12 subsidiaries, affiliates, parents, successors, and predecessors, or (iii) all other agents
13 and attorneys of Mayer Hoffman McCann P.C. CBIZ, Inc., CBIZ MHM, LLC,
14 CBIZ Orange County, CBIZ San Diego or any of their past or present subsidiaries,
15 affiliates, parents, successors, and predecessors.
16
44. "Settlement Fund" means the fund to be created by Plaintiffs' Counsel
17 for the purpose of maintaining the Settlement Payment, as set forth in Paragraph 53
18 of this Stipulation of Settlement.
19
45. "Settlement Payment" means the payment to be made by Wells Fargo
20 to the Settlement Fund, as set forth in Paragraph 54 of this Stipulation of
21
Settlement.
22 46. "Settlement" means the settlement evidenced by this Stipulation of
23
Settlement.
24 47. "Settlement Administrator" means the qualified third party selected by
25 the Masonek Plaintiffs and Wells Fargo, and approved by the Court in the
26 Preliminary Approval Order, to administer the Settlement, including providing
27 notice to Class Members. The Masonek Plaintiffs and Wells Fargo agree to
28
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1 recommend that the Court appoint Kurtzman Carson Consultants LLC as
2 Settlement Administrator.
3 48. "Summary Notice" means the summary notice of settlement,
4 substantially in the form attached hereto as Exhibit A.
5 49. "Supplemental Agreement" means the separate, confidential
6 agreement among the Parties, pursuant to Paragraph 61 of this Stipulation of
7 Settlement, which is intended to be incorporated into this Stipulation of Settlement.
8 The Parties intend that the Supplemental Agreement shall be specifically disclosed
9 to the Court and offered for in camera inspection by the Court at or before entry of
10 the Preliminary Approval Order.
11 III. SUBMISSION OF THE SETTLEMENT TO THE COURT FOR REVIEW
12 50. As soon as is practicable but no later than May 10, 2013, Class
13 14 Counsel shall apply to the Court for entry of the Preliminary Approval Order
15 (substantially in the form attached hereto as Exhibit C), for the purpose of, among
16 other things:
17 a. Approving the Summary Notice and the Long Form Notice,
18 substantially in the form attached hereto as Exhibits A and B, respectively;
b. Preliminarily approving the Settlement as to the Class as being 19 20 fair, reasonable, and adequate and in the best interests of the Noteholders, such that
21 the Long Form Notice and Summary Notice should be provided pursuant to this
22 Stipulation of Settlement;
C. Scheduling the Fairness Hearing not earlier than ninety (90) 23 24 days following the Notice Date to determine whether the Settlement should be
25 approved as to the Class as fair, reasonable, adequate and in the best interests of the
Plaintiffs and the Class Members, and to determine whether the Class Action Final 26 27 Order and Judgment should be entered dismissing the Class Action with prejudice;
28
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I
d. Preliminarily approving the form of the Class Action Final
2 Order and Judgment;
3 e. Directing that notice of the Settlement and of the Fairness
4 Hearing shall be given to the Class Members as follows:
5
i. by mailing, on or before the Notice Date as
6 specified in the Preliminary Approval Order, the Long Form
7 Notice substantially in the form attached hereto as Exhibit B, to
8 the last known addresses of the Class Members;
9
ii. by publishing, on or before the Notice Date as
10 specified in the Preliminary Approval Order, a copy of the
11 Summary Notice substantially in the form attached hereto as
12
Exhibit A, in the Legal Section of USA Today; and
13
iii. by providing a link in the Long Form Notice and
14 the Summary Notice to a website at the domain name
15 www.medicalcapitalclass.com that will contain the settlement
16
documents (including but not limited to the Long Form Notice),
17 a list of important dates, and any other information to which the
18
Parties may agree;
19
f. Providing that any objections by any Class Member to the
20 proposed Settlement contained in this Stipulation of Settlement, and/or the entry of
21 the Final Orders and Judgments, shall be heard and any papers submitted in support
22 of said objections shall be considered by the Court at the Fairness Hearing only if,
23 on or before the date(s) specified in the Long Form Notice, the Summary Notice,
24 and the Preliminary Approval Order, such objector files with the Court a notice of
25 the objector's intention to appear, and otherwise complies with the requirements in
26 Paragraphs 82 and 83 of this Stipulation of Settlement;
27
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1 g. Establishing dates by which the Parties shall file and serve all
2 papers in support of the application for final approval of the Settlement and/or in
3 response to any valid and timely objections;
4
h. Providing that all Class Members will be bound by the Class
5 Action Final Order and Judgment dismissing the Class Action with prejudice;
6
i. Pending the Fairness Hearing, staying all proceedings in the
7 Noteholder Actions relating to Wells Fargo or any of the Released Parties, other
8 than proceedings necessary to carry out or enforce the terms and conditions of this
9 Stipulation of Settlement and the Preliminary Approval Order; and
10
j. Pending the Fairness Hearing, enjoining the Plaintiffs and Class
11 Members, or any of them, from commencing or prosecuting, either directly or
12 indirectly, any action asserting any of the Released Claims against Wells Fargo or
13 any of the Released Parties.
14 51. Following the entry of the Preliminary Approval Order, the Long Form
15 Notice and the Summary Notice shall be given and published in the manner
16 directed and approved by the Court.
17
52. The Parties agree that the notice plan contemplated by this Stipulation
18 of Settlement is valid and effective, that it provides reasonable notice to the Class
19 Members, and that it represents the best practicable notice under the circumstances.
20 IV. THE SETTLEMENT PAYMENT, THE SETTLEMENT FUND, AND ITS DISTRIBUTION
21 53. A Settlement Fund shall be created by Plaintiffs’ Counsel by opening
22 an interest bearing escrow account with one of the following banks: Soci�t�
23 G�n�rale S.A., Deutsche Bank, ANZ Bank New Zealand Limited, BMO Harris
24 Bank, N.A., Bank of America, or RBS (and affiliates).
25 54. No later than ten (10) business days after entry of the Preliminary
26 27 Approval Order, Wells Fargo shall make the Settlement Payment to the Settlement
Fund in the amount of one-hundred and five million dollars ($105,000,000). 28
14 STIP OF SETTLEMENT BETWEEN NOTEHOLDER PLAINTIFFS AND WELLS FARGO BANK
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a. Upon deposit of the Settlement Payment into escrow, the
Settlement Payment and any income or interest earned thereon shall be the "Gross
Settlement Fund."
b. The Gross Settlement Fund will be divided in proportionate
shares as follows: 4% ($4,200,000 plus proportionate interest) to the Bain
Plaintiffs, 16.46% ($17,283,000 plus proportionate interest) to the Abbate
Plaintiffs, and 79.54% ($83,517,000 plus proportionate interest) to the Class. Wells
Fargo played no role in calculating, and expresses no view regarding these shares.
Wells Fargo shall have no responsibility or liability whatsoever for how the
Settlement Fund or the Gross Settlement Fund is allocated as among the Bain
Plaintiffs, the Abbate Plaintiffs, and the Class.
C. The Gross Settlement Fund, net of any Taxes (as defined below)
on the income thereof, shall be used to pay (i) costs of notice and administration
referred to in Paragraph 56 hereof to be subtracted directly and only from the share
allocable to the Class, (ii) the attorneys' fee and expense award referred to in
Paragraph 95a hereof and the service awards referred to in Paragraph 95b hereof,
both to be subtracted directly and only from the share allocable to the Class, and
(iii) the portions allocable to the Bain Plaintiffs and the Abbate Plaintiffs referred to
in Paragraph 54(b) hereof. The balance of the Gross Settlement Fund after the
above payments shall be the "Net Settlement Fund." The Net Settlement Fund shall
be distributed to the Class as provided in Paragraphs 71-81 hereof. Any sums
required to be held in escrow hereunder prior to the Effective Date shall be held for
the purposes of this Settlement by the Settlement Administrator or its designated
affiliate as the escrow agent(s). All funds required to be held in escrow hereunder
shall be deemed to be in the custody of the Court and shall remain subject to the
jurisdiction of the Court until such time as the funds shall be distributed or returned
to Wells Fargo pursuant to this Stipulation of Settlement and/or further order of the
Court. The escrow agent(s) shall invest any funds held in escrow in short-term
15 STIP OF SETTLEMENT BETWEEN NOTEHOLDER PLAINTIFFS AND WELLS FARGO BA
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I United States Agency or Treasury Securities (or a mutual fund invested solely in
2 such instruments), or in a fully US Government-insured or FDIC-insured account,
3 and shall collect and reinvest any and all interest accrued thereon. The Parties
4 agree that the Settlement Fund is intended to be a Qualified Settlement Fund within
5 the meaning of Treasury Regulation � 1.46813-1 and that the Settlement
6 Administrator or its designated affiliate, as administrator of the Settlement Fund
7 within the meaning of Treasury Regulation �1.46813-2(k)(3), shall be responsible
8 for filing tax returns for the Settlement Fund and paying from the Settlement Fund
9 any Taxes owed with respect to the Settlement Fund. The Parties agree that the
10 Settlement Fund shall be treated as a Qualified Settlement Fund from the earliest
11 date possible, and agree to any relation-back election required to treat the
12 Settlement Fund as a Qualified Settlement Fund from the earliest date possible.
13 Defense Counsel agree to provide promptly to the escrow agent(s) the statement
14 described in Treasury Regulation � 1.468B-3(e).
15 d. All (i) taxes on the income of the Gross Settlement Fund and (ii)
16 expenses and costs incurred in connection with the taxation of the Gross Settlement
17 Fund (including, without limitation, expenses of tax attorneys and accountants)
18 (collectively, "Taxes") shall be paid out of the Gross Settlement Fund, shall be
19 considered to be a cost of administration of the Settlement, and shall be timely paid
20 from the Settlement Fund without prior Order of the Court.
21 55. The Parties agree that the Settlement Payment is the full extent of
22 Wells Fargo’s payment obligation under this Stipulation of Settlement, and that the
23 Settlement Payment is an all-in settlement number, meaning that it includes all
24 attorneys’ fees, litigation expenses, notice and administration costs, taxes, and costs
25 of any kind incurred by the Plaintiffs or the Class Members in connection with the
26 resolution of this matter, if any.
27 56. Class Counsel may pay from the portion of the Settlement Fund
28 apportioned to the Masonek Plaintiffs and the Class Members, without further
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1 approval from Wells Fargo or further order of the Court, all notice and
2 administration costs actually and reasonably incurred. Such costs shall include,
3 without limitation, the actual costs of publication of the Summary Notice and
4 printing and mailing the Long Form Notice, the administrative expenses incurred
5 and fees charged by the Settlement Administrator in connection with providing
6 notice and processing any responses, and the fees, if any, of the escrow agent(s).
7 Before the Effective Date, Class Counsel shall not pay more than $75,000 from the
8 portion of the Settlement Fund apportioned to the Masonek Plaintiffs and the Class
9 Members for notice and administration expenses without the approval of Wells
10 Fargo, which shall not be unreasonably withheld.
11 57. After the Effective Date, Plaintiffs' Counsel may distribute the
12 Settlement Fund to the Plaintiffs and/or the Class Members.
13
14 a. Wells Fargo and Defense Counsel shall have no responsibility or
15
liability for the distribution of the Settlement Fund to the Plaintiffs or the Class
16 Members and shall not bear any cost or expense in connection with the distribution
17 of the Settlement Fund including but not limited to its allocation as between the
18 Masonek Plaintiffs and the Class, the Bain Plaintiffs, and the Abbate Plaintiffs.
19
b. The Masonek Plaintiffs, the Class Members, and their counsel
20 shall have no responsibility or liability for the distribution of the Settlement Fund to
21 the Bain Plaintiffs or the Abbate Plaintiffs or the Litigation Managers and shall not
22 bear any cost or expense in connection with the distribution of the Settlement Fund
23 to the Bain Plaintiffs or the Abbate Plaintiffs.
24 C. The Bain Plaintiffs and Bain Counsel shall have no
25 responsibility or liability for the distribution of the Settlement Fund to the Abbate
26 Plaintiffs, the Litigation Managers or the Class Members and shall not bear any cost
27 or expense in connection with the distribution of the Settlement Fund to the Abbate
28 Plaintiffs or the Class Members.
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d. The Abbate Plaintiffs, the Litigation Managers, and Abbate
Counsel shall have no responsibility or liability for the distribution of the
Settlement Fund to the Bain Plaintiffs or the Class Members and shall not bear any
cost or expense in connection with the distribution of the Settlement Fund to the
Bain Plaintiffs or the Class Members.
V. CONDITIONS OF THE SETTLEMENT RELATED TO THE RECEIVER 59. In addition to the conditions set forth in this Stipulation of Settlement,
the Settlement is conditional upon the following:
a. Release by the Receiver of Wells Fargo from all of Wells
Fargo's obligations under the Receiver Settlement Agreement;
b. Upon entry of the Final Orders and Judgments, release by the
Receiver of Wells Fargo and release by Wells Fargo of the Receiver and the
Receivership Entities in a form substantially similar to the releases in the Receiver
Settlement Agreement, and dismissal with prejudice of Wells Fargo from the
Receiver Action; and
C. Upon entry of the Final Orders and Judgments, Wells Fargo's
withdrawal of the Wells Fargo Claims, in the manner and as defined in the Receiver
Settlement Agreement.
VI. EFFECTIVE DATE OF SETTLEMENT, WAIVER OR TERMINATION 60. Wells Fargo and Plaintiffs shall each have the right to terminate the
Settlement and this Stipulation of Settlement by providing written notice of their
election to do so to all other Parties within thirty (30) days of: (a) the Court's
declining to enter the Preliminary Approval Order in any material respect; (b) the
Court's refusal to approve this Stipulation of Settlement or any material part of it;
(c) the Court's declining to enter the Final Orders and Judgments in any material
respect; (d) the date upon which the Final Orders and Judgments are modified or
reversed in any material respect by the Court of Appeals or the Supreme Court; or
18 STIP OF SETTLEMENT BETWEEN NOTEHOLDER PLAINTIFFS AND WELLS FARGO BANK
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1 (e) the date upon which an Alternative Judgment is modified or reversed in any
2 material respect by the Court of Appeals or the Supreme Court.
3
61. Class Members were previously notified of the pendency of the
4 Masonek Action as a class action and were given the opportunity to request
5 exclusion or remain in the Class. The proposed Preliminary Approval Order
6 annexed hereto as Exhibit C does not afford a new opportunity to request exclusion
7 to Class Members. In the event that the Court declines to enter the proposed
8 Preliminary Approval Order without affording a new opportunity to request
9 exclusion, then, in addition of any right of termination that may exist in accordance
10 with Paragraph 60 of this Stipulation of Settlement, Wells Fargo shall have the right
11 to terminate the Settlement pursuant to the terms of the Supplemental Agreement.
12 62. Except as otherwise provided herein, in the event the Settlement is
13 terminated, then the Parties shall be deemed to have reverted to their respective
14 positions in the Noteholder Actions as of the date of this Stipulation of Settlement
15 and, except as otherwise expressly provided, the Parties shall proceed in all respects
16 as if this Stipulation of Settlement and any related orders had not been entered, and
17 any portion of the Settlement Payment previously paid by or on behalf of Wells
18 Fargo, together with any interest earned thereon, less any Taxes due with respect to
19 such income, and less costs of administration and notice actually incurred and paid
20 or payable from the portion of the Settlement Fund apportioned to the Masonek
21 Plaintiffs and the Class Members (not to exceed $75,000 without the prior approval
22 of Wells Fargo or the Court), shall be returned to Wells Fargo. In the event the
23
Settlement is terminated, the Parties will cooperate in good faith to determine a
24 reasonable pre-trial and trial schedule.
25 VII. RELEASES
26
63. Upon the Effective Date, the Plaintiffs, the Class Members, Plaintiffs'
27 Counsel, and the Litigation Managers, on behalf of themselves and their successors
28 and assigns, shall be deemed to have fully, finally, and forever released,
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1 relinquished, and discharged Wells Fargo and the Released Parties from all of the
2 Released Claims. Notwithstanding the above, this release shall not extend to (a) the
3 obligations set forth in this Stipulation of Settlement; (b) the Receiver's accounts at
4 Wells Fargo, if any, relating to the Receivership Entities or any accounts held by
5 the Receiver; or (c) claims relating to accounts of any kind (including but not
6 limited to deposit, credit, and loan accounts) held at any time or that may hereafter
7 be opened by the Plaintiffs, the Class Members, Plaintiffs' Counsel, or the
8 Litigation Managers at Wells Fargo, its parent corporation, subsidiaries, or
9 affiliates, or at any of their predecessors or successors.
10 64. Upon the Effective Date, Wells Fargo, on behalf of itself, its parent
11 corporation, subsidiaries, and affiliates, and any of their successors and assigns,
12 shall be deemed to have fully, finally, and forever released, relinquished, and
13 discharged the Plaintiffs, the Class Members, Plaintiffs' Counsel, and the Litigation
14 Managers from all claims that arise out of or relate in any way to the institution,
15 prosecution, or settlement of the Noteholder Actions. Notwithstanding the above,
16 this release shall not extend to (a) the obligations set forth in this Stipulation of
17 Settlement; or (b) claims relating to accounts of any kind (including but not limited
18 to deposit, credit, and loan accounts) held at any time or that may hereafter be
19 opened by the Plaintiffs, the Class Members, Plaintiffs' Counsel, or the Litigation
20 Managers at Wells Fargo, its parent corporation, subsidiaries, or affiliates, or at any
21 of their predecessors or successors.
22
65. Each of the releases in Paragraphs 63 and 64 is intended to include
23 known and unknown claims arising out of, touching upon, or relating in any way to
24 Medical Capital, the NISAs, the Notes, or the administration of the NISAs and all
25 related agreements, and each of the releases in Paragraphs 63 and 64 is expressly
26 intended to cover and include all such injuries or damages, including all rights of
27 action thereunder. The Plaintiffs, the Class Members, Plaintiffs' Counsel, and the
28 Litigation Managers, on behalf of themselves and their successors and assigns,
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1 expressly, knowingly, and voluntarily waive the provisions of Section 1542 of the
2 California Civil Code, which provides as follows:
3 A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
4 WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
5 TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
6
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
7 OR HER MUST HAVE MATERIALLY AFFECTED HIS OR
8
HER SETTLEMENT WITH THE DEBTOR.
9
66. The Plaintiffs, the Class Members, Plaintiffs' Counsel, and the
10 Litigation Managers, on behalf of themselves and their successors and assigns,
11 expressly waive and relinquish any and all rights and benefits that they may have
12 under, or that may be conferred upon them by, the provisions of Section 1542 of the
13 California Civil Code, or any other law of any state or territory that is similar,
14 comparable, or equivalent to Section 1542, to the fullest extent that they may
15 lawfully waive such rights or benefits pertaining to the Released Claims. In
16 connection with such waiver and relinquishment, the Plaintiffs, the Class Members,
17 Plaintiffs' Counsel, and the Litigation Managers, on behalf of themselves and their
18 successors and assigns, hereby acknowledge that they are aware that they or their
19 attorneys may hereafter discover claims or facts in addition to or different from
20 those that they now know or believe to exist with respect to claims released in this
21 Section VII, but that it is their intention to hereby fully, finally, and forever settle
22 and release all of the claims known or unknown, suspected or unsuspected, that
23 they have against Wells Fargo and the Released Parties. The Plaintiffs and the
24 Class Members, on behalf of themselves and their successors and assigns, expressly
25 acknowledge that they have been advised by their attorney(s) of the contents and
26 effect of Section 1542, and with knowledge the Plaintiffs and the Class Members,
27 on behalf of themselves and their successors and assigns, hereby expressly waive
28 whatever benefits they may have had pursuant to such section.
21 STIP OF SETTLEMENT BETWEEN NOTEHOLDER PLAINTIFFS AND WELLS FARGO BANK
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67. Wells Fargo, on behalf of itself and its parent corporation, subsidiaries,
2 affiliates, and any of their successors and assigns, expressly waives and relinquishes
3 any and all rights and benefits that it may have under, or that may be conferred
4 upon it by, the provisions of Section 1542 of the California Civil Code, or any other
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law of any state or territory that is similar, comparable, or equivalent to Section
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1542, to the fullest extent that they may lawfully waive such rights or benefits
7 pertaining to the claims released in this Section VII. In connection with such
8 waiver and relinquishment, Wells Fargo, on behalf of itself and its parent
9 corporations, subsidiaries, affiliates, and any of their successors and assigns hereby
10 acknowledges that it is aware that it or its attorneys may hereafter discover claims
11 or facts in addition to or different from those that it now knows or believes to exist
12 with respect to claims released in this Section VII, but that it is its intention to
13 hereby fully, finally, and forever settle and release all of the claims known or
14 unknown, suspected or unsuspected.
