notice of electronic filing · 2018-09-19 · alafile e-notice to: degruy tiffany johnson...

AlaFile E-Notice

To: DEGRUY TIFFANY JOHNSON

[email protected]

01-CV-2014-902794.00

Judge: BRENDETTE BROWN GREEN

NOTICE OF ELECTRONIC FILING

IN THE CIRCUIT COURT OF JEFFERSON COUNTY, ALABAMA

The following matter was FILED on 9/17/2018 4:07:11 PM

TRACI SALINAS ET AL V. JAMES S. HOLBROOK JR. ET AL

01-CV-2014-902794.00

MOTION FOR FINAL APPROVAL OF CLASS SETTLEMENT

Notice Date: 9/17/2018 4:07:11 PM

[Filer: BADDLEY THOMAS EDMUND JR.]

ANNE-MARIE ADAMS

CIRCUIT COURT CLERK

JEFFERSON COUNTY, ALABAMA

716 N. RICHARD ARRINGTON BLVD.

BIRMINGHAM, AL, 35203

205-325-5355

[email protected]

JEFFERSON COUNTY, ALABAMA

C004 WAINWRIGHT HOWARD LOWELL

Motion to Intervene ($297.00)

Oral Arguments Requested

Pendente Lite

CV201490279400

9/17/2018 4:02:25 PM

0

C004 - WAINWRIGHT HOWARD LOWELL

Local Court Costs $

*Motion fees are enumerated in §12-19-71(a). Feespursuant to Local Act are not included. Please contact theClerk of the Court regarding applicable local fees.

($50.00)pursuant to Rule

(Subject to Filing Fee)Alabama Rules ofCivil Procedure

pursuant to Rule

Motion for Final Approval of ClassSettlement

Other

Withdraw

Vacate or Modify

Supplement to Pending Motion

Strike

Stay

Special Practice in Alabama

Sever

Sanctions

Release from Stay of Execution

Quash

Protective Order

Preliminary Injunction

Plaintiff's Motion to Dismiss

Objection of Exemptions Claimed

New Trial

Motion to Dismiss pursuant to Rule 12(b)

More Definite Statement

Joinder

In Limine

Extension of Time

Disburse Funds

Judgment as a Matter of Law (during Trial)

Designate a Mediator

Deposition

Continue

Consolidation

Compel

Change of Venue/Transfer

Amend

Add Party

Other

Motion to Dismiss, or in the AlternativeSummaryJudgment($50.00)

Judgment on the Pleadings ($50.00)

Renewed Dispositive Motion(SummaryJudgment,Judgment on the Pleadings, or otherDispositiveMotion not pursuant to Rule 12(b)) ($50.00)

Summary Judgment pursuant to Rule 56($50.00)

Joinder in Other Party's Dispositive Motion(i.e.Summary Judgment, Judgment on the Pleadings,orother Dispositive Motion not pursuant to Rule 12(b))($50.00)

Default Judgment ($50.00)

Motions Not Requiring FeeMotions Requiring Fee

TYPE OF MOTION

BAD001

BIRMINGHAM, AL 35209

850 Shades Creek Parkway, Ste. 310

THOMAS E. BADDLEY JR.

Attorney Bar No.:

Name, Address, and Telephone No. of Attorney or Party. If Not Represented.

Name of Filing Party:

CIVIL MOTION COVER SHEETTRACI SALINAS ET AL V. JAMES S. HOLBROOKJR. ET AL

Revised 3/5/08

Circuit CourtDistrict Court01-JEFFERSON

Unified Judicial System

STATE OF ALABAMA Case No.

Check here if you have filed or are filing contemoraneouslywith this motion an Affidavit of Substantial Hardship or if youare filing on behalf of an agency or department of the State,county, or municipal government. (Pursuant to §6-5-1 Codeof Alabama (1975), governmental entities are exempt fromprepayment of filing fees)

Date: Signature of Attorney or Party

/s/ THOMAS E. BADDLEY JR.