15 68. As a condition to this Stipulation of Settlement, the Plaintiffs,
16 Plaintiffs' Counsel, and the Litigation Managers expressly represent and warrant
17 that they have not assigned, sold, conveyed, transferred, or otherwise disposed of
18 any rights, claims, or remedies being released by this Stipulation of Settlement, or
19 attempted to do so. As a condition to this Stipulation of Settlement, Wells Fargo
20 expressly represents and warrants that it has not assigned, sold, conveyed,
21 transferred, or otherwise disposed of any rights, claims, or remedies being released
22 by this Stipulation of Settlement, or attempted to do so.
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69. The Court shall retain jurisdiction over the Parties to this Stipulation of
24 Settlement with respect to the future performance of the terms of this Stipulation of
25 Settlement. In the event that any applications for relief are made, such applications
26 shall be made to the Court.
27 70. Upon the Effective Date: (a) the Stipulation of Settlement shall be the
28 exclusive remedy for any and all Released Claims of the Plaintiffs, the Litigation
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1 Managers, and the Class Members against Wells Fargo and/or any of the Released
2 Parties; and (b) the Plaintiffs, the Litigation Managers, and the Class Members shall
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be permanently barred and enjoined from initiating, asserting, or prosecuting
4 against Wells Fargo and/or any of the Released Parties in any federal or state court
5 or tribunal any and all Released Claims.
6 VIII. ADMINISTRATION OF THE SETTLEMENT
7 71. After the entry of the Preliminary Approval Order, Class Counsel shall
8 provide notice to the Class as provided in this Stipulation of Settlement and the
9 Preliminary Approval Order. Class Counsel shall make every effort to accomplish
10 the notice required to implement and obtain Court approval for this Settlement.
11 72. The Settlement Administrator shall administer the process of providing
12 notice, receiving and reviewing responses from the Class Members, calculating
13 distribution amounts for the Class Members pursuant to the Plan of Allocation, and
14 distributing the Settlement funds to the Class Members, subject to the jurisdiction
15 of the Court. Co-Lead Class Counsel shall be responsible for supervising the
16 administration of the Settlement and disbursement of the Net Settlement Fund
17 subject to Court approval. Co-Lead Class Counsel shall have the right, but not the
18 obligation, to waive what they deem to be formal or technical defects relating to
19 any distribution in the interests of achieving substantial justice.
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73. For purposes of determining the extent, if any, to which a Class
21 Member shall be entitled to a distribution from the Settlement Fund, the Settlement
22 Administrator shall determine each eligible Class Member's pro rata share of the
23 Net Settlement Fund based upon their Recognized Loss compared to the total
24 Recognized Losses of all eligible Class Members (as set forth in the Plan of
25 Allocation set forth in the Long Form Notice attached hereto as Exhibit B, or in
26 such other plan of allocation as the Court approves). The Net Settlement Fund
27 from this Settlement will be distributed pro rata to eligible Class Members
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I regardless of the MedCap SPC in which they invested and may be based on unpaid
2 principal or MIMO.
3 74. This is not a claims-made settlement. The entire Net Settlement Fund
4 shall be distributed to eligible Class Members. Wells Fargo shall not be entitled to
5 get back any of the settlement monies once the Settlement becomes Final. Wells
6 Fargo shall have no involvement in reviewing or challenging distributions. The
7 distribution information will be reported to the Receiver. The Receiver has decided
8 that he will reduce distributions on allowed claims for his own distribution purposes
9 in implementing the Amended Distribution Plan based upon amounts that Class
10 Members and Noteholders in the Bain and Abbate Actions receive from this
11 Settlement.
12 75. Class Members who do not have Recognized Losses under the Plan of
13 Allocation may be rejected for distribution. Prior to such rejection, the Settlement
14 Administrator shall communicate with the Class Member in writing at the last
15 known mailing address to give the Class Member the chance to contest such
16 determination. The Settlement Administrator, under supervision of Co-Lead Class
17 Counsel, shall provide notice of the decision to reject a distribution, setting forth
18 the reasons therefore, and give notice of the Class Member's right to a review by
19 the Court if the Class Member so desires and complies with the requirements stated
20 in the Plan of Allocation. Any Class Member who is rejected for distribution by the
21 Settlement Administrator remains bound by this Stipulation of Settlement and the
22 releases herein and has no right to contend that the Stipulation of Settlement or the
23 releases herein are ineffective as to him or her owing to a lack of consideration.
24 76. Co-Lead Class Counsel will apply to the Court, on notice to Defense
25 Counsel, for a Class Distribution Order: (a) approving the Settlement
26 Administrator's administrative determinations concerning the distributions to Class
27 Members; (b) approving payment of any fees and expenses not previously applied
28 for, including the fees and expenses of the Settlement Administrator; and (c) if the
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1 Effective Date has occurred, directing payment of the Net Settlement Fund to Class
2 Members.
3 77. Payment pursuant to the Class Distribution Order shall be final and
4 conclusive against all Class Members. No person or Class Member shall have any
5 claim against the Plaintiffs, Plaintiffs' Counsel, Co-Lead Class Counsel, the
6 Settlement Administrator or any other agent designated by Co-Lead Class Counsel,
7 Wells Fargo, or Defense Counsel, arising from distributions made substantially in
8 accordance with the Stipulation, the plan of allocation, or any order of the Court.
9 Plaintiffs and Wells Fargo, and their respective counsel, shall have no liability
10 whatsoever for the investment or distribution of the Settlement Fund or the Net
11 Settlement Fund, the plan of allocation, or the determination, administration,
12 calculation, or payment of any amount by the Settlement Administrator, the
13 payment or withholding of Taxes (including interest and penalties) owed by the
14 Settlement Fund, or any losses incurred in connection therewith.
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78. All proceedings with respect to the administration, processing and
16 determination of distributions to Class Members and the determination of all
17 controversies relating thereto, including disputed questions of law and fact with
18 respect to such distributions, shall be subject to the jurisdiction of the Court. All
19 Class Members and Parties to this Settlement expressly waive trial by jury (to the
20 extent any such right may exist) and any right of appeal or review with respect to
21 such determinations.
22 79. To the extent that any monies remain in the Net Settlement Fund after
23 the Settlement Administrator has caused distributions to be made to all Class
24 Members whether by reason of un-cashed distributions or otherwise, then, after the
25 Settlement Administrator has made reasonable and diligent efforts to have Class
26 Members cash their distributions, any balance remaining in the Net Settlement
27 Fund six (6) months after the initial distribution of such funds shall be re-
28 distributed to Class Members who have cashed their initial distributions and who
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would receive at least $100.00 from such re-distribution, after payment of any
unpaid costs or fees incurred in administering the Net Settlement Fund for such re-
distribution. Additional payments may occur thereafter if Co-Lead Class Counsel,
in consultation with the Settlement Administrator, determine that additional re-
distributions, after the deduction of any additional fees and expense that would be
incurred, would be cost-effective. At such time as it is determined that the re-
distribution of funds remaining is not cost-effective, the remaining balance shall be
contributed to a designated non-profit organization(s), to be recommended by Co-
Lead Class Counsel and approved by the Court.
80. The Parties specifically agree that Wells Fargo shall not be liable for
the costs, fees, and expenses of providing notice to the Class Members or
administering the Settlement. Any costs, fees, and expenses associated with
providing notice to the Class Members, administering the Settlement as to the
Class, or distributing the Settlement Fund to the Class shall be the responsibility of
Class Counsel. Class Counsel may apply to the Court for reimbursement of such
expenses as set forth in Section XV hereto. Any costs, fees, and expenses
associated with administering the Settlement or distributing the Settlement Fund as
to the Abbate Plaintiffs shall be the responsibility of Abbate Counsel, and any
costs, fees, and expenses associated with administering the Settlement or
distributing the Settlement Fund as to the Bain Plaintiffs shall be the responsibility
of Bain Counsel.
81. Wells Fargo and the Released Parties are not and will not be obligated
to compute, estimate, or pay any taxes on behalf of any Plaintiff, any Class
Member, Plaintiffs' Counsel, the Litigation Managers, or the Settlement
Administrator.
IX. OBJECTIONS BY CLASS MEMBERS, THE FAIRNESS HEARING, AND THE CLASS ACTION FINAL ORDER AND JUDGMENT
26 STIP OF SETTLEMENT BETWEEN NOTEHOLDER PLAINTIFFS AND WELLS FARGO BANK
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82. Any Class Member may object to the fairness, reasonableness, and/or
adequacy of the Settlement contained in this Stipulation of Settlement, the entry of
the Class Action Final Order and Judgment, and/or the amount of fees requested by
Class Counsel. Any Class Member who intends to object to the Settlement must
file with the Court a written objection and/or brief, and must serve a copy of the
written objection and/or brief by fax, U.S. mail or e-mail to Co-Lead Class Counsel
and Defense Counsel at the addresses set forth below, postmarked (or the
equivalent for fax or e-mail) no later than the date specified in the Preliminary
Approval Order. Objections must be served:
a. Upon Co-Lead Class Counsel at:
Mark C. Molumphy COTCHETT, PIT1E & McCARTHY LLP San Francisco Airport Office Center 840 Malcolm Road, Suite 200 Burlingame, California 94010 Telephone: (650) 697-6000 Facsimile: (650) 697-0577 E-mail: [email protected]
Jeff S. Westerman WESTERMAN LAW CORP. 1925 Century Park B. Ste. 2100 Los Angeles, CA 90067 Telephone: (310) 698-7450 Facsimile: (310) 201-9160 E-mail: jwestermanjswlegal.com
b. Upon Defense Counsel at:
Lawrence C. Barth MUNGER, TOLLES & OLSON, LLP 355 South Grand Avenue, Thirty-Fifth Floor Los Angeles, CA 90071-1560 Telephone: (213) 683-9100 Facsimile: (213) 687-3702 E-mail: [email protected]
83. Objecting Class Members must set forth their full name, current
address, and telephone number. Objecting Class Members must state in writing all
objections and the reasons for each objection, and state whether the objecting Class
Member intends to appear at the Fairness Hearing either with or without separate
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counsel. No objection by a Class Member shall be received or considered by the
Court at the Fairness Hearing, no Class Member shall be entitled to appear at the
Fairness hearing (whether individually or through separate counsel) or entitled to
object to the Settlement, and no written objections or briefs submitted by any Class
Member shall be received or considered by the Court at the Fairness Hearing,
unless written notice of the objecting Class Member 's objection and/or intention to
appear at the Fairness Hearing and copies of any written objections and/or briefs
shall have been filed with the Court and served on the Settlement Administrator,
Class Counsel, and Defense Counsel on or before the date specified in the
Preliminary Approval Order.
84. Class Members who fail to file and serve timely written objections in
the manner specified above and in the Preliminary Approval Order shall be deemed
to have waived all objections and shall be foreclosed from making any objection
(whether by appeal or otherwise) to the Settlement.
85. On the date set forth in the Preliminary Approval Order, a Fairness
Hearing shall be conducted to determine final approval of the Settlement.
86. Upon final approval of the Settlement by the Court at or after the
Fairness Hearing, the Masonek Plaintiffs and Wells Fargo shall present the Class
Action Final Order and Judgment, substantially in the form attached to this
Stipulation of Settlement as Exhibit D, to the Court for approval and entry. All
Class Members will be bound by the Class Action Final Order and Judgment.
X. THE BAIN FINAL ORDER AND JUDGMENT, AND THE ABBATE FINAL ORDER AND JUDGMENT 87. The Bain Plaintiffs and Wells Fargo shall jointly and timely move the
Court for entry of the Bain Final Order and Judgment, substantially in the form
attached to this Stipulation of Settlement as Exhibit E, to be heard at the Fairness
Hearing. The entry of the Bain Final Order and Judgment shall be conditioned
upon the approval and entry by the Court of the Class Action Final Order and
28 STH OF SETTLEMENT BETWEEN NOTEHOLDER PLAINTIFFS AND WELLS FARGO BANK
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I Judgment, substantially in the form attached to this Stipulation of Settlement as
2 Exhibit D. All Bain Plaintiffs will be bound by the Bain Final Order and Judgment.
3 88. The Abbate Plaintiffs and Wells Fargo shall jointly and timely move
4 the Court for entry of the Abbate Final Order and Judgment, substantially in the
5 form attached to this Stipulation of Settlement as Exhibit F, to be heard at the
6 Fairness Hearing. The entry of the Abbate Final Order and Judgment shall be
7 conditioned upon the approval and entry by the Court of the Class Action Final
8 Order and Judgment, substantially in the form attached to this Stipulation of
9 Settlement as Exhibit D. All Abbate Plaintiffs will be bound by the Abbate Final
10 Order and Judgment.
11 XI. GOOD FAITH SETTLEMENT MOTION
12 89. Wells Fargo shall timely file in the SEC Action the Good Faith
13 Settlement Motion, to be heard at the Fairness Hearing, seeking an order declaring
14 the Settlement to be a good faith settlement and seeking a "bar order" barring any
15 person or entity from seeking implied indemnity, equitable indemnity, or
16 contribution from Wells Fargo, to the extent any right exists. The Parties agree that
17 the Plaintiffs do not allege in the Noteholder Actions that Wells Fargo and BNYM
18 are joint tortfeasors claimed to be liable for the same tort or co-obligors on a
19 contract debt, and accordingly, Wells Fargo will not seek a bar of contribution
20 rights against BNYM, to the extent any exist. The Good Faith Settlement Motion
21 shall request that the Court enter the Good Faith Settlement Order in a form
22 substantially identical to Exhibit G hereto.
23 XII. WELLS FARGO DOCUMENTS FILED UNDER SEAL
24 90. Plaintiffs agree that they will not request to unseal those Wells Fargo
25 produced documents and deposition transcripts of Wells Fargo witnesses that are
26 currently filed under seal in the Noteholder Actions. If, for any reason, Plaintiffs
27 determine that they need to file a motion to unseal any such document, they will
28
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1 first meet and confer with Wells Fargo and provide Wells Fargo an opportunity to
2 file responsive documents.
3 XIII. NO ADMISSION OF LIABILITY; SETTLEMENT NOT EVIDENCE AGAINST PARTIES
4 91. The provisions contained in this Stipulation of Settlement are not and
5 6 shall not be deemed a presumption, concession or admission by Wells Fargo of any
default, liability, or wrongdoing as to any facts or claims alleged or asserted in the 7
Noteholder Actions or the Receiver Action, or in any actions or proceedings, nor 8 9 shall they be interpreted, construed, deemed, invoked, offered, or received in
10 evidence or otherwise used by any person in the Noteholder Actions or the Receiver
Action, or in any other action or proceeding, whether civil, criminal or 11 12 administrative. Wells Fargo does not admit that it or any of the Released Parties
13 has engaged in any wrongful activity or that any person has sustained any damage
14 by reason of any of the facts complained of in the Noteholder Actions or the
Receiver Action. 15
XIV. BEST EFFORTS 16
92. Class Counsel shall take all necessary actions to accomplish approval 17 18 of the Settlement and provision of notice to the Class.
93. The Parties and their counsel agree to cooperate fully with one another 19
and to use their best efforts to effectuate the Settlement, including without 20
21 limitation in seeking preliminary and final Court approval of the Stipulation of
Settlement and the Settlement embodied herein, seeking entry of the Final Orders 22
and Judgments, carrying out the terms of this Stipulation of Settlement, and 23 24 promptly agreeing upon and executing all such other documentation as may be
reasonably required to obtain final approval by the Court of the Settlement. In the 25 26 event that the Court fails to approve the Settlement or fails to issue the Final Orders
27 and Judgments, the Parties agree to use all reasonable efforts, consistent with this
28 Stipulation of Settlement, to cure any defect identified by the Court.
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1 94. Each Party will cooperate with each other Party in connection with
2 effectuating the Settlement. Any requests for cooperation shall be narrowly tailored
3 and reasonably necessary for the requesting Party to recommend the Settlement to
4 the Court, and/or to carry out its terms.
5 XV. ATTORNEYS' FEE AND EXPENSE AWARD AND SERVICE
6 AWARDS 7
8 a. Class Counsel may submit an application to the Court for an
9 award of attorneys' fees, costs, and expenses, to be paid only out of the portion of
10 the Settlement Fund apportioned to the Masonek Plaintiffs and the Class Members
11 and to be noticed to be heard at the same time as the Fairness Hearing. Such
12 amounts as are awarded by the Court shall be payable from the Settlement Fund to
13 Co-Lead Class Counsel immediately upon award, notwithstanding the existence of
14 timely filed objections thereto, or potential for appeal therefrom, or collateral attack
15 on the Settlement or any part thereof, subject to Co-Lead Class Counsel's
16 obligation to make appropriate refunds or repayments to the Settlement Fund, plus
17 accrued interest at the same net rate as is earned by the Settlement Fund, if and
18 when, as a result of any appeal and/or further proceedings on remand, or successful
19 collateral attack, the Settlement is terminated or the fee or cost award is reduced or
20 reversed. In the event the Settlement is terminated or the Final Orders and
21 Judgments are reversed such that by order of the Court or by the terms of this
22 Stipulation of Settlement the Settlement Fund including any award of attorneys'
23 fees and expenses to Class Counsel shall be returned to Wells Fargo, then Class
24 Counsel agree to be jointly and severally liable for the return of all of the attorney'
25 fees, costs, and expenses distributed from the Settlement Fund to Class Counsel,
26 and Class Counsel agree that Wells Fargo may seek orders from the Court in aid of
27 the return of the money, including but not limited to attachment orders and related
28 remedies under California law, including temporary protective orders. Co-Lead
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Class Counsel shall allocate the attorneys' fees amongst Class Counsel in a manner
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in which they in good faith believe reflects the contributions of such counsel to the
3 prosecution and settlement of the Masonek Action. Wells Fargo shall have no
4 responsibility or liability for the allocation of such fees amongst Class Counsel.
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b. Class Counsel and Class Representatives Steven Masonek,
6 Joann Hosking, Robert H. Ludlow, Michel Rapoport, Kathleen Darrow, John
7 Toungaian, and Peter Braunstein may submit an application to the Court for the
8 payment of service awards to each for the Class Representatives, to recognize their
9 efforts, time and expenses in connection with the prosecution of the Masonek
10 Action. Such amounts as are awarded by the Court shall be payable after the
11 Effective Date from the portion of the Settlement Fund apportioned to the Masonek
12 Plaintiffs and the Class Members.
13 96. The procedure for and the allowance or disallowance by the Court of
14 any application for attorneys' fees, costs, expenses, or reimbursement to be paid to
15 Class Counsel and application for service awards to be paid to the Class
16 Representatives are not part of the settlement of the Released Claims as set forth in
17 this Stipulation of Settlement, and are to be considered by the Court separately from
18 the Court's consideration of the fairness, reasonableness, and adequacy of the
19 settlement of the Released Claims as set forth in this Stipulation of Settlement.
20 Any such separate order, finding, ruling, holding, or proceeding relating to any such
21 applications for attorneys' fees and expenses and for service awards, or any
22 separate appeal from any separate order, finding, ruling, holding, or proceeding
23 relating to them or reversal or modification of them, shall not operate to terminate
24 or cancel this Stipulation of Settlement or otherwise affect or delay the finality of
25 the Final Orders and Judgments or the Settlement.
26 XVI. MISCELLANEOUS PROVISIONS
27 97. Wells Fargo warrants that, as to the payments made by or on behalf of
28 it, at the time of such payment that Wells Fargo made or caused to be made
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pursuant to Paragraph 54 above, it was not insolvent, nor did nor will the payment
required to be made by or on behalf of it render it insolvent, within the meaning of
and/or for the purposes of the United States Bankruptcy Code, including �� 101 and
547 thereof. This warranty is made by Wells Fargo and not by Defense Counsel.
98. If a case is commenced in respect of Wells Fargo (or any insurer
contributing funds to the Settlement Payment on behalf of Wells Fargo) under Title
11 of the United States Code (Bankruptcy), or a trustee, receiver, conservator, or
other fiduciary is appointed under any similar law, and in the event of the entry of a
final order of a court of competent jurisdiction determining the transfer of money to
the Settlement Fund or any portion thereof by or on behalf of Wells Fargo to be a
preference, voidable transfer, fraudulent transfer or similar transaction and any
portion thereof is required to be returned, and such amount is not promptly
deposited to the Settlement Fund by others, then, at the election of Plaintiffs’
Counsel, the Parties shall jointly move the Court to vacate and set aside the releases
given and judgments entered in favor of Wells Fargo pursuant to this Stipulation of
Settlement which releases and judgments shall be null and void, and the Parties
shall be restored to their respective positions in the Noteholder Actions as of the
date of this Stipulation of Settlement, and any cash amounts in the Settlement Fund
shall be returned as provided in Paragraph 62 above.
99. The Recitals are contractual in nature and form a material part of this
Stipulation of Settlement.
100. The Section headings in this Stipulation of Settlement are for reference
only and do not form part of this Stipulation of Settlement.
101. This Stipulation of Settlement and its accompanying Exhibits
constitute a single integrated contract setting forth the entire agreement and
understanding of the Parties. No promise, inducement, or agreement other than that
expressed herein has been made by any Party. The Parties represent, understand,
and expressly agree that this Stipulation of Settlement sets forth all of the
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agreements, covenants, and understandings of the Parties, superseding all other
prior and contemporaneous oral and written agreements, discussions, or promises,
if any. The Parties agree that no other agreements or covenants will be binding
upon the Parties unless set forth in a writing signed by the Parties or their
authorized representatives, and that each of the Parties is authorized to make the
representations and agreements herein set forth by or on behalf of each such Party.
Any and all previous agreements and understandings between or among the Parties
regarding the subject matter of this Stipulation of Settlement, whether written or
oral, are superseded by this Stipulation of Settlement.
102. The substantive laws of the State of California shall govern this
Stipulation of Settlement without regard to any choice of law analysis.
103. Any dispute arising out of or relating to this Stipulation of Settlement,
or arising out of or relating to the performance or any breach by the Parties
hereunder, or the interpretation hereof, shall be decided by the Hon. Layn Phillips
(Ret.), whose decision shall be final and binding. Each Party hereby waives any
right to a trial by jury on any such applications for relief.
104. This Stipulation of Settlement is freely and voluntarily executed by the
Parties and their legal representatives.
105. The Parties expressly acknowledge that no person has made any
promise, representation, or warranty whatsoever, express or implied, not contained
herein, concerning the subject matter hereof, to induce such Parties to execute this
Stipulation of Settlement, and further acknowledge that they are not executing this
Stipulation of Settlement in reliance upon any promise, representation, or warranty
not expressly contained herein.
106. The waiver by any Party of a breach of any term of this Stipulation of
Settlement shall not operate or be construed as a waiver of any subsequent breach
by any Party. The failure of a Party to insist upon strict adherence to any provision
34 STIP OF SETTLEMENT BETWEEN NOTEHOLDER PLAINTIFFS AND WELLS FARGO BANK
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1 of the Stipulation of Settlement shall not constitute a waiver or thereafter deprive
2 such Party of the right to insist upon strict adherence.
3
107. The Parties expressly represent and warrant that they have the
4 authority and capacity to execute this Stipulation of Settlement, to perform each of
5 the respective obligations required of the Parties, and to provide the releases set
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forth herein. The individual(s) executing this Stipulation of Settlement represent
7 that he/she is authorized to do so on behalf of the respective Party.
8
108. Plaintiffs' Counsel, Defense Counsel, and the Litigation Managers
9 expressly represent and warrant that they have the authority and capacity to execute
10 this Stipulation of Settlement. Specifically, Abbate Counsel expressly
11 acknowledge that they have the authority and capacity to execute this Stipulation of
12 Settlement on behalf of each and every individual who is a plaintiff in the Abbate
13 Action, and that the execution of this Stipulation of Settlement binds all of the
14 Abbate Plaintiffs as if each of those individuals had personally executed this
15 Stipulation of Settlement. The Litigation Managers expressly represent and warrant
16 that they have the authority and capacity to grant, and did grant, Abbate Counsel
17 with the authority and capacity necessary to execute this Stipulation of Settlement
18 and bind all of the Abbate Plaintiffs as if each of those individuals had personally
19 executed this Stipulation of Settlement. Bain Counsel expressly acknowledge that
20 they have the authority and capacity to execute this Stipulation of Settlement on
21
behalf of each and every individual who is a plaintiff in the Bain Action, and that
22 the execution of this Stipulation of Settlement binds all of the Bain Plaintiffs as if
23 each of those individuals had personally executed this Stipulation of Settlement.
24 Class Counsel expressly acknowledge that they have the authority and capacity to
25 execute this Stipulation of Settlement on behalf of each and every individual who is
26 a named plaintiff in the Masonek Action, and that the execution of this Stipulation
27 of Settlement binds all of the Masonek Plaintiffs as if each of those individuals had
28 personally executed this Stipulation of Settlement.
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109. This Stipulation of Settlement has been negotiated among and drafted
2 by the Parties. To the extent there is any uncertainty or ambiguity in this
3
Stipulation of Settlement, none of the Parties will be deemed to have caused any
4 such uncertainty or ambiguity. Accordingly, this Stipulation of Settlement shall not
S
be construed against the Party preparing it, but shall be construed as if all Parties
6 hereto, and each of them, jointly prepared it, and any uncertainty or ambiguity shall
7 not be interpreted against any one Party.
8
110. The Parties believe that this Stipulation of Settlement is a fair,
9 adequate, and reasonable settlement of the Noteholder Actions, and they have
10 arrived at this Settlement through arms-length negotiations, taking into account all
11 relevant factors, present and potential.
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111. This Stipulation of Settlement may be executed in counterparts, each
13 of which shall be deemed an original and all of which, when taken together, shall
14 constitute one and the same instrument. The date of execution shall be the latest
15 date on which any Party signs the Stipulation of Settlement.
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112. A facsimile, copy, or pdf signature on this Stipulation of Settlement
17 shall have the same force and effect as an original signature thereto. This
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Stipulation of Settlement, regardless of whether it has original, facsimile, copy, or
19 pdf signatures, shall be binding and enforceable upon the affixing of such
20 signatures by the Parties to this Stipulation of Settlement.
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36 STIP OF SETTLEMENT BETWEEN NOTEHOLDER PLAINTIFFS AND WELLS FARGO BANK
Case 8:10-ml-02145-DOC-RNB Document 625-1 Filed 06/24/13 Page 38 of 45 Page ID #:28988
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IN WITNESS WHEREOF, the Parties have caused this Stipulation of
Settlement to be executed, by their duly authorized attorneys or representatives, as
of Apri 5o 13.
WESTERMAN LAW CORP.
LIF JEFF S. WESTERMAN
JEFF S. WESTERMAN (94559) JORDANNA G. THIGPEN (232642) 1925 Century Park E. Ste. 2100 Los Angeles, CA 90067 Telephone: (310) 698-7450 Fax: (310)201-9160 Email: [email protected] [email protected]
Co-Lead Counsel for Masonek Plaintiffs and the Class
COTCHETT, PITRE & McCARTHY LLP
MARK C. MOLUMPHY
JOSEPH W. COTCHETT (36324) MARK C. MOLUMPHY (168009) 840 Malcolm Road, Suite 200 Burlingame, CA 94010 Telephone: (650) 697-6000 Fax: (650) 697-0577 Email: jcotchettcpmlegaI.com rnmolumphycpmlegal .com
Co-Lead Counsel for Masonek Plaintiffs and the Class
37 STIP OF SETTLEMENT BETWEEN NOTEHOLDER PLAINTIFFS AND WELLS FARGO BANK
Case 8:10-ml-02145-DOC-RNB Document 625-1 Filed 06/24/13 Page 39 of 45 Page ID #:28989
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IN WITNESS WHEREOF, the Parties have caused this Stipulation of
Settlement to be executed, by their duly authorized attorneys or representatives, as
of April, 2013.
WESTERMAN LAW CORP.
JEFF S. WESTERMAN
JEFF S. WESTERMAN (94559) JORDANNA G. THIGPEN (232642) 1925 Century Park E. Ste. 2100 Los Angeles, CA 90067 Telephone: (310) 698-7450 Fax: (310)201-9160 Email: jwestermanjswlegal.com jthigpenjswlegal.com
Co-Lead Counsel for Masonek Plaintiffs and the Class
& McCRTHY LLP
Iti)4$Ji!iI
JOSEPH W. COTCHEIKI' 116801
632 MARK C. MOLUMPHW 840 Malcolm Road, Suite )0 Burlingame, CA 94010 Telephone:A1 7-
50) 697-6000 Fax: (650) O577 Email: [email protected] mmolumphycpmlegal.com
Co-Lead Counsel for Masonek Plaintiffs and the Class
37 STIP OF SETTLEMENT BETWEEN NOTEHOLDER PLAINTIFFS AND WELLS FARGO BANK
Case 8:10-ml-02145-DOC-RNB Document 625-1 Filed 06/24/13 Page 40 of 45 Page ID #:28990
P
W. ESTEIN
RICHARD W.N JPSTEIN, ad itted pro hac vice FRANKLIN S. mittedpro hac vice 200 East l3roward Blvd., Suite 1500 Fort Lauderdale FL 33301 Telephone: (954) 491-1120 Fax: (954) 343-6958 Email; richard.epsteingmlaw.com frank1in.homergrnlaw.com Attorneys for Abbate Plaintiffs
WAVERTON GROUP, LLC (as to Paragraphs 1-19,37,54, 58a.-d, 59 63 64, 65, 66 9 6 9 70, 80, 81 9 88, 93 9 105 9 1O3!, 18 and 110 only)
RICHARD BLOCK, MANAGER
RICHARD BLOCK MANAGER Waverton Group, LJC 4101 East Louisiana Avenue, Suite 300 Denver, CO 80246 Telephone: (303) 781-9900 Fax: (303) 781-4311 Email: [email protected] Litigation Manage rsfor Abbate Plaintiffs
38 STIP OF SETTLEMENT BETWEEN NOTELIOLDER PLAINTIFFS AND WELLS FARGO BANK
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Case 8:10-ml-02145-DOC-RNB Document 625-1 Filed 06/24/13 Page 41 of 45 Page ID #:28991
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GREENSPOON MARDER P.A.
RICHARD W. EPSTEIN
RICHARD W. EPSTEIN, admitted pro hac vice FRANKLIN S. HOMER, admitted pro hac vice 200 East Broward Blvd., Suite 1500 Fort Lauderdale, FL 33301 Telephone: (954) 491-1120 Fax: (954) 343-6958 Email: richard.qpsteingm1aw.com frankhn.homergm1aw.com
Attorneys for Abbate Plaintiffs
WAVERTON GROUP, LLC (as to Para2raphs 1-19 37 54, 58a.-d., 59, 63 64, 65, 66, 6, 70, 80,'81,9889 93, 105, 107, 168 and 110 only)
RICHARD BLOCK, MANAGER
RICHARD BLOCK, MANAGER Waverton Group, LLC 4101 East Louisiana Avenue, Suite 300 Denver, CO 80246 Telephone: (303) 781-9900 Fax: (303) 781-4311 Email: [email protected]
Litigation Managers for Abbate Plaintiffs
38 STIP OF SETTLEMENT BETWEEN NOTEHOLDER PLAINTIFFS AND WELLS FARGO BANK
Case 8:10-ml-02145-DOC-RNB Document 625-1 Filed 06/24/13 Page 42 of 45 Page ID #:28992
SIGNATURE ADVISORS LIP (as to Paraoraphs 1-19 37, 54, 58a.-d., 59, 63, 64, 65, 6, 64. 70. 80, 81, 88, 93, lOS, 107, 108 and 119 Only)
DAVID RENTZ, Pipa1 2601 Airport Drive'Suite 290 Torrance, California 90505 Telephone: (3 10') 325-1409 Fax:(310) 626-6278 Email: sfg.rentzsbcgloba1.net
Litigation Manage rs for Abbate Plaintiffs
PERKINS, MANN & EVERETT
DOUGLAS V. THORNTON
DOUGLAS V. THORNTON (154956) 7815 N. Palm Avenue, Suite 200 Fresno, CA 93711 Telephone: (559 447-5700 Fax: (559) 447-5600 Email: [email protected]
A ttorneys for Bain Plain qffs
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39 STIP OF SETTLEMENT BETWEEN NOTEHO! DFR PLAINTIFFS AND WELLS FARGO BANK
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SIGNATURE ADVISORS LLP (as to Paragraphs 1-19, 379 54, 58a.-d., 59, 63 64, 65, 66, 68, 70, 80, 81, 88, 93, 105, 107, 168 and 110 only)
DAVID RENTZ
DAVID RENTZ, Principal 2601 Airport Drive Suite 290 Torrance, California 90505 Telephone: (310) 325-1409 Fax: (310) 626-6278 Email: sfg.rentzsbcglobal.net
Litigation Managers for Abbate Plaintiffs
PERKINS, MANN & EVERETT
'DOUGLAS V. THORNTON
DOUGLAS V. THORNTON (15495 6) 7815 N. Palm Avenue, Suite 200 Fresno, CA 93711 Telephone: (559) 447-5700 Fax: (559) 447-5600 Email: [email protected]
Attorneys for Bain Plaintiffs
39 STIP OF SETTLEMENT BETWEEN NOTEHOLDER PLAINTIFFS AND WELLS FARGO BANK
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Case 8:10-ml-02145-DOC-RNB Document 625-1 Filed 06/24/13 Page 44 of 45 Page ID #:28994
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MUNGER TOLLES & OLSON LLP
LAWRENCE C. BARTH
LAWRENCE C. BARTH (SBN 123002) Lawrence.Barth(mto.com MUNGER, TOrIES & OLSON, LLP 355 South Grand Avenue Thirty-Fifth Floor Los Angeles, CA 900714560 Telephone: (213) 683-9100 Facsimile: (213) 687-3702
Attorneys for WELLS FARGO BANKN.A.
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40 STIP OF SETTLEMENT BETWEEN NOTEHOLDER PLAINTIFFS AND WELLS FARGO BANK
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Mill* 0 1 WAIN DI
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 1 of 45 Page ID #:28996
LEGAL NOTICE
If YOU purchased or acquired notes issued by Medical Provider Financial Corporation II, III or IV, and/or Medical
Provider Funding Corporation V or VI, you could get a payment from a class action settlement.
This Notice is directed to persons and entities who purchased or acquired notes issued by one or more of the above-mentioned special purpose corporations owned by Medical Capital Holdings, Inc., also known as MP II, MP III, MP IV, MP V and/or MP VI. The United States District Court of the Central District of California has allowed or "certified" a class action lawsuit to move forward against Wells Fargo Bank, N.A. ("Wells Fargo") and The Bank of New York Mellon ("BNYM"). The class action is known as Masonek, et al. v. Wells Fargo Bank, N.A., et al., Case No. SA-CV-09-01048 DOC (RNBx), and is part of the group of lawsuits known as In re Medical Capital Securities Litigation, Lead Case No. SA- 1 0-ML-02145-DOC (RNBx). A proposed settlement has been reached between the Class and Wells Fargo, which will provide $83,517,000 to pay eligible Class Members. If you qualify, you may get benefits from the settlement or object to it.
The Court authorized this notice. Before any money is paid, the Court will have a hearing to decide whether to approve the settlement.
WHO'S INCLUDED?
As described in prior notices, you are a Class Member if you purchased or acquired notes issued by MP II, III, IV, V and/or VI and did not receive some or all of your principal or interest payments. Excluded from the Class are: (a) Wells Fargo and BNYM, and their subsidiaries, parents, affiliates, and controlled persons or entities, as well as their family members, employees and representatives; and (b) Medical Capital Holdings, Inc., Medical Capital Corporation, Medical Tracking Services, Inc., and MP II, MP III, MP IV, MP V, and MP VI, and their subsidiaries, parents, affiliates, and controlled persons or entities, including specifically all of their past or present officers or directors (including Sidney M. Field and Joseph J. Lampariello), as well as their family members, employees and representatives. You are also excluded if you previously decided to opt out of the Class.
If you are still not sure whether you are included in the Class, you can obtain more information, including a detailed notice, at www.medicalcapitalclass.com or by calling toll-free 1-877-287-0718.
WHAT'S THIS ABOUT?
This class action lawsuit alleges a breach of contract. Plaintiffs claim that Wells Fargo and BNYM, as hired trustees for Medical Capital, improperly disbursed millions of dollars in breach of their contractual duties to noteholders. Wells Fargo and BNYM deny any wrongdoing,
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 2 of 45 Page ID #:28997
and each denies that it breached any contractual duties it may have owed to the noteholders or that it caused any injury to the noteholders, including the members of the Class. The Masonek Plaintiffs, on behalf of themselves and the Class, with the assistance of Class Counsel, negotiated a proposed settlement of the Class action lawsuit with Wells Fargo. The settlement is part of a global settlement of all claims against Wells Fargo, including claims by the Class, the Receiver, and Plaintiffs in two related mass actions. Wells Fargo will pay a total of $105 million to settle all actions. The Class will receive $83,517,000 of this total amount paid by Wells Fargo ("Class Settlement Fund"), which will be used to pay eligible Class Members, after payment of any fees or expenses approved by the Court. The $83,517,000 is in addition to the $90,675,600 paid to the Class by BNYM in connection with the prior settlement, for a combined $174,192,600 for the Class in both settlements.
HOW DO YOU GET A PAYMENT?
Copies of the detailed notice, Stipulation of Settlement, and proposed plan of allocation, available at www.medicalcapitalclass.com, describe all of the details of the proposed settlement.
Class Counsel is proposing the same Plan of Allocation for this settlement with Wells Fargo that Class Counsel proposed for the settlement with BNYM. As proposed, your eligibility and share of the Class Settlement Fund will be based on the total principal you invested in notes issued by MP II, MP III, MP IV, MP V and/or MP VI, minus any principal returned and interest paid. This claim amount is referred to as your "Net Recognized Loss" and will equal the "Allowed" claim amount previously determined by the Receiver based on the Money-In/Money-Out ("MIMO") approach, and approved by the Court in the action brought by the SEC. As proposed, eligible Class Members will receive a pro rata payment from the Settlement based on their Net Recognized Loss, provided, however, that the amount of your Net Recognized Loss shall be reduced, dollar-for-dollar, by any amounts received by you, net of attorneys' fees, from any recovery from any broker litigation initiated by you or on your behalf. Any such set-off will be determined based on data received by the Receiver. All of the Settlement funds will be distributed.
WHAT ARE YOUR OPTIONS?
If you are a Class Member, you have to decide whether you want to take any action.
If you are in the Class, and the Wells Fargo settlement is approved, you will be legally bound by the Court's order and release of all claims against Wells Fargo relating to Medical Capital. You may object to the settlement by Month 00, 2013. The detailed notice describes how to object. The Court will hold a hearing in this case on Month 00, 2013 to consider whether to approve the settlement and a request by the lawyers representing the Class for up to 20% of the Class Settlement Fund as attorneys' fees and for up to $___________ in expenses, and possibly a request for up to $________ in total to the seven class representatives for their services as class representatives, to be paid from the Class Settlement Fund. You may ask to appear at the hearing, but you don't have to. The detailed notice, available at the website, explains how to object or give notice of your intent to appear. For more information, you can call toll-free 1-877-287-0718 or visit www.medicalcapitalclass.com.
PA
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 3 of 45 Page ID #:28998
1-877-287-0718 www.medicaIcapita1c1ass.com
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I a t iliu'
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 5 of 45 Page ID #:29000
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
If you purchased or acquired notes issued by one or more of the
following:
� Medical Provider Financial Corporation II ("MP II")
. Medical Provider Financial Corporation III ("MP III")
� Medical Provider Financial Corporation IV ("MP IV")
. Medical Provider Funding Corporation V ("MP V")
� Medical Provider Funding Corporation VI ("MP VI")
You could get a payment from a class action settlement.
A federal court authorized this notice. This is not a solicitation from
a lawyer
Individuals who purchased notes issued by one or more of the aforementioned special purpose corporations affiliated with Medical Capital Holdings, Inc. ("MCH") have sued Wells Fargo Bank, N.A. ("Wells Fargo") and The Bank of New York Mellon ("BNYM") alleging breach of contract. The United States District Court for the Central District of California has allowed the lawsuit to be treated as a class action on behalf of all noteholders who purchased or acquired notes issued by one or more of MP II, MP III, MP IV, MPV, orMPVI.
The Court-appointed Class Representatives, on behalf of themselves and the Court- certified Class (as defined below), have reached a proposed settlement of the class action lawsuit with Wells Fargo. The settlement is part of a global settlement of all claims
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 6 of 45 Page ID #:29001
against Wells Fargo, including claims by the Class, the Court-appointed Receiver, and plaintiffs in two related mass actions. The Class will receive $83,517,000 from Wells Fargo ("Class Settlement Fund"), which will be used to pay eligible Class Members. If approved, the settlement will resolve all claims in the Class Action against Wells Fargo. The Settlement with Wells Fargo is in addition to the prior settlement with BNYM. The settlement with BNYM is described in a Notice dated March 21, 2013 previously distributed to the Class. In addition, the Court-appointed lawyers for the Class will ask the Court for up to 20% of the Class Settlement Fund as attorneys' fees and up to $ expenses and may ask the Court for up to $________ in total to the seven class representatives for their services as class representatives, to be paid from the Class Settlement Fund. The fees would pay Class Counsel for investigating the facts, litigating the case, and negotiating the settlement with Wells Fargo.