ELECTRONICALLY FILED9/17/2018 4:05 PM

01-CV-2014-902794.00CIRCUIT COURT OF

JEFFERSON COUNTY, ALABAMAANNE-MARIE ADAMS, CLERK

DOCUMENT 652

**Motions titled 'Motion to Dismiss' that are not pursuant to Rule 12(b) and are in fact Motions for Summary Judgments are subject to filing fee.*This Cover Sheet must be completed and submitted to the Clerk of Court upon the filing of any motion. Each motion should contain a separate Cover Sheet.

DOCUMENT 652

1


HAROLD LOWELL WAINWRIGHT, )

derivatively on behalf of STERNE AGEE )

GROUP, INC., )

)

Plaintiff, )

)

v. ) CASE NO: CV-2014-902794

)

JAMES S. HOLBROOK, JR., et al. )

)

Defendants. )

PLAINTIFF’S MOTION AND MEMORANDUM BRIEF IN SUPPORT OF FINAL

APPROVAL OF CLASS SETTLEMENT

COMES NOW the Plaintiff, Harold Lowell Wainwright, and respectfully files

Plaintiff’s Motion and Memorandum Brief in Support of Final Approval of Class

Settlement. If approved by the Court, the Settlement will resolve the claims of the Plaintiff

and Settlement Class, bringing this complex litigation to a conclusion and resulting in a

substantial recovery for the Class.

I. INTRODUCTION

Plaintiff, Lowell Wainwright (“Plaintiff” or “Wainwright”), individually and as

representative of the Class, respectfully makes this submission in support of the Settlement

of all claims in this Action, together with the accompanying Declaration of Thomas E.

Baddley, Jr.; attached hereto as Exhibit 1, and the Affidavit of Andrew P. Campbell,

attached hereto as Exhibit 2. The Stipulation of Settlement and Release (hereinafter

“Settlement”) resolves all claims asserted against Sterne Agee Group, Inc., Stifel Financial

Corp., Saban Successor Subsidiary, LLC, James S. Holbrook, Jr. and William K. Holbrook,




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Jon S. Sanderson, Eric B. Needleman, Sal A. Nunzuata, Robert G. Nunziata, Walter S.

Robertson III, Walter A. Ruch III, Henry S. Lynn Jr., Linda M. Daniel, Jay W. Carter, and

Joe R. Roberts Jr. (hereinafter “Defendants”).

The Settlement is a favorable resolution of a complex case, crafted at arms-length

by experienced counsel on both sides. The total economic relief to be conferred upon the

Class represents a recovery that surpasses all criteria for fairness, reasonableness and

adequacy under applicable law. In the broadest outline, the Settlement provides, at a

minimum, $23,000,000 to Settlement Class members through a simple claim process

whereby Class members submit a claim form and receive a pro rata distribution of a $6.5

million Payment Fund from Defendants’ insurance carrier, as well as a pro rata distribution

from the $15 million Indemnity Earnout Fund held by Stifel Financial Corp., and at least

$1.5 million in reimbursement from insurance carrier. (Settlement Agreement, ¶¶ 4.1, 4.2,

4.3). Finally, Defendants have agreed that fees and expenses commonly borne by class

members may be deducted from class settlement funds, which included the cost of

settlement administration, notice, and class counsel’s attorneys’ fee and expense request.

Plaintiff and Class Counsel believe that the Settlement is in the best interests of the

Settlement Class. Class Counsel are informed of the strengths and weaknesses of the

claims and defenses in the Action and believe that the Settlement represents a favorable

outcome for the Settlement Class. As explained herein, the Settlement is fair, reasonable

and adequate under governing standards.

In addition, the Plan of Allocation which ties each Settlement Class Member’s

recovery to his/her pro rata share of holdings in Sterne Agee Group, Inc. as of the June 5,

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2015 merger is a fair and reasonable method for distributing the net Settlement Fund to the

Settlement Class and warrants approval.