If you are a Class Member, your legal rights are affected whether you act, or don't act. Read this notice carefully.
Your rights and options - and the deadlines to exercise them - are explained in this notice.
The Court in charge of this case still has to decide whether to approve the settlement. Payments will be made if the Court approves the settlement and after any appeals are resolved. Please be patient.
BASIC INFORMATION
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 7 of 45 Page ID #:29002
The Court sent you this notice because you may be a member of the class. If so, you have a right to know about a proposed settlement of the class action against Wells Fargo, and about all of your options, before the Court decides whether to approve the settlement. If the Court approves it and after any objections and appeals are resolved, an administrator appointed by the Court will make the payments that the settlement allows. You will be informed of the progress of the settlement.
This package explains the lawsuit, the settlement with Wells Fargo, your legal rights, what benefits are available, who is eligible for them, and how to get them.
Judge David 0. Carter of the United States District Court for the Central District of California is overseeing this class action, which is part of a group of lawsuits related to Medical Capital entities. The group of lawsuits is known as In re Medical Capital Securities Litigation, Lead Case No. SA-10-ML-02145-DOC (RNBx), and this class action is known as Masonek, et al. v. Wells Fargo Bank, N.A., et al., Case No. SA-CV-09-01048 DOC (RNBx).
This class action lawsuit alleges a breach of contract. There are two defendants: Wells Fargo and BNYM. Plaintiffs allege that Wells Fargo and BNYM, as hired trustees for MP II, MP III, MP IV, MP V, or MP VI, improperly disbursed millions of dollars in breach of their contractual duties to noteholders. Wells Fargo and BNYM deny any wrongdoing, and each denies that it breached any contractual duties it may have owed to the noteholders or that it caused any injury to the noteholders, including the members of the class. You can read the Plaintiffs' Fourth Amended Consolidated Class Action Complaint at www.medicalcapitalclass.com.
Right now, there are other lawsuits against Wells Fargo and BNYM pending in the United States District Court for the Central District of California relating to similar allegations as this case. Two actions, James L. Abbate, et al. v. Wells Fargo Bank, NA., et al., Case No. SA-CV-10-06561 DOC (RNBx) and Bain, et al. v. Wells Fargo Bank,
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 8 of 45 Page ID #:29003
N.A., et al., Case No. SA-CV-10-00548 DOC (RNBx), involve claims by individual noteholders who opted out of the class. These plaintiffs hired their own attorneys and are participating in the lawsuits in their individual capacity. Plaintiffs in the Abbate and Bain actions are not Class Members, and will not be paid from the Class Settlement Fund.
Lawsuits were also filed against certain of the brokers who sold the Medical Capital notes to individual investors. On August 4, 2011, a class of investors who bought their notes through Securities America and/or Ameriprise Financial settled their claims in the action known as McCoy v. Cullum & Burks Securities, Inc., Case No. SA-CV-09-01084 DOC (RNBx) ("McCoy"). Other investors are choosing to pursue individual claims against their brokers through arbitration or litigation. Your participation as a Class Member in this case does not prevent you from being a party to the cases against the brokers.
Finally, in August 2009, Judge Carter appointed Thomas Seaman as the permanent Receiver for Medical Capital Holdings in a securities fraud enforcement action brought by the Securities and Exchange Commission. SEC vs. Medical Capital Holdings, Inc.; Medical Capital Corporation; Medical Provider Funding Corporation VI; Sidney M Field; and Joseph J. Lampariello, Case No. SA CV09-08 18 DOC(RNBx). The Receiver has separately agreed to dismiss his respective claims on behalf of the Receivership Estate against Wells Fargo, and Wells Fargo has agreed to release its claims against the Estate, if the Court approves the Wells Fargo settlement.
In a class action lawsuit, one or more people called "Plaintiffs" or "Class Representatives" (in this case Steven Masonek, Joann Hosking, Robert H. Ludlow, Jr., on behalf of the Robert H. Ludlow, Jr. Revocable Trust 1999, Kathleen Darrow, Michel Rapoport, John Toungaian, and Peter Braunstein) sue on behalf of other people who have similar claims.
The people together are a "Class" or "Class Members." The companies the Plaintiffs sued (in this case Wells Fargo and BNYM) are called the Defendants. One court resolves the issues for everyone in the Class.
The Court previously decided that this lawsuit can proceed as a class action and move towards a trial because it meets the requirements of Federal Rule of Civil Procedure 23, which governs class actions in federal courts. You were sent a prior notice informing you of the Court's decision.
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 9 of 45 Page ID #:29004
More information about why the Court is allowing this lawsuit to be a class action is in the Court's Order Certifying the Class, which is available at www.medicalcapitalclass.com.
Plaintiffs and Wells Fargo agreed to a settlement. That way, they avoid the cost of trial, and the people affected will get compensation. The Class Representatives and the attorneys think the settlement is in the best interests of the Class.
WHO IS IN THE SETTLEMENT To see if you will get money from this settlement, you have to determine if you are a Class Member and if you are eligible to receive a portion of the Class Settlement Fund.
The Court previously decided that everyone who fits this description is a Class Member:
All persons and entities who purchased or otherwise acquired notes issued by one or more of Medical Provider Financial Corporation II, III, and IV and Medical Provider Funding Corporation V and VI and did not receive some or all of their principal or interest payments.
You are not a Class Member if you previously opted out of the Class. You are also not a Class Member if you are one of the Defendants, their subsidiaries, parents, affiliates, controlled persons or entities, as well as their family members, employees and representatives. Also excluded are Medical Capital Holdings, Inc., Medical Capital Corporation, Medical Tracking Services, Inc., and MP II, MP III, MP IV, MP V, and MP VI, and their subsidiaries, parents, affiliates, and controlled persons or entities, including specifically all of their past or present officers or directors (including Sidney M. Field and Joseph J. Lampariello), as well as their family members, employees, and representatives.
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 10 of 45 Page ID #:29005
If you are still not sure whether you are included in the Class, you can obtain free help at www.medicalcapitalclass.com or by calling or writing to the lawyers or administrator in this case, at the phone numbers or addresses listed below.
Wells Fargo has agreed to pay $105 million to resolve all claims of all plaintiffs in the Class, Bain and Abbate actions. Of this total amount, $83,517,000 will be paid to the Class, and will be divided among eligible Class Members, after payment of any fees and expenses awarded by the Court. This amount is referred to as the "Net Class Settlement Fund."
The $83,517,000 is in addition to the $90,675,600 paid to the Class by BNYM in connection with the prior settlement, for a combined $174,192,600 for the Class in both settlements.
Class Counsel is proposing the same Plan of Allocation for this settlement with Wells Fargo that Class Counsel proposed for the settlement with BNYM.
Your share of the Net Class Settlement Fund will depend on how much you invested in notes issued by MP II, MP III, MP IV, MP V, and MP VI, whether you received any principal or interest distributions, and whether you received funds from other sources related to your losses, such as from other suits against your brokers. Here's how it works:
Your claim will be based on the total principal invested in notes issued by MP II, MP III, MP IV, MP V, and MP VI, minus any funds paid to you, including principal returned and interest paid. This claim amount is referred to as your "Net Recognized Loss" and will equal the "Allowed" claim amount previously determined by the Receiver based on the MIMO approach, and approved by the Court in the SEC action.
Class Members will receive a pro rata payment from the Net Class Settlement Fund based on their Net Recognized Loss, provided, however, that to the extent such
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 11 of 45 Page ID #:29006
information is available from the Receiver, the amount of your Net Recognized Loss shall be reduced, dollar-for-dollar, by any amounts received by you, net of attorneys' fees, from any recovery from any broker litigation or arbitration initiated by you or on your behalf. Any such set-off will be determined based on data, if available, received by the Receiver from Class Members and counsel in the broker litigation described above and any other litigation or arbitration against brokers initiated by Class Members.
All of the Net Class Settlement Fund will be distributed. More information about the proposed plan of allocation is available at www.medicalcapitalclass.com.
110W YOU GET A PAYMENT - NO CLAIM FORM NECESSARY
You do not need to submit any claim form. If the settlement is approved and becomes final, eligible Class Members automatically will be mailed distributions from the Net Class Settlement Fund to the last addresses known to the Settlement Administrator. This notice is being mailed to that address. If this notice has been forwarded to you it is important that you notify the Settlement Administrator of the change of your address. Mail notices of your current address to:
In re Medical Capital Securities Litigation Address Changes do KCC Class Action Services, Settlement Administrator P.O. Box 6112 Novato, CA 94948-6112
The Court will hold a hearing on , 2013 to decide whether to approve the settlement. If the Court approves the settlement, and there are no appeals, the distribution will then occur. Please be patient.
If you are a Class Member, and the settlement with Wells Fargo is approved, you will release all "Released Claims" (as defined in the Stipulation of Settlement) against the "Released Parties" (as defined in the Stipulation of Settlement).
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 12 of 45 Page ID #:29007
"Released Claims" means all claims, rights, debts, demands, causes of actions, suits, dues, sums of money, accounts, bonds, bills, covenants, contracts, controversies, agreements, promises, judgments, variances, executions, obligations, damages, losses, fees, costs, rights, matters, and issues, whether based on federal, state, local, statutory, or common law, or any other law, rule, or regulation, or whether based in equity, whether suspected or unsuspected, fixed or contingent, accrued or un-accrued, liquidated or Un-liquidated, matured or un-matured, class or individual in nature, that have been, might have been, or could be asserted (or threatened, alleged, or litigated) at law, in equity, or otherwise, at any time, in any capacity, that were asserted or that could have been asserted in the Noteholder Actions, the Receiver Action, or in any court of competent jurisdiction or other tribunal or adjudicative body by anyone, which arise out of, touch upon, or relate in any way whatsoever to Medical Capital, the NISAs, the Notes, or the administration of the NISAs and all related agreements, from the beginning of time through the date of entry of the Final Orders and Judgments.
"Released Parties" means (a) Wells Fargo's parent corporation, subsidiaries, and affiliates, (b) all current and former directors, officers, and employees of Wells Fargo and its parent corporation, subsidiaries, and affiliates, but only in their capacity as such directors, officers, and employees, and (c) all other agents and attorneys of Wells Fargo and its parent corporation, subsidiaries, and affiliates, but only with respect to actions taken or omissions made by such agents and attorneys on behalf of these entities in connection with Wells Fargo's exercise of its rights and performance of its obligations under the NISAs, and as disbursing agent for any and all entities affiliated with MCH. Released Parties do not include (i) Mayer Hoffman McCann P.C., CBIZ, Inc., CBIZ MHM, LLC, CBIZ Orange County, CBIZ San Diego or any of their past or present subsidiaries, affiliates, parents, successors, and predecessors, (ii) the current or former directors, officers, and employees of Mayer Hoffman McCann P.C. CBIZ, Inc., CBIZ MHM, LLC, CBIZ Orange County, CBIZ San Diego or any of their past or present subsidiaries, affiliates, parents, successors, and predecessors, or (iii) all other agents and attorneys of Mayer Hoffman McCann P.C. CBIZ, Inc., CBIZ MHM, LLC, CBIZ Orange County, CBIZ San Diego or any of their past or present subsidiaries, affiliates, parents, successors, and predecessors.
NO FURTHER EXCLUSION FROM THE CLASS The Court previously certified this litigation to proceed as a class action on behalf
of all persons and entities who purchased or otherwise acquired notes issued by one or more of MP II, MP III, MP IV, MP V, and MP VI and did not receive some or all of their principal or interest payments. As described in the prior notice of pendency and the prior
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summary notice, Class Members were previously provided the opportunity, until March 12, 2012, to elect either to exclude themselves from the Class for all purposes or to remain as members of the Class and be bound by these proceedings. The settlement does not provide for any new right to be excluded from the Class with respect to the settlement with Wells Fargo. If the settlement is approved, it will be binding on all Class Members.
The persons and entities who previously requested exclusion from the Class are excluded from the Class for purposes of this settlement. Class Members who did not request exclusion in response to the notice of pendency may not now request exclusion from the Class.
THE LAWYERS REPRESENTING YOU
The Court previously decided that the attorneys at Cotchett, Pitre & McCarthy, LLP and Westerman Law Corp. are qualified to represent the Class. Cotchett, Pitre & McCarthy, LLP and Westerman Law Corp. are referred to as "Co-Lead Class Counsel." If you want to hire your own lawyer, you may do so at your own expense.
Class Counsel will ask the Court for up to 20% of the Class Settlement Fund as attorneys' fees and for up to $__________ in expenses, to be paid from the Class Settlement Fund. The fees would pay Class Counsel for investigating the facts, litigating the case, and negotiating a settlement with Wells Fargo. The Court may award less than these amounts.
In addition, to recognize their efforts, time, and expenses incurred on behalf of the Class in this lawsuit, Class Counsel may ask the Court to award the plaintiffs representing the Class service awards of up to $________ in total for their services as class representatives, to be paid from the Class Settlement Fund.
OBJECTING TO THE SETTLEMENT You can tell the Court that you disagree with the settlement or some part of it.
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If you're a Class Member, you can object to the settlement if you don't like any part of it, including the proposed plan of allocation or request for attorneys' fees and expenses and for service awards. You can give reasons why you think the Court should not approve it. The Court will consider your views. To object, you must send a letter saying that you object to the Wells Fargo settlement in the Masonek Class Action. Be sure to include your name, address, telephone number, signature, and the reasons you object to the settlement. Mail the objection to the Court (and send a copy by fax, U.S. mail, or e-mail to Class Counsel and Defense Counsel), postmarked (or the equivalent for fax or e-mail) no later than , 2013, at the addresses listed below:
CLASS COUNSEL
Mark C. Molumphy Cotchett, Pitre & McCarthy, LLP San Francisco Airport Office Center 840 Malcolm Road, Suite 200 Burlingame, CA 94010 Telephone: (650) 697-6000 Facsimile: (650) 697-0577 E-mail: mmolumphycpmlegal.com
Jeff S. Westerman Westerman Law Corp. 1925 Century Park East, Suite 2100 Los Angeles, CA 90067 Telephone: (310) 698-7450 Facsimile: (310) 201-9160 E-mail: [email protected]
COURT
Clerk of the Court United States District Court for the Central District of California Ronald Reagan Federal Building and United States Courthouse 411 West Fourth Street Santa Ana, CA 92701-45 16
DEFENSE COUNSEL
Lawrence C. Barth Munger, Tolles & Olson LLP 355 South Grand Avenue Thirty-Fifth Floor Los Angeles, CA 90071- 1560 Facsimile: (213) 683-4017 E-mail: [email protected]
THE COURT'S FAIRNESS HEARING
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The Court will hold a hearing to decide whether to approve the Wells Fargo settlement. You may attend and you may ask to speak, but you don't have to.
You can tell the Court that you disagree with the settlement or some part of it.
The Court will hold a Fairness Hearing at _:_____ _.m. on day, 2013, at the United States District Court for the Central District of
California, located at Ronald Reagan Federal Building and United States Courthouse, 411 West Fourth Street, Santa Ana, CA 92701-4516. At this hearing, the Court will consider whether the settlement is fair, reasonable, and adequate. If there are objections, the Court will consider them. Judge Carter will listen to people who have asked to speak at the hearing. The Court may also decide how much to pay Class Counsel. After the hearing, the Court will decide whether to approve the settlement. We do not know how long these decisions will take.
No. Class Counsel will answer questions the Court may have. But, you are welcome to come at your own expense. If you send an objection, you don't have to come to Court to talk about it. As long as you sent your written objection on time, the Court will consider it. You may also pay your own lawyer to attend, but it's not necessary.
You may ask the court for permission to speak at the Fairness Hearing. To do so, you must send a letter saying that it is your "Notice of Intention to Appear in the Masonek Class Action." Be sure to include your name, address, telephone number, and your signature. Your Notice of Intention to Appear must be postmarked no later than
2013, and be sent to the Clerk of the Court, Class Counsel, and Defense Counsel, at the addresses in Question 15 above. You cannot speak at the hearing if you are not a Class Member.
GETTING MORE INFORMATION
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This notice summarizes the proposed settlement with Wells Fargo. More details are in the Stipulation of Settlement. You can get a copy of the Stipulation of Settlement, and find answers to common questions about the settlement and the class action, by visiting www.medicalcapitalclass.com.
Date: ,2013
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EXHIBIT C
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MARK C. MOLUMPHY (SBN 168009) mmolumphy(2icpmlegal .com COTCHFTT?I1TRE & MCCARTHY, LLP San Francisco Airport Office Center 840 Malcolm Road, Suite 200 Burlingame, CA 94010 Telephone: (650) 697-6000 Facsimile: (650) 697-0577 JEFF S. WESTERMAN (SBN 94559) jwesterman(j swlegal.com WESTERMN LAW CORP. 1925 Century Park East, Suite 2100 Los Angeles, CA 90067 Telephone: (310) 698-7450 Facsimile: (310) 201-9160
Co-Lead Counsel for Masonek Plaintiffs and the Class
LAWRENCE C. BARTH (SBN 123002) Lawrence.Barth(mto.com MUNGER, TOLIES & OLSON LLP 355 South Grand Avenue, Thirty-Fifth Floor Los Angeles, CA 90071-1560 Telephone: (213) 683-9100 Facsimile: (213) 683-4017
Attorneys for Defendant WELLS FARGO BANK, N.A.
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
SOUTHERN DIVISION
In re: MEDICAL CAPITAL SECURITIES LITIGATION
This document relates to:
NO. SACV 09-1048 DOC (RNB)
NO. SACV 10-00548 DOC (RNBx)
NO. SACV 10-6561 DOC (RNB)
CASE NO. SA 10-ML-2145 DOC (RNB)
[PROPOSED]ORDER PRELIMINARILY APPROVING CLASS ACTION SETTLEMENT, APPROVING PROPOSED NOTICE, AND SCHEDULING FAIRNESS HEARING
IPROPOSEDI ORDER PRELIMINARILY APPROVING CLASS ACTION
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The Motion by the Plaintiffs in the case captioned Masonek v. Wells Fargo
Bank, N.A., Case No. SACY 09-1048 DOC (RNBx) (the "Class Action") for
Preliminary Approval of the Settlement with Wells Fargo Bank, N.A. ("Wells
Fargo") came on for hearing on 2013. Appearances were
entered on the record.
The Court, having reviewed and considered the Motion, hereby GRANTS the
Motion, and further finds and orders as follows:
1. The Noteholder Actions include: (1) the Class Action; (2) the case
captioned Bain v. Wells Fargo Bank, N.A., et al., Case No. SACV 10-00548 DOC
(RNBx) (the "Bain Action"); and (3) the case captioned Abbate v. Wells Fargo
Bank, NA., Case No. SACV 10-6561 DOC (RNBx) (the "Abbate Action"). The
plaintiffs in the Class Action are referred to herein as the "Masonek Plaintiffs"; the
plaintiffs in the Noteholder Actions are collectively referred to herein as the
"Plaintiffs."
2. The Plaintiffs in the Noteholder Actions, on the one hand, and Wells
Fargo, on the other hand, have agreed upon the terms and conditions of the
Settlement, as set forth in the Stipulation of Settlement, dated April , 2013,
which has been filed with the Court.
3. The definitions in the Stipulation of Settlement are hereby
incorporated as though fully set forth in this Order, and except where otherwise
noted, capitalized terms shall have the meanings attributed to them in the
Stipulation of Settlement.
4. The Court has carefully reviewed the Stipulation of Settlement, as well
as the files, records, and proceedings to date in the Noteholder Actions.
5. Because the Settlement meets the standards for preliminary approval,
the terms of the Settlement as set forth in the Stipulation of Settlement are
preliminarily approved as being fair, reasonable, and adequate.
1 [PROPOSED] ORDER PRELIMINARILY APPROVING CLASS ACTION
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6. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, the
settlement of the claims of the Masonek Plaintiffs and the Class Members is subject
to Court approval. The settlement of the claims of the Bain Plaintiffs and the
Abbate Plaintiffs, on the other hand, does not require Court approval under Rule 23.
However, pursuant to the Stipulation of Settlement, the entry of the Abbate Final
Order and Judgment and the Bain Final Order and Judgment (Exhibits F and E
respectively to the Stipulation of Settlement), and the consequent dismissal with
prejudice of the Abbate Action and the Bain Action, is conditioned upon the
Court’s approval and entry of the Class Action Final Order and Judgment (Exhibit
D to the Stipulation of Settlement). Accordingly, the findings of this Order are
limited to the Settlement as it applies to the Class Action, except that Paragraphs
15-16 and 29-31 below extend to all of the Noteholder Actions.
7. On or about July 26, 2011, this Court certified the Class. On or about
December 8, 2011, the Court approved the form of class notice and class notice
plan. Pursuant to the class notice plan, class notice was mailed to absent class
members on or about January 31, 2012 and a summary notice was published in the
Legal Section of USA Today. Class notice and related documents were also
published on the website www.medicalcapitalclass.com. Absent class members
were given 60 days to opt out of the class�a period that expired on or about March
30, 2012.
8. In light of the extensive notice program undertaken in connection with
class certification and the ample opportunity provided to Class Members to request
exclusion from the Class at that time, the Court is exercising its discretion in
accordance with Federal Rule of Civil Procedure 23(e)(4) and the circumstances of
this case to preclude Class Members from having a second opportunity to exclude
themselves from the Class in connection with the Settlement proceedings. The
previous class notice provided adequate information to Class Members about their
rights and the claims in the Class Action, and informed Class Members that they
2 [PROPOSED] ORDER PRELIMINARILY APPROVING CLASS ACTION
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would be bound by any judgments that the Court makes in this case if they did not
exclude themselves from the Class at that time.
9. The Masonek Plaintiffs have investigated the facts and law relating to
the matters alleged in their complaint, including extensive pretrial discovery,
pretrial motion practice, legal research as to the sufficiency of the claims, and an
evaluation of the risks associated with continued litigation, trial, and/or appeal(s).
10. The Settlement was reached in good faith and as a result of extensive
arm's length negotiations between counsel for Plaintiffs in the Noteholder Actions,
on the one hand, and counsel for Wells Fargo, on the other hand, occurring over
mediation sessions with the Honorable Layn R. Phillips (Ret.).
11. The Settlement confers substantial benefits upon the Plaintiffs and the
Class Members, particularly in light of the damages that the Masonek Plaintiffs and
Class Counsel believe are potentially recoverable or provable at trial, without the
costs, uncertainties, delays, and other risks and expenses associated with continued
litigation, trial, and/or appeal(s).
12. A Fairness Hearing shall be held before this Court at _:_____ .m.
on , 2013, to determine whether the Stipulation of Settlement
should be approved as fair, reasonable, and adequate, and to determine whether the
Class Action Final Order and Judgment (Exhibit D to the Stipulation of Settlement)
should be entered dismissing the Class Action with prejudice as against Wells
Fargo and the Released Parties. The Court will also consider Class Counsel's
application for an award of attorneys' fees, costs, and expenses (the "Fee
Application") at that time.
13. Papers in support of final approval of the Stipulation of Settlement and
approval of the Fee Application shall be filed with the Court according to the
schedule set forth in Paragraph 26 below. The Fairness Hearing may be postponed,
adjourned, or continued by order of the Court without further notice to the Class.
3 [PROPOSED] ORDER PRELIMINARILY APPROVING CLASS ACTION
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14. After the Fairness Hearing, the Court may enter the Class Action Final
Order and Judgment (Exhibit D to the Stipulation of Settlement) in accordance with
the Stipulation of Settlement.
15. Pending the Fairness Hearing, all proceedings in the Noteholder
Actions relating to Wells Fargo or any of the Released Parties, other than
proceedings necessary to carry out or enforce the terms and conditions of the
Stipulation of Settlement and this Order, are stayed.
16. Pending final determination of whether the Settlement should be
approved, no Plaintiff or Class Member in any of the Noteholder Actions shall
commence or continue, directly, derivatively, in a representative capacity, or in any
other capacity, any action against Wells Fargo or any of the Released Parties in any
court or tribunal asserting any of the Released Claims.
17. The Court approves, as to form and content, the Long Form Notice and
Summary Notice, attached as Exhibits B and A, respectively, to the Stipulation of
Settlement.
18. Kurtzman Carson Consultants LLC is hereby appointed as Settlement
Administrator for the Settlement and shall perform all of the duties of the
Settlement Administrator set forth in the Stipulation of Settlement.
19. Class Counsel shall provide notice of the Settlement and of the
Fairness Hearing to the Class Members as follows:
a. by mailing, on or before three (3) weeks/twenty-one (21) days
after the entry of this Order, the Long Form Notice substantially
in the form attached as Exhibit B to the Stipulation of Settlement
to the last known addresses of the Class Members;
b. publishing, not later than thirty (30) days after the entry of this
Order, a copy of the Summary Notice substantially in the form
attached as Exhibit A to the Stipulation of Settlement in the
Legal Section of USA Today; and
4 IPROPOSEDI ORDER PRELIMINARILY APPROVING CLASS ACTION
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c. providing a link in the Long Form Notice and the Summary
Notice to a website at the domain name
www.rnedicalcapitalclass.com that will contain the settlement
documents (including but not limited to the Long Form Notice),
a list of important dates, and any other information to which the
Parties may agree.
20. The Court finds that the Long Form Notice and the Summary Notice
are reasonable, and that they constitute due, adequate, and sufficient notice to all
persons entitled to receive notice, and that they meet the requirements of due
process and Rule 23 of the Federal Rules of Civil Procedure. The Court finds that
the manner of dissemination of the Long Form Notice and the Summary Notice
described in Paragraph 19 of this Order complies with Rule 23(d) of the Federal
Rules of Civil Procedure as it is a reasonable manner of providing notice to the
Class Members. The Court also finds that the manner of dissemination of the Long
Form Notice and the Summary Notice described in Paragraph 19 of this Order
complies with Rule 23(c)(2), as it is also the best practicable notice under the
circumstances, provides individual notice to all Class Members who can be
identified through a reasonable effort, and is reasonably calculated, under all the
circumstances, to apprise the Class Members of the terms of the Settlement, and
their right to object to the Settlement. At or before the Fairness Hearing, Co-Lead
Class Counsel shall file with the Court proof of dissemination of the Long Form
Notice and the Summary Notice. At or before the Fairness Hearing, Defense
Counsel shall file with the Court proof of compliance with the Class Action
Fairness Act of 2005, 28 U.S.C. � 1715.
21. Any Class Member may object to the Settlement contained in the
Stipulation of Settlement, the entry of the Class Action Final Order and Judgment,
and/or the amount of fees requested by Class Counsel in the Fee Application. Any
Class Member who intends to object to the Settlement must file with the Court a
5 IPROPOSEDI ORDER PRELIMINARILY APPROVING CLASS ACTION.
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written objection and/or brief no later than ten (10) weeks/seventy (70) days after
the entry of this Order, and must serve a copy of the written objection and/or brief
by fax, U.S. mail, or e-mail to Class Counsel and Defense Counsel at the addresses
set forth below postmarked (or the equivalent for fax or e-mail) no later than ten
(10) weeks/seventy (70) days after the entry of this Order. Objections must be
served:
Upon Class Counsel at:
Mark C. Molumphy COTCHETT, PITRE & McCARTHY, LLP San Francisco Airport Office Center 840 Malcolm Road, Suite 200 Burlingame, CA 94010 Facsimile: (650) 697-0577 E-mail: [email protected]
Jeff S. Westerman WESTERMAN LAW CORP. 1925 Century Park East, Suite 2100 Los Angeles, CA 90067 Facsimile: (310) 201-9160 E-mail: [email protected]
Upon Defense Counsel at:
Lawrence C. Barth MUNGER, TOLLES & OLSON LLP 355 South Grand Avenue Thirty-Fifth Floor Los Angeles, CA 90071-1560 Facsimile: (213) 683-4017 E-mail: [email protected]
22. Class Members who object must set forth their full name, current
address, telephone number, and signature. Objecting Class Members must state in
writing all objections and the reasons for each objection, and state whether the
objecting Class Member intends to appear at the Fairness Hearing either with or
6 IPROPOSEDI ORDER PRELIMINARILY APPROVING CLASS ACTION
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without separate counsel. No Class Member shall be received or considered by the
Court at the Fairness Hearing (whether individually or through separate counsel) or
entitled to object to the Settlement, and no written objections or briefs submitted by
any Class Member shall be received or considered by the Court at the Fairness
Hearing, unless written notice of the objecting Class Member's intention to appear
at the Fairness Hearing and copies of any written objections and/or briefs have been
filed with the Court and served on Class Counsel and Defense Counsel as set forth
in Paragraph 21 of this Order.
23. Class Members who fail to file and serve timely written objections in
the manner specified in Paragraph 21 of this Order shall be deemed to have waived
all objections and shall be foreclosed from making any objection (whether by
appeal or otherwise) to the Settlement.
24. Class Counsel shall file papers in support of final approval of the
Settlement and their Fee Application no later than seven (7) weeks/forty-nine (49)
days after the entry of this Order.
25. Papers in response to objections to the Settlement and/or the Fee
Application shall be filed with the Court no later than two (2) weeks/fourteen (14)
days before the Fairness Hearing.
26. In summary, the dates of performance are as follows:
a. The Long Form Notice required to be sent by mail to the Class
per the Stipulation of Settlement shall be sent no later than
three (3) weeks/twenty-one (21) days after the entry of this
Order;
b. The Summary Notice shall be published within thirty (30) days
after the entry of this Order;
c. All objections to the Settlement and written notices of the
objecting Class Member's intention to appear at the Fairness
- [PROPOSED] ORDER PRELIMINARILY / APPROVING CLASS ACTION
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Hearing shall be filed and served no later than ten (10)
2 weeks/seventy (70) days after the entry of this Order.
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d. Class Counsel shall file their papers in support of final approval
4 of the Settlement and their Fee Application no later than seven
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(7) weeks/forty-nine (49) days after the entry of this Order;
6 e. Papers in response to objections to the Stipulation of Settlement
7 and/or the Fee Application shall be filed with the Court no later
8 than two (2) weeks/fourteen (14) days before the Fairness
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Hearing; and
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f. The Fairness Hearing shall be held on , 2013
11 at :______ .m..
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27. These dates of performance may be extended by order of the Court, for
13 good cause shown, without further notice to the Class. Class Members should
14 check the settlement website at www.medicalcapitalclass.com regularly for updates
15 and further details regarding extensions of these dates of performance.
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28. Class Counsel and Defense Counsel are hereby authorized to use all
17 reasonable procedures in connection with approval and administration of the
18 Settlement that are not materially inconsistent with this Order or the Stipulation of
19 Settlement, including making, without further approval of the Court, minor changes
20 to the form or content of the Long Form Notice, Summary Notice, and other
21 exhibits that they jointly agree are reasonable or necessary.
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29. In the event the Stipulation of Settlement is not approved by the Court,
23 or for any reason the Parties fail to obtain the Final Orders and Judgments or any
24 conditions for settlement specified in the Stipulation of Settlement are not met, or
25 the Stipulation of Settlement is terminated pursuant to its terms for any reason or
26 the Effective Date does not occur for any reason, then the following shall apply:
27 a. All orders and findings entered in connection with the
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Stipulation of Settlement shall be vacated and shall become null
Q [PROPOSED] ORDER PRELIMINARILY APPROVING CLASS ACTION
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and void and shall have no force and effect whatsoever, shall not
be used or referred to for any purposes whatsoever, and shall not
be admissible or discoverable in this or any other proceeding;
b. The Noteholder Actions relating to Wells Fargo shall return to
the procedural status quo before entry of this Order as if no
settlement had been negotiated or entered into;
c. All of the Court's prior Orders shall, subject to this Order,
remain in force and effect; and
d. The Parties shall cooperate in good faith to determine a
reasonable pre-trial and trial schedule.
30. Nothing contained in this Order is, or may be construed as, a
presumption, concession or admission by or against Wells Fargo or the Plaintiffs of
any default, liability, or wrongdoing as to any facts or claims alleged or asserted in
the Noteholder Actions, or any actions or proceedings, whether civil, criminal, or
administrative. Nothing in this Order or pertaining to the Stipulation of Settlement,
including any of the documents or statements generated or received pursuant to the
claims administration process, shall be used as evidence in any further proceeding
in the Noteholder Actions.
31. The Court shall retain jurisdiction over the Noteholder Actions related
to Defendants, the Parties, and the administration, enforcement, and interpretation
of the Settlement. Any disputes or controversies arising with respect to the
Settlement shall be presented by motion to the Court.
IT IS SO ORDERED.
Dated: 2013
Honorable David 0. Carter United States District Judge
9 IPROPOSEDI ORDER PRELIMINARILY APPROVING CLASS ACTION
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MARK C. MOLUMPHY (SBN 168009) mmolurnphy(cpmlegal .com COTCHFTT?fl'RE & MCCARTHY, LLP San Francisco Airport Office Center 840 Malcolm Road, Suite 200 Burlingame, CA 94010 Telephone: (650) 697-6000 Facsimile: (650) 697-0577 JEFF S. WESTERMAN (SBN 94559) j westerman(j swlegal .com WESTERMN LAW CORP. 1925 Century Park East, Suite 2100 Los Angeles, CA 90067 Telephone: (310) 698-7450 Facsimile: (310) 201-9160
Co-Lead Counsel for Masonek Plaintiffs and the Class
LAWRENCE C. BARTH (SBN 123002) Lawrence .B arth(mto.com MUNGER, TOIXES & OLSON LLP 355 South Grand Avenue, Thirty-Fifth Floor Los Angeles, CA 90071-1560 Telephone: (213) 683-9100 Facsimile: (213) 683-4017
Attorneys for Defendant WELLS FARGO BANK, N.A.
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
SOUTHERN DIVISION
In re: MEDICAL CAPITAL SECURITIES LITIGATION
This document relates to:
NO. SACV 09-1048 DOC (RNB)
NO. SACV 10-00548 DOC (RNBx)
NO. SACV 10-6561 DOC (RNB)
IPROPOSEDI ORDER GRANTING FINAL APPROVAL TO CLASS ACTION SETTLEMENT; FINAL JUDGMENT
CASE NO. SA 10-ML-2 145 DOC (RNB)
[PROPOSED] ORDER GRANTING FINAL APPROVAL TO CLASS ACTION SETTLEMENT; FINAL JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 30 of 45 Page ID #:29025
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The Motion by the plaintiffs in the case captioned Masonek v. Wells Fargo
Bank, N.A., Case No. SACV 09-1048 DOC (RNBx) (the "Class Action") for final
approval of the Settlement with Wells Fargo Bank, N.A. ("Wells Fargo") and entry
of the Class Action Final Order and Judgment came on for hearing on
2013. Appearances were entered on the record.
The Court, having reviewed and considered the Motion, hereby GRANTS the
Motion, enters the Class Action Final Order and Judgment, and further finds and
orders as follows:
1. The Noteholder Actions include: (1) the Class Action; (2) the case
captioned Bain v. Wells Fargo Bank, N.A., et al., Case No. SACV 10-00548 DOC
(RNBx) (the "Bain Action"); and (3) the case captioned Abbate v. Wells Fargo
Bank, N.A., Case No. SACV 10-6561 DOC (RNBx) (the "Abbate Action"). The
plaintiffs in the Class Action are referred to herein as the "Masonek Plaintiffs"; the
plaintiffs in the Noteholder Actions are collectively referred to herein as the
"Plaintiffs."
2. The Plaintiffs in the Noteholder Actions, on the one hand, and Wells
Fargo, on the other hand, have agreed upon the terms and conditions of the
Settlement, as set forth in the Stipulation of Settlement, dated April , 2013, which
has been filed with the Court.
3. The Stipulation of Settlement, including all Exhibits thereto, is
expressly incorporated by reference into this Class Action Final Order and
Judgment and made a part hereof for all purposes. Except where otherwise noted,
all capitalized terms used in this Class Action Final Order and Judgment shall have
the meanings set forth in the Stipulation of Settlement.
4. On or about July 6, 2011, the Court certified a Class consisting of the
following Members:
All persons and entities who purchased or otherwise acquired notes issued by one or more of MP II, MP III, MP IV, MP V,
[PROPOSED] ORDER GRANTING FINAL 1 APPROVAL TO CLASS ACTION
SETTLEMENT; FINAL JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 31 of 45 Page ID #:29026
1 and MP VI and did not receive some or all of their principal or 2 interest payments. Excluded from the Class are: (i) Defendants
Wells Fargo and BNYM, and their subsidiaries, parents, 3 affiliates, and controlled persons or entities, as well as their 4 family members, employees and representatives; and (ii) MCH,
MCC, Medical Tracking Services, Inc., and MP II, MP III, MP 5 IV, MP V, and MP VI, and their subsidiaries, parents, affiliates, 6 and controlled persons or entities, including specifically all of
their past or present officers or directors (including Sidney M. 7 Field and Joseph J. Lampariello), as well as their family 8 members, employees and representatives.
9 5. On or about December 8, 2011, the Court approved the form of class
10 notice and class notice plan in the Class Action. Pursuant to the class notice plan,
11 class notice was mailed to absent class members on or about January 31, 2012 and a
12 summary notice was published in the Legal Section of USA Today. Class notice
13 and related documents were also published on the website
14 www.medicalcapitalclass.com. Absent class members were given 60 days to opt
15 out of the class�a period that expired on or about March 30, 2012.
16 6. Excluded from the Class are those persons and entities listed in
17 Schedule 1 who opted out of the class in response to the January 2012 class notice
18 plan.
19 7. By order dated -, 2013, this Court granted preliminary
20 approval of the Settlement with Wells Fargo.
21 8. In the Preliminary Approval Order, the Court approved the procedure
22 for giving notice of the Settlement to Class Members, and approved the forms of
23 notice, consistent with the requirements of Rule 23. Further, in light of the
24 extensive notice program undertaken in connection with class certification and the
25 ample opportunity provided to Class Members to request exclusion from the Class
26 at that time, the Court exercised its discretion in accordance with Rule 23 and
27 applicable law to preclude Class Members from having a second opportunity to
28 [PROPOSED] ORDER GRANTING FINAL
2 APPROVAL TO CLASS ACTION SETTLEMENT; FINAL JUDGMENT
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exclude themselves from the Class in connection with the Settlement proceedings.
The Court -approved notice program has occurred.
9. The Court held a duly noticed final Fairness Hearing on
2013 to consider: (1) whether the terms and conditions of the Settlement are
fair, reasonable, and adequate; (2) whether the Class Action Final Order and
Judgment should be entered dismissing the Masonek Plaintiffs' complaint with
prejudice; (3) whether and in what amount to award attorneys' fees and expenses to
Class Counsel; and (4) whether and in what amount to award service awards to
representatives of the class.
10. The Court has personal jurisdiction over Defendants, the Masonek
Plaintiffs, and all Class Members, and has subject-matter jurisdiction over the Class
Action, including, without limitation, jurisdiction to approve the proposed
Settlement, to settle and release all claims arising out of the transactions alleged in
the Masonek Plaintiffs' complaints, and to dismiss the Class Action on the merits
and with prejudice as against Wells Fargo.
11. The Court has determined that the proposed Settlement, as well as the
release of Wells Fargo and the Released Parties from the Released Claims, the
significant relief provided to the Plaintiffs and the Class Members as described in
the Stipulation of Settlement, the award of attorneys' fees and expenses requested,
and the service awards to representatives of the class are fair, reasonable, and
adequate.
12. The mail notice and publication notice in accordance with the terms of
the Stipulation of Settlement and this Court's Preliminary Approval Order:
a. constituted the best practicable notice to Class Members under
the circumstances;
b. were reasonably calculated, under the circumstances, to apprise
Class Members of their right to object to any aspect of the
proposed Settlement (including the fairness, reasonableness or IPROPOSEDI ORDER GRANTING FINAL
3 APPROVAL TO CLASS ACTION SETTLEMENT; FINAL JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 33 of 45 Page ID #:29028
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adequacy of the proposed Settlement and/or the award of
attorneys’ fees), (ii) their right to appear at the Fairness Hearing
(either on their own or through counsel hired at their own
expense), and (iii) the binding effect of the Class Action Final
Order and Judgment on all Class Members;
c. constituted reasonable, due, adequate, and sufficient notice to all
persons and entities entitled to be provided with notice; and
d. fully satisfied the requirements of the Federal Rules of Civil
Procedure, including Rule 23(c)(2) and (e) of the Federal Rules
of Civil Procedure, the Class Action Fairness Act of 2005, 28
U.S.C. � 1715, the United States Constitution (including the Due
Process Clause), the Rules of this Court, and any other
applicable law.
13. Class Counsel has filed with the Court proof of mailing of the Long
Form Notice and proof of publication of the Summary Notice. Wells Fargo’s
Counsel has filed with the Court proof of compliance with the Class Action
Fairness Act of 2005.