II. BACKGROUND AND PROCEDURAL HISTORY

A. Summary of Plaintiff’s Claims

This action was filed on July 2, 2014 and was precipitated by a fraudulent scheme

by Defendant James S. Holbrook, Jr. to misappropriate corporate assets in furtherance of

his own self-interest, and the interest of friends, co-conspirators, and family. Plaintiffs

alleged that Defendant Holbrook unlawfully converted corporate assets in an effort to

fraudulently enrich himself at the expense of SAG’s shareholders, which the Defendant

Board tacitly approved and/or ratified. Further, Plaintiffs alleged that this pervasive breach

of fiduciary duty, coupled with the Non-Holbrook Defendants’ (consisting of SAG’s

Officers and Directors) corresponding dereliction of their fiduciary duties, culminated in a

June 2015 fire-sale merger of the Company at a materially depressed value, without

adequate disclosures to SAG’s shareholders, and included self-interested transactions

benefiting inside Director Defendants.

Sterne Agee Group, Inc. (“Sterne Agee” “SAG” or “Company”) and the Non-

Holbrook Defendants tacitly acknowledged the merits of Plaintiff’s allegations concerning

repeated breaches of fiduciary duty and pervasive self-dealing by the Holbrook Defendants

as the Director Defendants, who were complicit in the fraud and therefore faced a

substantial risk of personal liability for their acts/omissions, instituted three (3) civil actions

after the instant action was filed and raising many of the same allegations as the instant

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litigation, on behalf of SAG against Defendant CEO and Board Chairman James Holbrook,

Jr., in order to recoup assets unlawfully converted or misappropriated.

By Order dated January 25, 2015, Judge Helen Shores Lee determined that

Plaintiffs allegations were sufficient to withstand the Holbrook Defendants, Non-Holbrook

Defendants’ and Sterne Agee Group, Inc.’s Motions to Dismiss under the heightened

pleading standard of Rule 23.1, based upon the Holbrook Defendants’ pervasive

wrongdoing, their domination and control over the Sterne corporate entities, as well as the

other Director Defendants’ knowledge of, approval and/or complicity in such misconduct.

Non-Holbrook Directors filed a petition for writ of mandamus of the Court’s January 25,

2015 Order with the Alabama Supreme Court, which was denied.

On February 22, 2015, Defendants announced and effectuated a fire-sale merger

with Stifel Financial Corp. (“Stifel”), which closed on June 5, 2015, and which failed to

maximize shareholder value and consisted of self-interested transactions designed to

benefit the inside Director Defendants at the expense of SAG’s shareholders. Plaintiffs

thereafter alleged that in furtherance of obtaining shareholder approval for the merger, the

Defendant Board failed to provide adequate disclosures to SAG’s shareholders regarding

the terms of the proposed merger, including the sale of a valuable corporate asset to inside

Defendant Directors for less-than-adequate price, as well as failed to provide SAG

shareholders with adequate disclosures regarding substantial indemnity holdbacks based

on the Defendants’ pre-merger unlawful conduct.

Amended Complaints:

On October 2, 2015, based on the June 5, 2015 merger closing and the additional

legal impediments created therefrom, Plaintiffs filed their Sixth Amended Complaint

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alleging direct claims against the Defendants arising out of the fraudulent merger between

Sterne Agee and Stifel, as contemplated under Delaware law. See Arkansas Teacher Ret.

Sys. v. Countrywide Fin. Corp., 75 A.3d 888, 896 (Del. 2013).

On July 6, 2016, Plaintiffs filed a Seventh Amended Complaint, to assert additional

class claims in connection with the merger, as well as, added Stifel Financial Corporation

and Saban Successor Subsidiary LLC as party Defendants challenging, inter alia, the

fairness of the merger price and merger process, the adequacy of the disclosures, and

Stifel’s efforts to aid and abet the Individual Defendants’ breaches of fiduciary duty

concerning the fire-sale merger.

On February 13, 2018, Plaintiff filed his Eighth Amended Complaint against Stifel

and the other Defendants, asserting class claims based on, inter alia, Stifel’s alleged breach

of the Merger Agreement’s provisions governing the distribution of the Indemnity Earnout

Holdback.