14. The terms and provisions of the Stipulation of Settlement, including all
Exhibits, have been entered into in good faith and are hereby fully and finally
approved as fair, reasonable, and adequate as to, and in the best interests of, the
Plaintiffs and the Class Members, and in full compliance with all applicable
requirements of the Federal Rules of Civil Procedure, the United States
Constitution (including the Due Process Clause), and any other applicable law. The
Court finds that the Stipulation of Settlement is fair, reasonable, and adequate based
on the following factors, among other things:
a. There is no fraud or collusion underlying the Settlement, and it
was reached after good faith, arms-length negotiations,
warranting a presumption in favor of approval. Officers for
[PROPOSED] ORDER GRANTING FINAL 4 APPROVAL TO CLASS ACTION
SETTLEMENT; FINAL JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 34 of 45 Page ID #:29029
1
Justice v. Civil Serv. Comm 'n, 688 F.2d 615, 625 (9th Cir.
2
1982).
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b. The complexity, expense, and likely duration of the litigation
4
favor settlement on behalf of the Class, which provides
5 meaningful benefits on a much shorter time frame than
6 otherwise possible. Based on the stage of the proceedings and
7 the amount of investigation and pre-trial discovery completed,
8 the Parties had developed a sufficient factual record to fully
9 evaluate their chances of success at trial and the proposed
10
Settlement.
11 c. The support of Class Counsel, who are highly skilled in class
12 action litigation such as this, and the Masonek Plaintiffs, who
13
have participated in this litigation and evaluated the proposed
14
Settlement, also favors final approval. See Boyd v. Bechtel
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Corp., 485 F. Supp. 610, 622 (N.D. Cal. 1979); Class Plaintiffs
16 v. City of Seattle, 955 F.2d 1268, 1291 (9th Cir. 1992).
17
d. The Settlement provides meaningful relief to the Class, and
18 certainly falls within the range of possible recoveries by the
19
Class.
20 The Masonek Plaintiffs and Wells Fargo are directed to consummate the Stipulation
21 of Settlement in accordance with its terms and conditions. The Court hereby
22 declares that the Stipulation of Settlement is binding on the Masonek Plaintiffs, all
23 Class Members, and Wells Fargo, and it is to be preclusive in all pending and future
24 lawsuits or other proceedings.
25
15. The Plan of Allocation is approved as fair and reasonable, and Class
26 Counsel and the Settlement Administrator are directed to administer the Settlement
27 in accordance with its terms and provisions.
28 IPROPOSEDI ORDER GRANTING FINAL
5 APPROVAL TO CLASS ACTION SETTLEMENT; FINAL JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 35 of 45 Page ID #:29030
16. The Court finds that the Parties and their counsel have complied with
each requirement of Rule 11 of the Federal Rules of Civil Procedure as to all
proceedings herein.
17. Pursuant to Rule 23(h) of the Federal Rules of Civil Procedure, the
Court hereby awards Class Counsel attorneys' fees in the amount of
$ . The attorneys' fees are based on the amount of time Class
Counsel reasonably expended working on the Class Action. The Court further
authorizes Class Counsel to be reimbursed for expenses reasonably incurred for the
benefit of the Class in the amount of$ . These amounts shall be
paid out of the portion of the Settlement Fund apportioned to the Masonek
Plaintiffs and the Class Members, and shall be allocated by Co-Lead Class Counsel
pursuant to the Stipulation of Settlement. In the event that any dispute arises
relating to the allocation of fees amongst Class Counsel and any other attorneys for
Plaintiffs, Class Counsel will hold Wells Fargo harmless from any and all such
liabilities, costs, and expenses of such dispute.
18. The Court hereby awards $________ to Steven Masonek, $______
to Joann Hosking, $________ to Robert H. Ludlow, $________ to Michel
Rapoport, $________ to Kathleen Darrow, $ to John Toungaian, and
$ to Peter Braunstein for their services as class representatives, which
sums the Court finds to be fair and reasonable, to be paid in accordance with the
terms of the Stipulation of Settlement.
19. In making this award of attorneys' fees and reimbursement of
expenses, the Court has considered and found that:
a. the settlement has created a fund apportioned to the Masonek
Plaintiffs and the Class Members of $83,517,000 in cash that is
already on deposit, plus interest thereon, and numerous Class.
Members will benefit from the Settlement created by Class
Counsel; IPROPOSEDI ORDER GRANTING FINAL
6 APPROVAL TO CLASS ACTION SETTLEMENT; FINAL JUDGMENT
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Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 36 of 45 Page ID #:29031
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b. Over copies of the Long Form Notice were
disseminated to putative Class Members indicating that Class
Counsel were moving for attorneys' fees in the amount of for up
to 20% of the Class Settlement Fund as attorneys' fees and for
up to $_____________ in expenses, to be paid from the Class
Settlement Fund, and objections were filed against the
terms of the proposed Settlement or the attorneys' fees and
expenses as requested by Class Counsel;
c. Class Counsel have conducted the litigation and achieved the
Settlement with skill, perseverance and diligent advocacy;
d. The action involves complex factual and legal issues and was
actively prosecuted over _ years and, in the absence of a
settlement, would involve further lengthy proceedings with
uncertain resolution of the complex factual and legal issues;
e. Had Class Counsel not achieved the Settlement there would
remain a significant risk that the Class may have recovered less
or nothing from Wells Fargo;
f. Class Counsel have devoted over hours from the
inception of this case, with a lodestar value of
to achieve the settlements with Wells Fargo
and with BNYM; and
g. The amount of attorneys' fees awarded and expenses reimbursed
from the portion of the Settlement Fund apportioned to the
Masonek Plaintiffs and the Class Members are fair and
reasonable and consistent with awards in similar cases.
20. The Class Action (Masonek v. Wells Fargo Bank, N.A., Case No.
SACV 09-1048 DOC (RNBx)) is hereby dismissed with prejudice and without
costs as against Wells Fargo and the Released Parties only. IPROPOSEDI ORDER GRANTING FINAL
7 APPROVAL TO CLASS ACTION SETTLEMENT; FINAL JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 37 of 45 Page ID #:29032
1
21. Upon the Effective Date, the Masonek Plaintiffs, the Class Members,
2 and Class Counsel, on behalf of themselves and their successors and assigns, shall
3 be deemed to have, and by operation of this Class Action Final Order and Judgment
4 shall have, fully, finally, and forever released, relinquished and discharged all
5 Released Claims against Wells Fargo and the Released Parties, as those terms are
6 defined below.
7 a. "Released Claims" means all claims, rights, debts, demands,
8 causes of actions, suits, dues, sums of money, accounts, bonds,
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bills, covenants, contracts, controversies, agreements, promises,
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judgments, variances, executions, obligations, damages, losses,
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fees, costs, rights, matters, and issues, whether based on federal,
12 state, local, statutory, or common law, or any other law, rule, or
13 regulation, or whether based in equity, whether suspected or
14 unsuspected, fixed or contingent, accrued or un-accrued,
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liquidated or un-liquidated, matured or un-matured, class or
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individual in nature, that have been, might have been, or could
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be asserted (or threatened, alleged, or litigated) at law, in equity,
18 or otherwise, at any time, in any capacity, that were asserted or
19 that could have been asserted in the Noteholder Actions, the
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Receiver Action, or in any court of competent jurisdiction or
21 other tribunal or adjudicative body by anyone, which arise out
22 of, touch upon, or relate in any way whatsoever to Medical
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Capital, the NISAs, the Notes, or the administration of the
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NISAs and all related agreements, from the beginning of time
25 through the date of entry of the Final Orders and Judgments.
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b. "Released Parties" means (a) Wells Fargo's parent corporation,
27 subsidiaries, and affiliates, (b) all current and former directors,
28 officers, and employees of Wells Fargo and its parent [PROPOSED] ORDER GRANTING FINAL
8 APPROVAL TO CLASS ACTION SETTLEMENT; FINAL JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 38 of 45 Page ID #:29033
I corporation, subsidiaries, and affiliates, but only in their
2 capacity as such directors, officers, and employees, and (c) all
3 other agents and attorneys of Wells Fargo and its parent
4 corporation, subsidiaries, and affiliates, but only with respect to
5 actions taken or omissions made by such agents and attorneys
6 on behalf of these entities in connection with Wells Fargo's
7 exercise of its rights and performance of its obligations under
8 the NISAs, and as disbursing agent for any and all entities
9 affiliated with MCH. Released Parties do not include (i) Mayer
10 Hoffman McCann P.C., CBIZ, Inc., CBIZ MHM, LLC, CBIZ
11 Orange County, CBIZ San Diego or any of their past or present
12 subsidiaries, affiliates, parents, successors, and predecessors, (ii)
13 the current or former directors, officers, and employees of
14 Mayer Hoffman McCann P.C. CBIZ, Inc., CBIZ MHM, LLC,
15 CBIZ Orange County, CBIZ San Diego or any of their past or
16 present subsidiaries, affiliates, parents, successors, and
17 predecessors, or (iii) all other agents and attorneys of Mayer
18 Hoffman McCann P.C. CBIZ, Inc., CBIZ MHM, LLC, CBIZ
19 Orange County, CBIZ San Diego or any of their past or present
20 subsidiaries, affiliates, parents, successors, and predecessors.
21 c. Notwithstanding the above, this release shall not extend to (1)
22 the obligations set forth in the Stipulation of Settlement; (2) the
23 Receiver's accounts at Wells Fargo, if any, relating to the
24 Receivership Entities or any accounts held by the Receiver; or
25 (3) claims relating to accounts of any kind (including but not
26 limited to deposit, credit, and loan accounts) held at any time or
27 that may hereafter be opened by the Masonek Plaintiffs, the
28 Class Members, or Class Counsel at Wells Fargo, its parent IPROPOSEDI ORDER GRANTING FINAL
9 APPROVAL TO CLASS ACTION SETTLEMENT; FINAL JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 39 of 45 Page ID #:29034
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corporation, subsidiaries, or affiliates, or at any of their
predecessors or successors.
22. Upon the Effective Date, Wells Fargo, on behalf of itself, its parent
corporation, subsidiaries, and affiliates, and any of their successors and assigns,
shall be deemed to have, and by operation of this Class Action Final Order and
Judgment shall have, fully, finally, and forever released, relinquished, and
discharged the Masonek Plaintiffs, the Class Members, and Class Counsel from all
claims that arise out of or relate in any way to the institution, prosecution, or
settlement of the Noteholder Actions. Notwithstanding the above, this release shall
not extend to the (1) the obligations set forth in the Stipulation of Settlement; or (2)
claims relating to accounts of any kind (including but not limited to deposit, credit,
and loan accounts) held at any time or that may hereafter be opened by the
Masonek Plaintiffs, the Class Members, or Class Counsel at Wells Fargo, its parent
corporation, subsidiaries, or affiliates, or at any of their predecessors or successors.
23. Each of the releases in Paragraphs 21 and 22 is intended to include
known and unknown claims arising out of, touching upon, or relating in any way to
Medical Capital, the NISAs, the Notes, or the administration of the NISAs and all
related agreements, and each of the releases in Paragraphs 21 and 22 is expressly
intended to cover and include all such injuries or damages, including all rights of
action thereunder. The Masonek Plaintiffs, the Class Members, and Class Counsel,
on behalf of themselves and their successors and assigns, expressly, knowingly, and
voluntarily waive the provisions of Section 1542 of the California Civil Code,
which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO I
I
� IPROPOSEDI ORDER GRANTING FINAL 10. APPROVAL TO CLASS ACTION
SETTLEMENT; FINAL JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 40 of 45 Page ID #:29035
1 The Masonek Plaintiffs, the Class Members, and Class Counsel, on behalf of
2 themselves and their successors and assigns, expressly waive and relinquish any
3 and all rights and benefits that they may have under, or that may be conferred upon
4 them by, the provisions of Section 1542 of the California Civil Code, or any other
5
law of any state or territory that is similar, comparable, or equivalent to Section
6 1542, to the fullest extent that they may lawfully waive such rights or benefits
7 pertaining to the Released Claims. Wells Fargo, on behalf of itself and its parent
8 corporation, subsidiaries, affiliates, and any of their successors and assigns,
9 expressly waives and relinquishes any and all rights and benefits that it may have
10 under, or that may be conferred upon it by, the provisions of Section 1542 of the
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California Civil Code, or any other law of any state or territory that is similar,
12 comparable, or equivalent to Section 1542, to the fullest extent that they may
13 lawfully waive such rights or benefits pertaining to the claims released in Paragraph
14 21 of this Class Action Final Order and Judgment.
15 24. Upon the Effective Date, the Stipulation of Settlement shall be the
16 exclusive remedy for any and all Released Claims of the Masonek Plaintiffs and/or
17 the Class Members. The Court thus hereby permanently bars and enjoins the
18 Masonek Plaintiffs, all Class Members, all of their successors and assigns, and all
19 persons acting on behalf of or in concert or participation with the Masonek
20 Plaintiffs or Class Members or their successors and assigns from: (a) filing,
21 commencing, asserting, prosecuting, maintaining, pursuing, continuing, intervening
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in, or participating in, or receiving any benefits from, any lawsuit, arbitration, or
23 administrative, regulatory or other proceeding or order in any jurisdiction based
24 upon or asserting any of the Released Claims against Wells Fargo or any of the
25 Released Parties; or (b) bringing a class action on behalf of the Masonek Plaintiffs
26 or Class Members, seeking to certify a class that includes the Masonek Plaintiffs or
27 Class Members, or continuing to prosecute or participate in any previously filed
28 and/or certified class action in any lawsuit based upon, asserting, touching upon, or [PROPOSED ORDER GRANTING FINAL
11 APPROVAL TO CLASS ACTION SETTLEMENT; FINAL JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 41 of 45 Page ID #:29036
1 relating in any way to any of the Released Claims against Wells Fargo or any of the
2 Released Parties.
3
25. Neither the Stipulation of Settlement, nor any of its terms and
4 provisions, nor any of the negotiations or proceedings connected with it, nor any of
5 the documents or statements referred to therein, nor any of the documents or
6 statements generated or received pursuant to the claims administration process,
7 shall be:
8 a. offered by any person or received against Wells Fargo or the
9
Released Parties as evidence or construed as or deemed to be
10 evidence of any presumption, concession, or admission by Wells
11 Fargo or the Released Parties of the truth of the facts alleged by
12 the Plaintiffs or any Class Member or the validity of any claim
13 that has been or could have been asserted in the Class Action or
14
in any litigation, or other judicial or administrative proceeding,
15 or the deficiency of any defense that has been or could have
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been asserted in the Class Action or in any litigation, or of any
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liability, negligence, fault or wrongdoing of Wells Fargo or the
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Released Parties;
19
b. offered by any person or received against Wells Fargo or the
20
Released Parties as evidence of a presumption, concession or
21 admission of any fault, misrepresentation or omission with
22 respect to any statement or written document approved or made
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by Wells Fargo or the Released Parties or any other wrongdoing
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by Wells Fargo or the Released Parties;
25 c. offered by any person or received against Wells Fargo or the
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Released Parties as evidence of a presumption, concession, or
27 admission with respect to any default, liability, negligence, fault,
28 or wrongdoing, or in any way interpreted, construed, deemed, IPROPOSEDI ORDER GRANTING FINAL�
� � 12 APPROVAL TO CLASS ACTION � SETTLEMENT; FINAL JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 42 of 45 Page ID #:29037
1
invoked, offered, received in evidence, or referred to for any
2 other reason against any of the settling parties, in any civil,
3 criminal, or administrative action or proceeding; provided,
4 however, that nothing contained in this paragraph shall prevent
5 the Stipulation of Settlement (or any agreement or order relating
6 thereto) from being used, offered, or received in evidence in any
7 proceeding to approve, enforce, or otherwise effectuate the
8 Settlement (or any agreement or order relating thereto) or this
9
Class Action Final Order and Judgment, or in which the
10 reasonableness, fairness, or good faith of the parties in
11 participating in the Settlement (or any agreement or order
12 relating thereto) is an issue, or to enforce or effectuate
13 provisions of the Settlement, this Class Action Final Order and
14
Judgment, or the releases as to Wells Fargo, the Released
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Parties, the Masonek Plaintiffs, or the Class Members; or
16
d. offered by any person or received against any of the Masonek
17 Plaintiffs or any Class Member as evidence or construed as or
18
deemed to be evidence that any of their claims in the Class
19
Action lack merit.
20 Notwithstanding the foregoing, Wells Fargo and/or the Released Parties may file
21 the Stipulation of Settlement, this Class Action Final Order and Judgment, and/or
22 any of the documents or statements referred to therein in support of any defense or
23 claim that is binding on and shall have resjudicata, collateral estoppel, and/or
24 preclusive effect in all pending and future lawsuits or other proceedings maintained
25 by or on behalf of the Masonek Plaintiffs and/or any Class Members, and each of
26 them, as well as their heirs, executors, administrators, successors, and/or assigns.
27
26. The Court has jurisdiction to enter this Class Action Final Order and
28 Judgment. Without in any way affecting the finality of this Class Action Final [PROPOSED.] ORDER GRANTING FINAL
13 APPROVAL TO CLASS ACTION SETTLEMENT; FINAL JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 43 of 45 Page ID #:29038
1
Order and Judgment, the Court expressly retains exclusive and continuing
2 jurisdiction over Defendants, the Masonek Plaintiffs, and the Class, and all matters
3 relating to the administration, consummation and enforcement of the Stipulation of
4 Settlement and of this Class Action Final Order and Judgment, including, without
5
limitation, for the purpose of:
6 a. enforcing the terms and conditions of the Stipulation of
7
Settlement (following, and in conformity with, the resolution by
8 the Hon. Layn Phillips (Ret.) of any disputes, claims or causes
9 of action that, in whole or in part, are related to or arise out of
10 the Stipulation of Settlement, and/or this Class Action Final
11
Order and Judgment, including, without limitation: whether
12 claims or causes of action allegedly in any way are related to the
13
Class Action are or are not barred or released by this Class
14
Action Final Order and Judgment; and whether persons or
15 entities are enjoined from pursuing any claims against Wells
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Fargo or the Released Parties);
17
b. entering such additional orders, if any, as may be necessary or
18 appropriate to protect or effectuate this Class Action Final Order
19 and Judgment and the Stipulation of Settlement (including,
20 without limitation, orders enjoining persons or entities from
21 pursuing any claims against Wells Fargo or the Released
22 Parties), or to ensure the fair and orderly administration of the
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Settlement; and
24 c. entering any other necessary or appropriate orders to protect and
25 effectuate the Court's retention of continuing jurisdiction over
26 the Stipulation of Settlement, the Masonek Plaintiffs, the Class
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Members, and Wells Fargo.
28 [PROPOSED] ORDER GRANTING FINAL
14 APPROVAL TO CLASS ACTION SETTLEMENT; FINAL JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 44 of 45 Page ID #:29039
27. Without further order of the Court, the Parties may agree to reasonably
necessary extensions of time to carry out any of the provisions of the Stipulation of
Settlement.
28. There is no just reason for delay in the entry of this Class Action Final
Order and Judgment and immediate entry by the Clerk of the Court is expressly
directed pursuant to Rule 54 (b) of the Federal Rules of Civil Procedure.
29. In the event that the Effective Date does not occur:
a. All orders, findings, and releases entered in connection with the
Stipulation of Settlement shall be vacated and become null and
void and shall have no force and effect whatsoever, shall not be
used or referred to for any purposes whatsoever, and shall not be
admissible or discoverable in this or any other proceeding;
b. The Class Action relating to Wells Fargo shall return to the
procedural status quo before entry of this Class Action Final
Order and Judgment as if no settlement had been negotiated or
entered into;
c. All of the Court's prior Orders shall, subject to this Class Action
Final Order and Judgment, remain in force and effect; and
d. The Parties shall cooperate in good faith to determine a
reasonable pre-trial and trial schedule.
IT IS SO ORDERED.
Dated: ,2013 In
Honorable David 0. Carter United States District Judge
IPROPOSEDI ORDER GRANTING FINAL 15 APPROVAL TO CLASS ACTION
SETTLEMENT; FINAL JUDGMENT
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Case 8:10-ml-02145-DOC-RNB Document 625-2 Filed 06/24/13 Page 45 of 45 Page ID #:29040
ZUiUhl.
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DOUGLAS V. THORNTON (SBN 154956) PERKINS, MANN & EVERETT Incorporated 7815 N. Palm Avenue, Suite 200 Fresno, California 93711 Telephone: (559) 447-5700 Facsimile: (559) 447-5600
Attorneys for Bain Plaintiffs
LAWRENCE C. BARTH (SBN 123002) Lawrence .B arth(mto . corn MUNGER, TOIIES & OLSON LLP 355 South Grand Avenue, Thirty-Fifth Floor Los Angeles, CA 90071-1560 Telephone: (213) 683-9100 Facsimile: (213) 683-4017
Attorneys for Defendant WELLS FARGO BANK, N.A.
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
SOUTHERN DIVISION
In re: MEDICAL CAPITAL SECURITIES LITIGATION
This document relates to:
NO. SACV 09-1048 DOC (RNB)
NO. SACV 10-00548 DOC (RNBx)
NO. SACV 10-6561 DOC (RNB)
CASE NO. SA 10-ML-2145 DOC (RNB)
[PROPOSED] BAIN FINAL ORDER AND JUDGMENT
RM [PROPOSED] BAIN FINAL ORDER AND JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-3 Filed 06/24/13 Page 2 of 28 Page ID #:29042
I The Motion by the plaintiffs in the case captioned Bain v. Wells Fargo Bank,
2 N.A., et al., Case No. SACV 10-00548 DOC (RNBx) (the "Bain Action") for entry
3 of the Bain Final Order and Judgment in connection with the Settlement with Wells
4 Fargo Bank, N.A. ("Wells Fargo") came on for hearing on
5 2013. Appearances were entered on the record.
6 The Court, having reviewed and considered the Motion, hereby GRANTS the
7 Motion, enters the Bain Final Order and Judgment, and further finds and orders as
8 follows:
9 1. The Noteholder Actions include: (1) the case captioned Masonek v.
10 Wells Fargo Bank, N.A., Case No. SACV 09-1048 DOC (RNBx) (the "Class
11 Action"); (2) the case captioned Abbate v. Wells Fargo Bank, N.A., Case No.
12 SACV 10-6561 DOC (RNBx) (the "Abbate Action"); and (3) the Bain Action.
13 Plaintiffs in the Class Action are referred to herein as the "Masonek Plaintiffs";
14 plaintiffs in the Bain Action are referred to herein as the "Bain Plaintiffs"; and
15 plaintiffs in the Abbate Action are referred to herein as the "Abbate Plaintiffs." The
16 Masonek Plaintiffs, the Bain Plaintiffs, and the Abbate Plaintiffs are collectively
17 referred to herein as the "Plaintiffs."
18 2. The Plaintiffs in the Noteholder Actions, on the one hand, and Wells
19 Fargo, on the other hand, have agreed upon the terms and conditions of the
20 Settlement, as set forth in the Stipulation of Settlement, dated April , 2013, which
21 has been filed with the Court.
22 3. The Stipulation of Settlement, including all Exhibits thereto, is
23 expressly incorporated by reference into this Bain Final Order and Judgment and
24 made a part hereof for all purposes. Except where otherwise noted, all capitalized
25 terms used in this Bain Final Order and Judgment shall have the meanings set forth
26 in the Stipulation of Settlement.
27 4. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, the
28 settlement of the claims of the Masonek Plaintiffs and the Class Members is subject
1 [PROPOSED] BAIN FINAL ORDER AND JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-3 Filed 06/24/13 Page 3 of 28 Page ID #:29043
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to Court approval. The settlement of the claims of the Bain Plaintiffs (and the
Abbate Plaintiffs), on the other hand, does not require Court approval under Rule
23. However, pursuant to the Stipulation of Settlement, the entry of this Bain Final
Order and Judgment (and the Abbate Final Order and Judgment), and the
consequent dismissal with prejudice of the Bain Action (and the Abbate Action), is
conditioned upon the Court's approval and entry of the Class Action Final Order
and Judgment.
5. The Court granted final approval of the Settlement after conducting a
duly noticed Fairness Hearing on or about , 2013, and found
the Settlement to be fair, reasonable and adequate, and in the best interests of the
Plaintiffs and the Class Members. On or about , 2013, the Court
approved and entered the Class Action Final Order and Judgment, which dismissed
the Class Action on the merits with prejudice and released Wells Fargo and the
Released Parties from the Released Claims including all claims arising out of the
transactions alleged in the Masonek Plaintiffs' complaints.
6. The Court has personal jurisdiction over Defendants and the Bain
Plaintiffs, and has subject-matter jurisdiction over the Bain Action, including,
without limitation, jurisdiction to release all claims arising out of the transactions
alleged in the Bain Plaintiffs' complaints and to dismiss the Bain Action on the
merits and with prejudice as against Wells Fargo.
7. The Bain Action (Bain v. Wells Fargo Bank, NA., et al., Case No.
SACV 10-00548 DOC (RNBx) (the "Bain Action")) is hereby dismissed with
prejudice and without costs as against Wells Fargo and the Released Parties.
8. Upon the Effective Date, the Bain Plaintiffs and Bain Counsel, on
behalf of themselves and their successors and assigns, shall be deemed to have, and
by operation of this Bain Final Order and Judgment shall have, fully, finally, and
forever released, relinquished and discharged all Released Claims against Wells
Fargo and the Released Parties, as those terms are defined below.
[PROPOSED] BAIN FINAL ORDER AND 2 JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-3 Filed 06/24/13 Page 4 of 28 Page ID #:29044
1 a. Released Claims means all claims, rights, debts, demands,
2 causes of actions, suits, dues, sums of money, accounts, bonds,
3 bills, covenants, contracts, controversies, agreements, promises,
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judgments, variances, executions, obligations, damages, losses,
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fees, costs, rights, matters, and issues, whether based on federal,
6 state, local, statutory, or common law, or any other law, rule, or
7 regulation, or whether based in equity, whether suspected or
8 unsuspected, fixed or contingent, accrued or un-accrued,
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liquidated or un-liquidated, matured or un-matured, class or
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individual in nature, that have been, might have been, or could
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be asserted (or threatened, alleged, or litigated) at law, in equity,
12 or otherwise, at any time, in any capacity, that were asserted or
13 that could have been asserted in the Noteholder Actions, the
14 Receiver Action, or in any court of competent jurisdiction or
15 other tribunal or adjudicative body by anyone, which arise out
16 of, touch upon, or relate in any way whatsoever to Medical
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Capital, the NISAs, the Notes, or the administration of the
18 NISAs and all related agreements, from the beginning of time
19 through the date of entry of the Final Orders and Judgments.
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b. Released Parties means (a) Wells Fargo's parent corporation,
21 subsidiaries, and affiliates, (b) all current and former directors,
22 officers, and employees of Wells Fargo and its parent
23 corporation, subsidiaries, and affiliates, but only in their
24 capacity as such directors, officers, and employees, and (c) all
25 other agents and attorneys of Wells Fargo and its parent
26 corporation, subsidiaries, and affiliates, but only with respect to
27 actions taken or omissions made by such agents and attorneys
28 on behalf of these entities in connection with Wells Fargo's
IPROPOSEDI BAIN FINAL ORDER AND JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-3 Filed 06/24/13 Page 5 of 28 Page ID #:29045
1 exercise of its rights and performance of its obligations under
2 the NISAs, and as disbursing agent for any and all entities
3 affiliated with MCH. Released Parties do not include (i) Mayer
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Hoffman McCann P.C., CBIZ, Inc., CBIZ MHM, LLC, CBIZ
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Orange County, CBIZ San Diego or any of their past or present
6 subsidiaries, affiliates, parents, successors, and predecessors, (ii)
7 the current or former directors, officers, and employees of
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Mayer Hoffman McCann P.C. CBIZ, Inc., CBIZ MHM, LLC,
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CBIZ Orange County, CBIZ San Diego or any of their past or
10 present subsidiaries, affiliates, parents, successors, and
11 predecessors, or (iii) all other agents and attorneys of Mayer
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Hoffman McCann P.C. CBIZ, Inc., CBIZ MHM, LLC, CBIZ
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Orange County, CBIZ San Diego or any of their past or present
14 subsidiaries, affiliates, parents, successors, and predecessors.
15 c. Notwithstanding the above, this release shall not extend to (1)
16 the obligations set forth in the Stipulation of Settlement; (2) the
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Receiver's accounts at Wells Fargo, if any, relating to the
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Receivership Entities or any accounts held by the Receiver; or
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(3) claims relating to accounts of any kind (including but not
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limited to deposit, credit, and loan accounts) held at any time or
21 that may hereafter be opened by the Bain Plaintiffs or Bain
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Counsel at Wells Fargo, its parent corporation, subsidiaries, or
23 affiliates, or at any of their predecessors or successors.
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9. Upon the Effective Date, Wells Fargo, on behalf of itself, its parent
25 corporation, subsidiaries, and affiliates, and any of their successors and assigns,
26 shall be deemed to have, and by operation of this Bain Final Order and Judgment
27 shall have, fully, finally, and forever released, relinquished, and discharged the
28 Bain Plaintiffs, and Bain Counsel from all claims that arise out of or relate in any
A [PROPOSED] BAIN FINAL ORDER AND JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-3 Filed 06/24/13 Page 6 of 28 Page ID #:29046
1 way to the institution, prosecution, or settlement of the Noteholder Actions.
2 Notwithstanding the above, this release shall not extend to (1) the obligations set
3 forth in the Stipulation of Settlement; or (2) claims relating to accounts of any kind
4 (including but not limited to deposit, credit, and loan accounts) held at any time or
5 that may hereafter be opened by the Bain Plaintiffs or Bain Counsel at Wells Fargo,
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its parent corporation, subsidiaries, or affiliates, or at any of their predecessors or
7 successors.
8
10. Each of the releases in Paragraphs 8 and 9 is intended to include
9 known and unknown claims arising out of, touching upon, or relating in any way to
10 Medical Capital, the NISAs, the Notes, or the administration of the NISAs and all
11 related agreements, and each of the releases in Paragraphs 8 and 9 is expressly
12 intended to cover and include all such injuries or damages, including all rights of
13 action thereunder. The Bain Plaintiffs, and Bain Counsel on behalf of themselves
14 and their successors and assigns, expressly, knowingly, and voluntarily waive the
15 provisions of Section 1542 of the California Civil Code, which provides as follows:
16 A GENERAL RELEASE DOES N 17
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20 The Bain Plaintiffs, and Bain Counsel on behalf of themselves and their successors
21 22 and assigns, expressly waive and relinquish any and all rights and benefits that they
23 may have under, or that may be conferred upon them by, the provisions of Section
24 1542 of the California Civil Code, or any other law of any state or territory that is
25 similar, comparable, or equivalent to Section 1542, to the fullest extent that they
26 may lawfully waive such rights or benefits pertaining to the Released Claims.
27 Wells Fargo, on behalf of itself and its parent corporation, subsidiaries, affiliates,
28 and any of their successors and assigns, expressly waives and relinquishes any and
[PROPOSED] BAIN FINAL ORDER AND JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-3 Filed 06/24/13 Page 7 of 28 Page ID #:29047
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all rights and benefits that it may have under, or that may be conferred upon it by,
the provisions of Section 1542 of the California Civil Code, or any other law of any
state or territory that is similar, comparable, or equivalent to Section 1542, to the
fullest extent that they may lawfully waive such rights or benefits pertaining to the
claims released in Paragraph 9 of this Bain Final Order and Judgment.
11. Upon the Effective Date, the Stipulation of Settlement shall be the
exclusive remedy for any and all Released Claims of the Bain Plaintiffs. The Court
thus hereby permanently bars and enjoins the Bain Plaintiffs, all of their successors
and assigns, and all persons acting on behalf of or in concert or participation with
the Bain Plaintiffs or their successors and assigns from: (a) filing, commencing,
asserting, prosecuting, maintaining, pursuing, continuing, intervening in, or
participating in, or receiving any benefits from, any lawsuit, arbitration, or
administrative, regulatory or other proceeding or order in any jurisdiction based
upon or asserting any of the Released Claims against Wells Fargo or any of the
Released Parties; or (b) bringing a class action on behalf of the Bain Plaintiffs,
seeking to certify a class that includes the Bain Plaintiffs, or continuing to prosecute
or participate in any previously filed and/or certified class action in any lawsuit
based upon, asserting, touching upon, or relating in any way to any of the Released
Claims against Wells Fargo or any of the Released Parties.
12. The Court hereby declares that the Stipulation of Settlement is binding
on the Bain Plaintiffs and Wells Fargo, and it is to be preclusive in all pending and
future lawsuits or other proceedings.
13. Neither the Stipulation of Settlement, nor any of its terms and
provisions, nor any of the negotiations or proceedings connected with it, nor any of
the documents or statements referred to therein, nor any of the documents or
statements generated or received pursuant to the claims, administration process,
shall be:
a. offered by any person or received against Wells Fargo or the
[PROPOSED] BAIN FINAL ORDER AND 6 . . JUDGMENT .
Case 8:10-ml-02145-DOC-RNB Document 625-3 Filed 06/24/13 Page 8 of 28 Page ID #:29048
1 Released Parties as evidence or construed as or deemed to be
2 evidence of any presumption, concession, or admission by Wells
3 Fargo or the Released Parties of the truth of the facts alleged by
4 the Plaintiffs or the validity of any claim that has been or could
5 have been asserted in the Bain Action or in any litigation, or
6 other judicial or administrative proceeding, or the deficiency of
7 any defense that has been or could have been asserted in the
8 Bain Action or in any litigation, or of any liability, negligence,
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fault or wrongdoing of Wells Fargo or the Released Parties;
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b. offered by any person or received against Wells Fargo or the
11 Released Parties as evidence of a presumption, concession or
12 admission of any fault, misrepresentation or omission with
13 respect to any statement or written document approved or made
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by Wells Fargo or the Released Parties or any other wrongdoing
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by Wells Fargo or the Released Parties;
16 c. offered by any person or received against Wells Fargo or the
17 Released Parties as evidence of a presumption, concession, or
18 admission with respect to any default, liability, negligence, fault,
19 or wrongdoing, or in any way interpreted, construed, deemed,
20 invoked, offered, received in evidence, or referred to for any
21 other reason against any of the settling parties, in any civil,
22 criminal, or administrative action or proceeding; provided,
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however, that nothing contained in this paragraph shall prevent
24 the Stipulation of Settlement (or any agreement or order relating
25 thereto) from being used, offered, or received in evidence in any
26 proceeding to approve, enforce, or otherwise effectuate the
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Settlement (or any agreement or order relating thereto) or this
28 Bain Final Order and Judgment, or in which the reasonableness,
IPROPOSEDI BAIN FINAL ORDER AND JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-3 Filed 06/24/13 Page 9 of 28 Page ID #:29049
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fairness, or good faith of the parties in participating in the
Settlement (or any agreement or order relating thereto) is an
issue, or to enforce or effectuate provisions of the Settlement,
this Bain Final Order and Judgment, or the releases as to Wells
Fargo, the Released Parties, or the Bain Plaintiffs; or
d. offered by any person or received against any of the Bain
Plaintiffs as evidence or construed as or deemed to be evidence
that any of their claims in the Bain Action lack merit.
Notwithstanding the foregoing, Wells Fargo and/or the Released Parties may file
the Stipulation of Settlement, this Bain Final Order and Judgment, and/or any of the
documents or statements referred to therein in support of any defense or claim that
is binding on and shall have res judicata, collateral estoppel, and/or preclusive
effect in all pending and future lawsuits or other proceedings maintained by or on
behalf of the Bain Plaintiffs, and each of them, as well as their heirs, executors,
administrators, successors, and/or assigns.
14. The Court has jurisdiction to enter this Bain Final Order and
Judgment. Without in any way affecting the finality of this Bain Final Order and
Judgment, the Court expressly retains exclusive and continuing jurisdiction over
Defendants and the Bain Plaintiffs, and all matters relating to the administration,
consummation and enforcement of the Stipulation of Settlement and of this Bain
Final Order and Judgment, including, without limitation, for the purpose of:
a. enforcing the terms and conditions of the Stipulation of
Settlement (following, and in conformity with, the resolution by
the Hon. Layn Phillips (Ret.) of any disputes, claims or causes
of action that, in whole or in part, are related to or arise out of
the Stipulation of Settlement, and/or this Bain Final Order and
Judgment, including, without limitation: whether claims or
causes of action allegedly in any way are related to the Bain
IPROPOSEDI BAIN FINAL ORDER AND 8 JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-3 Filed 06/24/13 Page 10 of 28 Page ID #:29050
1 Action are or are not barred or released by this Bain Final Order
2 and Judgment; and whether persons or entities are enjoined from
3 pursuing any claims against Wells Fargo or the Released
4 Parties);
5 b. entering such additional orders, if any, as may be necessary or
6 appropriate to protect or effectuate this Bain Final Order and
7 Judgment and the Stipulation of Settlement (including, without
8 limitation, orders enjoining persons or entities from pursuing
9 any claims against Wells Fargo or the Released Parties), or to
10 ensure the fair and orderly administration of the Settlement; and
11 c. entering any other necessary or appropriate orders to protect and
12 effectuate the Court's retention of continuing jurisdiction over
13 the Stipulation of Settlement, the Bain Plaintiffs, and Wells
14 Fargo.
15 15. Without further order of the Court, the Parties may agree to reasonably
16 necessary extensions of time to carry out any of the provisions of the Stipulation of
17 Settlement.
18 16. There is no just reason for delay in the entry of this Bain Final Order
19 and Judgment and immediate entry by the Clerk of the Court is expressly directed
20 pursuant to Rule 54 (b) of the Federal Rules of Civil Procedure.
21 17. In the event that the Effective Date does not occur:
22 a. All orders, findings, and releases entered in connection with the
23 Stipulation of Settlement shall be vacated and become null and
24 void and shall have no force and effect whatsoever, shall not be
25 used or referred to for any purposes whatsoever, and shall not be
26 admissible or discoverable in this or any other proceeding;
27 b. The Bain Action relating to Wells Fargo shall return to the
28 procedural status quo before entry of this Bain Final Order and
9 [PROPOSED] BAIN FINAL ORDER AND JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-3 Filed 06/24/13 Page 11 of 28 Page ID #:29051
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Judgment as if no settlement had been negotiated or entered
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into;
3 c. All of the Court's prior Orders shall, subject to this Bain Final
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Order and Judgment, remain in force and effect; and
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d. The Parties shall cooperate in good faith to determine a
6 reasonable pre-trial and trial schedule.
7 IT IS SO ORDERED.
8 Dated: 5 2013
9 By:
Honorable David 0. Carter 10 United States District Judge
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EXHIBIT F
Case 8:10-ml-02145-DOC-RNB Document 625-3 Filed 06/24/13 Page 13 of 28 Page ID #:29053
RICHARD W. EPSTEIN, admitted pro hac vice richard. epstem(gmlaw.com GREENSPOOI MARDER, P.A. 200 E. Broward Blvd. Suite 1500 Fort Lauderdale, FL 33301 Telephone: (954) 491-1120 Facsimile: (954) 343-6958
Attorneys for Abbate Plaintiffs
LAWRENCE C. BARTH (SBN 123002) Lawrence.Barth(2rnto.com MUNGER, TOE1IES & OLSON LLP 355 South Grand Avenue, Thirty-Fifth Floor Los Angeles, CA 90071-1560 Telephone: (213) 683-9100 Facsimile: (213) 683-4017
Attorneys for Defendant WELLS FARGO BANK, N.A.
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
SOUTHERN DIVISION
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JAMES ABBATE, et al.,
Plaintiffs,
I,,
WELLS FARGO BANK, NATIONAL ASSOCIATION, et al.,
Defendants.
This document relates to:
NO. SACV 09-1048 DOC (RNB)
NO. SACV 10-00548 DOC (RNBx)
NO. SACV 10-6561 DOC (RNB)
CASE NO. SACV 10-6561 DOC (RNB)
[PROPOSED] ABBATE FINAL ORDER AND JUDGMENT
IPROPOSEDI ABBATE FINAL ORDER AND JUDGMENT
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The Motion by the plaintiffs in the case captioned Abbate v. Wells Fargo
Bank, N.A., Case No. SACV 10-6561 DOC (RNBx) (the "Abbate Action") for
entry of the Abbate Final Order and Judgment in connection with the Settlement
with Wells Fargo Bank, N.A. ("Wells Fargo") came on for hearing on
2013. Appearances were entered on the record.
The Court, having reviewed and considered the Motion, hereby GRANTS the
Motion, enters the Abbate Final Order and Judgment, and further finds and orders
as follows:
1. The Noteholder Actions include: (1) the case captioned Masonek v.
Wells Fargo Bank, NA., Case No. SACV 09-1048 DOC (RNBx) (the "Class
Action"); (2) the case captioned Bain v. Wells Fargo Bank, N.A., et al., Case No.
SACV 10-00548 DOC (RNBx) (the "Bain Action"); and (3) the Abbate Action.