On May 2-3, 2018, the parties mediated the case before well recognized mediator

Ralph Levy, Esq. The parties’ negotiations continued well after the scheduled mediation

in furtherance of reaching a global resolution of all claims among all parties.

In June and July, 2018, the parties continued their efforts to finalize the global

settlement achieved herein, including negotiations over the terms of the Stipulation of

Settlement and Release, Notice to the Class, Proof of Claim and Release, as well as, the

Motion for Preliminary Approval of the Settlement to be filed with the Court.

The Defendants have denied all allegations of wrongdoing, denied any liability to

the Plaintiff and the putative class members, and asserted affirmative defenses to the claims

DOCUMENT 653

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asserted in this action, and intend to continue with a vigorous defense if the Settlement is

not approved by the Court.

B. History of the Litigation and Settlement Negotiations

Plaintiff has set forth in detail the procedural history of the litigation in Class

Counsel’s Memorandum in Support of Petition for Attorneys’ Fees and Reimbursement of

Litigation Expenses. This action has been pending more than four (4) years, during which

time Defendants have filed repeated motions to dismiss and motions for summary judgment,

which have been opposed, orally argued and ultimately denied. Defendants have further

sought appellate relief on two (2) separate occasions following adverse rulings by the trial

court, which have been denied.

While the case was originally instituted as a shareholder derivative action, Plaintiff

successfully navigated the legal and procedural impediments created as a result of SAG’s

June 2015 merger with Stifel and amended their claims into a class action asserting direct

claims against the former SAG Directors and Officers, as well as Stifel Financial Corp.

Specifically, following the fire sale merger of SAG, Inc. with Stifel in June 2015, which

effectively served to extinguish Plaintiffs’ standing to pursue their derivative claims,

Plaintiffs were forced to change course to assert direct fraud claims in furtherance of a

limited exception recognized under Delaware jurisprudence (i.e., where the Defendant

directors and officers engaged in misconduct which led to the merger, as well as secured

personal benefits for themselves not otherwise available to the other shareholders). Further

complicating matters, in conjunction with the approval of the merger with Stifel, Plaintiff

and the shareholder class were required to execute release agreements, which Defendants

DOCUMENT 653

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argued constituted a waiver of Plaintiffs’ pre-merger claims asserted in this litigation. Such

intervening events altered the risk, complexity and calculus of the action, and required

Class Counsel to successfully plead direct claims under the limited fraud exception

recognized under Delaware law which would allow for post-merger standing to recover

damages.

C. THE SETTLEMENT

1. Summary of the Settlement

Following a two-day mediation with Ralph Levy, Esq., and ongoing negotiations

thereafter, the parties reached a global resolution of all claims among all parties in several

inter-related actions. Such claims were inextricably inter-related as Plaintiff’s claims

against the Holbrook Defendants were subsequently asserted by SAG against James

Holbrook in separate litigation, which directly impacted Stifel’s claims of indemnity out

of the $45 million Indemnity Holdback. As set forth in the Settlement Agreement, the

Total Settlement consists of, at least, $23,000,000 to be distributed to the Settlement Class

Members on a pro rata basis.

Pursuant to the Settlement Agreement, Defendants have agreed to make available

three separate Settlement Funds, which include: (1) The $6.5 Million Payment Fund, (2)

The Indemnity Earnout Payment Fund, and (3) The XL Claim Amount Fund which will be

distributed to the Settlement Class as follows:

a. The $6.5 Million Payment Fund. The Holbrook Defendants, the Non-

Holbrook Director Defendants, and Sterne Agee have agreed to create a $6.5

Million Payment Fund. The $6.5 Million Payment Fund will first be used to (1)

pay all costs and expenses reasonably incurred by the Claims Administrator,

Tilghman & Co., P.C., in connection with preparing and providing this Notice,

processing Proofs of Claim and Release, and otherwise administering and

distributing the $6.5 Million Payment Fund to the Settlement Class Members,

(2) pay Escrow Agent fees and expenses and other administration expenses that

DOCUMENT 653

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are attributable to the $6.5 Million Payment Fund, (3) pay taxes and tax

expenses attributable to the $6.5 Million Payment fund; and (4) pay attorneys’

fees and costs that have been awarded by the Court from the $6.5 Million

Payment Fund.

The balance of the $6.5 Million Payment Fund (the “Net $6.5 Million Payment

Fund”) shall be distributed to Settlement Class Members who have submitted a

timely and valid Proof of Claim and Release. Settlement Class Members who

submit a timely and valid Proof of Claim and Release will receive a pro-rata

distribution of the Net $6.5 Million Payment Fund based on their percentage

ownership of SAG as of June 5, 2015. Specifically, each Settlement Class

Member shall be entitled to a proportion of the Net $6.5 Million Payment Fund

that is equal to that Settlement Class Member’s proportionate holdings as of

June 5, 2015 of the fully-diluted outstanding shares of SAG common and

preferred stock (including shares of common stock issuable upon exercise of

In-the-Money Company Warrants and the conversion of SAG convertible

debentures, as well as vested performance and tracking shares under SAG’s

Amended and Restated Compensation Plan and Amended and Restated 2009

Deferred Compensation Plan) as compared to the other Settlement Class

Members.

b. The $15 Million Indemnity Earnout Payment Fund. Stifel has agreed to

create a $15,000,000 Indemnity Earnout Payment Fund. The Indemnity Earnout

Payment Fund will first be used to (1) pay all escrow fees, costs, and other

administration expenses that are attributable to the Indemnity Earnout Payment

Fund; and (2) pay taxes and tax expenses that are attributable to the Indemnity

Earnout Payment Fund. The balance of the Indemnity Earnout Payment Fund

(the “Net Indemnity Earnout Payment Fund”) shall be distributed to

Equityholders as set forth in Paragraphs 8.7 and 8.10 of the Stipulation.

Specifically, (a) Equityholders who are members of the Settlement Class and

(b) Equityholders who are not members of the Settlement Class but who, as of

the Effective Date, are entitled under Section 3.06 of the Merger Agreement to

receive distributions of the Indemnity Earnout Amount Balance (“Eligible

Equityholders”), shall receive a pro rata share of the Net Indemnity Earnout

Payment Fund based on their percentage ownership of SAG as of June 5, 2015

as set forth in the Merger Agreement. For the avoidance of all doubt, if you are

an Equityholder entitled under Section 3.06 of the Merger Agreement to receive

a distribution of the Indemnity Earnout Amount Balance, then you shall receive

a pro rata share of the Net Indemnity Earnout Fund, even if you choose to

exclude yourself from the Settlement Class.

The Net Indemnity Earnout Payment Fund shall be apportioned in the same

proportions that the Indemnity Earnout Amount Balance would be apportioned

under the terms of the Merger Agreement were that amount distributed. Thus,

those entitled to receive a pro-rata share of the Net Indemnity Earnout Payment

DOCUMENT 653

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Fund shall receive the same percentage share of the Net Indemnity Earnout

Payment Fund as they would be entitled to receive, under the Merger

Agreement, of a distribution of the Indemnity Earnout Amount Balance. For

illustrative purposes, if, under the Merger Agreement, a Settlement Class

Member or an Eligible Equityholder is entitled to receive 1% of any distribution

of the Indemnity Earnout Amount Balance, then that Settlement Class Member

or Eligible Equityholder shall receive a 1% share of the Net Indemnity Earnout

Payment Fund.

c. The XL Claim Amount Fund. Stifel also has agreed to distribute the XL

Claim Amount, which comprises any amounts that Stifel and/or Sterne Agee

are able to recover from XL Specialty Insurance Company (“XL”), SAG’s

directors’ and officers’ liability insurer, on the claims for indemnification

and/or defense costs that Stifel and/or Sterne Agree have made with XL as of

July 19, 2018, which are set forth in the schedule attached to the Stipulation as

Exhibit J.