Plaintiffs in the Class Action are referred to herein as the "Masonek Plaintiffs";
plaintiffs in the Bain Action are referred to herein as the "Bain Plaintiffs"; and
plaintiffs in the Abbate Action are referred to herein as the "Abbate Plaintiffs." The
Masonek Plaintiffs, the Bain Plaintiffs, and the Abbate Plaintiffs are collectively
referred to herein as the "Plaintiffs."
2. The Plaintiffs in the Noteholder Actions, on the one hand, and Wells
Fargo, on the other hand, have agreed upon the terms and conditions of the
Settlement, as set forth in the Stipulation of Settlement, dated April , 2013, which
has been filed with the Court.
3. The Stipulation of Settlement, including all Exhibits thereto, is
expressly incorporated by reference into this Abbate Final Order and Judgment and
made a part hereof for all purposes. Except where otherwise noted, all capitalized
terms used in this Abbate Final Order and Judgment shall have the meanings set
forth in the Stipulation of Settlement.
4. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, the
settlement of the claims of the Masonek Plaintiffs and the Class Members is subject
IPROPOSEDI ABBATE FINAL ORDER 1 AND JUDGMENT
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to Court approval. The settlement of the claims of the Abbate Plaintiffs (and the
Bain Plaintiffs), on the other hand, does not require Court approval under Rule 23.
However, pursuant to the Stipulation of Settlement, the entry of this Abbate Final
Order and Judgment (and the Bain Final Order and Judgment), and the consequent
dismissal with prejudice of the Abbate Action (and the Bain Action), is conditioned
upon the Court's approval and entry of the Class Action Final Order and Judgment.
5. The Court granted final approval of the Settlement after conducting a
duly noticed Fairness Hearing on or about , 2013, and found
the Settlement to be fair, reasonable and adequate, and in the best interests of the
Plaintiffs and the Class Members. On or about , 2013, the Court
approved and entered the Class Action Final Order and Judgment, which dismissed
the Class Action on the merits with prejudice and released Wells Fargo and the
Released Parties from the Released Claims including all claims arising out of the
transactions alleged in the Masonek Plaintiffs' complaints.
6. The Court has personal jurisdiction over Defendants and the Abbate
Plaintiffs, and has subject-matter jurisdiction over the Abbate Action, including,
without limitation, jurisdiction to release all claims arising out of the transactions
alleged in the Abbate Plaintiffs' complaints and to dismiss the Abbate Action on
the merits and with prejudice as against Wells Fargo.
7. The Abbate Action (Abbate v. Wells Fargo Bank, NA., Case No.
SACV 10-6561 DOC (RNBx)) is hereby dismissed with prejudice and without
costs as against Wells Fargo and the Released Parties.
8. Upon the Effective Date, the Abbate Plaintiffs, Abbate Counsel, and
the Litigation Managers, on behalf of themselves and their successors and assigns,
shall be deemed to have, and by operation of this Abbate Final Order and Judgment
shall have, fully, finally, and forever released, relinquished and discharged all
Released Claims against Wells Fargo and the Released Parties, as those terms are
defined below. [PROPOSEDI ABBATE FINAL ORDER 2 AND JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-3 Filed 06/24/13 Page 16 of 28 Page ID #:29056
1 a. Released Claims means all claims, rights, debts, demands,
2 causes of actions, suits, dues, sums of money, accounts, bonds,
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bills, covenants, contracts, controversies, agreements, promises,
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judgments, variances, executions, obligations, damages, losses,
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fees, costs, rights, matters, and issues, whether based on federal,
6 state, local, statutory, or common law, or any other law, rule, or
7 regulation, or whether based in equity, whether suspected or
8 unsuspected, fixed or contingent, accrued or un-accrued,
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liquidated or un-liquidated, matured or un-matured, class or
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individual in nature, that have been, might have been, or could
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be asserted (or threatened, alleged, or litigated) at law, in equity,
12 or otherwise, at any time, in any capacity, that were asserted or
13 that could have been asserted in the Noteholder Actions, the
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Receiver Action, or in any court of competent jurisdiction or
15 other tribunal or adjudicative body by anyone, which arise out
16 of, touch upon, or relate in any way whatsoever to Medical
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Capital, the NISAs, the Notes, or the administration of the
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NISAs and all related agreements, from the beginning of time
19 through the date of entry of the Final Orders and Judgments.
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b. Released Parties means (a) Wells Fargo's parent corporation,
21 subsidiaries, and affiliates, (b) all current and former directors,
22 officers, and employees of Wells Fargo and its parent
23 corporation, subsidiaries, and affiliates, but only in their
24 capacity as such directors, officers, and employees, and (c) all
25 other agents and attorneys of Wells Fargo and its parent
26 corporation, subsidiaries, and affiliates, but only with respect to
27 actions taken or omissions made by such agents and attorneys
28 on behalf of these entities in connection with Wells Fargo's
IPROPOSEDI ABBATE FINAL ORDER AND JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-3 Filed 06/24/13 Page 17 of 28 Page ID #:29057
1 exercise of its rights and performance of its obligations under
2 the NISAs, and as disbursing agent for any and all entities
3 affiliated with MCH. Released Parties do not include (i) Mayer
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Hoffman McCann P.C., CBIZ, Inc., CBIZ MHM, LLC, CBIZ
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Orange County, CBIZ San Diego or any of their past or present
6 subsidiaries, affiliates, parents, successors, and predecessors, (ii)
7 the current or former directors, officers, and employees of
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Mayer Hoffman McCann P.C. CBIZ, Inc., CBIZ MHM, LLC,
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CBIZ Orange County, CBIZ San Diego or any of their past or
10 present subsidiaries, affiliates, parents, successors, and
11 predecessors, or (iii) all other agents and attorneys of Mayer
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Hoffman McCann P.C. CBIZ, Inc., CBIZ MHM, LLC, CBIZ
13
Orange County, CBIZ San Diego or any of their past or present
14 subsidiaries, affiliates, parents, successors, and predecessors.
15 c. Notwithstanding the above, this release shall not extend to (1)
16 the obligations set forth in the Stipulation of Settlement; or (2)
17 the Receiver's accounts at Wells Fargo, if any, relating to the
18 Receivership Entities or any accounts held by the Receiver; or
19
(3) claims relating to accounts of any kind (including but not
20
limited to deposit, credit, and loan accounts) held at any time or
21 that may hereafter be opened by the Abbate Plaintiffs, Abbate
22
Counsel, or the Litigation Managers at Wells Fargo, its parent
23 corporation, subsidiaries, or affiliates, or at any of their
24 predecessors or successors.
25
9. Upon the Effective Date, Wells Fargo, on behalf of itself, its parent
26 corporation, subsidiaries, and affiliates, and any of their successors and assigns,
27 shall be deemed to have, and by operation of this Abbate Final Order and Judgment
28 shall have, fully, finally, and forever released, relinquished, and discharged the
IPROPOSEDI ABBATE FINAL ORDER AND JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-3 Filed 06/24/13 Page 18 of 28 Page ID #:29058
1 Abbate Plaintiffs, Abbate Counsel, and the Litigation Managers from all claims that
2 arise out of or relate in any way to the institution, prosecution, or settlement of the
3 Noteholder Actions. Notwithstanding the above, this release shall not extend to (1)
4 the obligations set forth in the Stipulation of Settlement; or (2) claims relating to
5 accounts of any kind (including but not limited to deposit, credit, and loan
6 accounts) held at any time or that may hereafter be opened by the Abbate Plaintiffs
7 or Abbate Counsel at Wells Fargo, its parent corporation, subsidiaries, or affiliates,
8 or at any of their predecessors or successors.
9
10. Each of the releases in Paragraphs 8 and 9 is intended to include
10 known and unknown claims arising out of, touching upon, or relating in any way to
11 Medical Capital, the NISAs, the Notes, or the administration of the NISAs and all
12 related agreements, and each of the releases in Paragraphs 8 and 9 is expressly
13 intended to cover and include all such injuries or damages, including all rights of
14 action thereunder. The Abbate Plaintiffs, Abbate Counsel, and the Litigation
15 Managers, on behalf of themselves and their successors and assigns, expressly,
16 knowingly, and voluntarily waive the provisions of Section 1542 of the California
17 Civil Code, which provides as follows:
18 RELEASE DOES NOT EXTEND TO 19
20
21
22 23 The Abbate Plaintiffs, Abbate Counsel, and the Litigation Managers, on behalf of
24 themselves and their successors and assigns, expressly waive and relinquish any
25 and all rights and benefits that they may have under, or that may be conferred upon
26 them by, the provisions of Section 1542 of the California Civil Code, or any other
27 law of any state or territory that is similar, comparable, or equivalent to Section
28 1542, to the fullest extent that they may lawfully waive such rights or benefits
[PROPOSED] ABBATE FINAL ORDER AND JUDGMENT
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pertaining to the Released Claims. Wells Fargo, on behalf of itself and its parent
corporation, subsidiaries, affiliates, and any of their successors and assigns,
expressly waives and relinquishes any and all rights and benefits that it may have
under, or that may be conferred upon it by, the provisions of Section 1542 of the
California Civil Code, or any other law of any state or territory that is similar,
comparable, or equivalent to Section 1542, to the fullest extent that they may
lawfully waive such rights or benefits pertaining to the claims released in Paragraph
9 of this Abbate Final Order and Judgment.
11. Upon the Effective Date, the Stipulation of Settlement shall be the
exclusive remedy for any and all Released Claims of the Abbate Plaintiffs. The
Court thus hereby permanently bars and enjoins the Abbate Plaintiffs, all of their
successors and assigns, and all persons acting on behalf of or in concert or
participation with the Abbate Plaintiffs or their successors and assigns from: (a)
filing, commencing, asserting, prosecuting, maintaining, pursuing, continuing,
intervening in, or participating in, or receiving any benefits from, any lawsuit,
arbitration, or administrative, regulatory or other proceeding or order in any
jurisdiction based upon or asserting any of the Released Claims against Wells Fargo
or any of the Released Parties; or (b) bringing a class action on behalf of the Abbate
Plaintiffs, seeking to certify a class that includes the Abbate Plaintiffs, or
continuing to prosecute or participate in any previously filed and/or certified class
action in any lawsuit based upon, asserting, touching upon, or relating in any way
to any of the Released Claims against Wells Fargo or any of the Released Parties.
12. The Court hereby declares that the Stipulation of Settlement is binding
on the Abbate Plaintiffs and Wells Fargo, and it is to be preclusive in all pending
and future lawsuits or other proceedings.
13. Neither the Stipulation of Settlement, nor any of its terms and
provisions, nor any of the negotiations or proceedings connected with it, nor any of
the documents or statements referred to therein, nor any of the documents or
[PROPOSED] ABBATE FINAL ORDER 6 AND JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-3 Filed 06/24/13 Page 20 of 28 Page ID #:29060
1 statements generated or received pursuant to the claims administration process,
2 shall be:
3 a. offered by any person or received against Wells Fargo or the
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Released Parties as evidence or construed as or deemed to be
5 evidence of any presumption, concession, or admission by Wells
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Fargo or the Released Parties of the truth of the facts alleged by
7 the Plaintiffs or the validity of any claim that has been or could
8
have been asserted in the Abbate Action or in any litigation, or
9 other judicial or administrative proceeding, or the deficiency of
10 any defense that has been or could have been asserted in the
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Abbate Action or in any litigation, or of any liability,
12 negligence, fault or wrongdoing of Wells Fargo or the Released
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Parties;
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b. offered by any person or received against Wells Fargo or the
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Released Parties as evidence of a presumption, concession or
16 admission of any fault, misrepresentation or omission with
17 respect to any statement or written document approved or made
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by Wells Fargo or the Released Parties or any other wrongdoing
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by Wells Fargo or the Released Parties;
20 c. offered by any person or received against Wells Fargo or the
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Released Parties as evidence of a presumption, concession, or
22 admission with respect to any default, liability, negligence, fault,
23 or wrongdoing, or in any way interpreted, construed, deemed,
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invoked, offered, received in evidence, or referred to for any
25 other reason against any of the settling parties, in any civil,
26 criminal, or administrative action or proceeding; provided,
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however, that nothing contained in this paragraph shall prevent
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the Stipulation of Settlement (or any agreement or order relating
IPROPOSEDI ABBATE FINAL ORDER AND JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-3 Filed 06/24/13 Page 21 of 28 Page ID #:29061
1 thereto) from being used, offered, or received in evidence in any
2 proceeding to approve, enforce, or otherwise effectuate the
3
Settlement (or any agreement or order relating thereto) or this
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Abbate Final Order and Judgment, or in which the
5 reasonableness, fairness, or good faith of the parties in
6 participating in the Settlement (or any agreement or order
7 relating thereto) is an issue, or to enforce or effectuate
8 provisions of the Settlement, this Abbate Final Order and
9
Judgment, or the releases as to Wells Fargo, the Released
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Parties, or the Abbate Plaintiffs; or
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d. offered by any person or received against any of the Abbate
12
Plaintiffs as evidence or construed as or deemed to be evidence
13
that any of their claims in the Abbate Action lack merit.
14 Notwithstanding the foregoing, Wells Fargo and/or the Released Parties may file
15 the Stipulation of Settlement, this Abbate Final Order and Judgment, and/or any of
16 the documents or statements referred to therein in support of any defense or claim
17 that is binding on and shall have resjudicata, collateral estoppel, and/or preclusive
18 effect in all pending and future lawsuits or other proceedings maintained by or on
19 behalf of the Abbate Plaintiffs, and each of them, as well as their heirs, executors,
20 administrators, successors, and/or assigns.
21
14. The Court has jurisdiction to enter this Abbate Final Order and
22 Judgment. Without in any way affecting the finality of this Abbate Final Order and
23 Judgment, the Court expressly retains exclusive and continuing jurisdiction over
24 Defendants and the Abbate Plaintiffs, and all matters relating to the administration,
25 consummation and enforcement of the Stipulation of Settlement and of this Abbate
26 Final Order and Judgment, including, without limitation, for the purpose of:
27 a. enforcing the terms and conditions of the Stipulation of
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Settlement (following, and in conformity with, the resolution by
o IPROPOSEDI ABBATE FINAL ORDER AND JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-3 Filed 06/24/13 Page 22 of 28 Page ID #:29062
1 the Hon. Layn Phillips (Ret.) of any disputes, claims or causes
2 of action that, in whole or in part, are related to or arise out of
3 the Stipulation of Settlement, and/or this Abbate Final Order and
4
Judgment, including, without limitation: whether claims or
5 causes of action allegedly in any way are related to the Abbate
6
Action are or are not barred or released by this Abbate Final
7
Order and Judgment; and whether persons or entities are
8 enjoined from pursuing any claims against Wells Fargo or the
9
Released Parties);
10
b. entering such additional orders, if any, as may be necessary or
11 appropriate to protect or effectuate this Abbate Final Order and
12
Judgment and the Stipulation of Settlement (including, without
13
limitation, orders enjoining persons or entities from pursuing
14 any claims against Wells Fargo or the Released Parties), or to
15 ensure the fair and orderly administration of the Settlement; and
16 c. entering any other necessary or appropriate orders to protect and
17 effectuate the Court's retention of continuing jurisdiction over
18
the Stipulation of Settlement, the Abbate Plaintiffs, and Wells
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Fargo.
20
15. Without further order of the Court, the Parties may agree to reasonably
21 necessary extensions of time to carry out any of the provisions of the Stipulation of
22 Settlement.
23
16. There is no just reason for delay in the entry of this Abbate Final Order
24 and Judgment and immediate entry by the Clerk of the Court is expressly directed
25 pursuant to Rule 54 (b) of the Federal Rules of Civil Procedure.
26
17. In the event that the Effective Date does not occur:
27 a. All orders, findings, and releases entered in connection with the
28
Stipulation of Settlement shall be vacated and become null and
IPROPOSEDI ABBATE FINAL ORDER AND JUDGMENT
Case 8:10-ml-02145-DOC-RNB Document 625-3 Filed 06/24/13 Page 23 of 28 Page ID #:29063
I void and shall have no force and effect whatsoever, shall not be
2 used or referred to for any purposes whatsoever, and shall not be
3 admissible or discoverable in this or any other proceeding;
4
b. The Abbate Action relating to Wells Fargo shall return to the
5 procedural status quo before entry of this Abbate Final Order
6 and Judgment as if no settlement had been negotiated or entered
7 into;
8 c. All of the Court's prior Orders shall, subject to this Abbate Final
9
Order and Judgment, remain in force and effect; and
10
d. The Parties shall cooperate in good faith to determine a
11 reasonable pre-trial and trial schedule.
12 IT IS SO ORDERED.
13
Dated: 5 2013
14 By:
Honorable David 0. Carter
15 United States District Judge
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10 [PROPOSED] ABBATE FINAL ORDER AND JUDGMENT
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EXHIBIT G
Case 8:10-ml-02145-DOC-RNB Document 625-3 Filed 06/24/13 Page 25 of 28 Page ID #:29065
SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
V.
Case No. SACV 09-818 DOC (RNBx)
[PROPOSED] ORDER GRANTING GOOD FAITH SETTLEMENT MOTION
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LAWRENCE C. BARTH (SBN 123002) Lawrence .B arth(mto . corn MUNGER, TOL1IES & OLSON LLP 355 South Grand Avenue, Thirty-Fifth Floor Los Angeles, CA 90071-1560 Telephone: (213) 683-9100 Facsimile: (213) 683-4017
Attorneys for Defendant WELLS FARGO BANK, N.A.
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
SOUTHERN DIVISION
MEDICAL CAPITAL HOLDINGS, INC., et al.,
Defendants.
WA
[PROPOSED] ORDER GRANTING GOOD FAITH SETTLEMENT MOTION
Case 8:10-ml-02145-DOC-RNB Document 625-3 Filed 06/24/13 Page 26 of 28 Page ID #:29066
1
The Good Faith Settlement Motion by Wells Fargo Bank, N.A. ("Wells
2 Fargo") came on for hearing on 2013. Appearances were
3 I entered on the record.
4
The Court, having reviewed and considered the Motion, hereby GRANTS the
5 Motion in its entirety, and further finds and orders as follows:
6
1. The Noteholder Actions include: (1) the case captioned Masonek v.
7 Wells Fargo Bank, N.A., Case No. SACV 09-1048 DOC (RNBx); (2) the case
8 captioned Bain v. Wells Fargo Bank, N.A., et al., Case No. SACV 10-00548 DOC
9 (RNBx); and (3) the case captioned Abbate v. Wells Fargo Bank, N.A., Case No.
10 SACV 10-656 1 DOC (RNBx).
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2. Plaintiffs do not allege in the Noteholder Actions that Wells Fargo and
12 BNYM are joint tortfeasors liable for the same tort, co-obligors on a contract debt,
13 or otherwise subject to a right of contribution among them and, accordingly, this
14 Order does not reduce any claims asserted by Plaintiffs in the Noteholder Actions.
15
3. The Plaintiffs in the Noteholder Actions, on the one hand, and Wells
16 Fargo, on the other hand, have agreed upon the terms and conditions of the
17 Settlement, as set forth in the Stipulation of Settlement, dated April -, 2013, which
18 has been filed with the Court.
19
4. The Stipulation of Settlement, including all Exhibits thereto, is
20 expressly incorporated by reference into this Order and made a part hereof for all
21 purposes. Except where otherwise noted, all capitalized terms used in this Order
22 shall have the meanings set forth in the Stipulation of Settlement.
23
5. The Settlement embodied in the Stipulation of Settlement was made
24 and entered into in good faith within the meaning and effect of California Code of
25 Civil Procedure Section 877.6 and applicable case law, including the factors set
26 forth in Tech-Bilt, Inc. v. Woodward-Clyde & Associates, 38 Cal. 3d 488 (1985).
27 The consideration provided by Wells Fargo for the release provided to Wells Fargo
28 and the Released Parties satisfied the Tech-Bilt "ballpark" standard for finding that
IPROPOSEDI ORDER GRANTING GOOD FAITH SETTLEMENT MOTION
Case 8:10-ml-02145-DOC-RNB Document 625-3 Filed 06/24/13 Page 27 of 28 Page ID #:29067
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the settlement was made in good faith. Id.
6. In accordance with California Code of Civil Procedure Section 877.6,
the Court finds that the Settlement embodied in the Stipulation of Settlement was
made in good faith and any and all joint tortfeasors or co-obligors shall be barred
from pursuing any claims against Wells Fargo or the Released Parties for
contribution, implied indemnity, or equitable indemnity that are based upon,
asserting, touching upon, or relating in any way to any of the Released Claims, to
the extent any such claims exist.
IT IS SO ORDERED.
Dated: ,2013 By:
Honorable David 0. Carter United States District Judge
[PROPOSED] ORDER GRANTING GOOD FAITH SETTLEMENT MOTION
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