Amounts that Stifel and/or Sterne Agee recover as of the Effective Date are

referred to as the “Initial XL Claim Amount Fund.” The Initial XL Claim

Amount Fund will first be used to (1) pay all escrow fees, costs, and other

administration expenses that are attributable to the Initial XL Claim Amount

Fund; (2) pay taxes and tax expenses that are attributable to the Initial XL Claim

Amount Fund; and (3) pay attorneys’ fees that have been awarded by the Court

from the Initial XL Claim Amount Fund. The balance of the Initial XL Claim

Amount Fund (the “Net Initial XL Claim Amount Fund”) shall be distributed

to Equityholders as set forth in Paragraphs 8.7 and 8.10 of the Stipulation.

Specifically, (a) Equityholders who are members of the Settlement Class and

(b) Eligible Equityholders shall receive a pro rata share of the Net Initial XL

Claim Amount Fund based on their percentage ownership of SAG as of June 5,

2015 as set forth in the Merger Agreement. For the avoidance of all doubt, if

you are an Eligible Equityholder, then you shall receive a pro rata share of the

Net Initial XL Claim Amount Fund, even if you choose to exclude yourself

from the Settlement Class.

Amounts that Stifel and/or Sterne Agee recover after the Effective Date are

referred to as the “Subsequent XL Claim Amounts.” The Subsequent XL

Claim Amounts will first be used to pay attorneys’ fees, expenses, and costs

that have been awarded by the Court from the Subsequent XL Claim Amounts.

The balance of the Subsequent XL Claim Amounts (the “Net Subsequent XL

Claim Amounts”) shall be distributed to Equityholders in the same manner as

the Net Initial XL Claim Amount Fund.

Like the Net Indemnity Earnout Payment Fund, the Net Initial XL Claim

Amount Fund and the Net Subsequent XL Claim Amounts shall be apportioned

in the same proportions that the Indemnity Earnout Amount Balance would be

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apportioned under the terms of the Merger Agreement were that amount

distributed. Those entitled to receive a pro-rata share of the Net Initial XL Claim

Amount Fund and the Net Subsequent XL Claim Amounts shall receive the

same percentage share of those funds as they would be entitled to receive, under

the Merger Agreement, of a distribution of the Indemnity Earnout Amount

Balance. For illustrative purposes, if, under the Merger Agreement, a

Settlement Class Member or an Eligible Equityholder is entitled to receive 1%

of any distribution of the Indemnity Earnout Amount Balance, then that

Settlement Class Member or Eligible Equityholder shall receive a 1% share of

the Net Initial XL Claim Amount Fund and a 1% share of any Net Subsequent

XL Claim Amounts.

The actual amount that each Settlement Class Member will receive will

ultimately depend on a variety of factors, including his or her percentage

ownership of SAG as of June 5, 2015, whether he or she submits a Proof of

Claim, the number of potential Settlement Class Members who exclude

themselves from the Settlement, the amount of Escrow Agent fees and

expenses, the amount of costs and expenses reasonably incurred by the Claims

Administrator, the amount of taxes and tax expenses, the amount of notice and

other administration costs, and whether and in what amounts the Court will

approve Fee and Expense Awards.

(See Settlement Agreement, ¶ 4)

2. Class Notice

Class Counsel and Defendants’ counsel negotiated a Class Notice form designed to

inform and educate Class Members regarding the Settlement and the benefits available to

them under the Settlement. This Notice involved the mailing of notice to 390 Class

Members based on shareholder information provided by Stifel Financial Corp. containing

the names, last known mailing addresses and Sterne Agee Group holdings information as

of June 5, 2015. Such Notice also included the establishment of a settlement website which

was printed in the Class Notice, activated on August 2, 2018, and periodically updated with

additional settlement information and filings from this Action.

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3. The Release

The terms of the release were included in the Notice mailed to Class Members. If

the Settlement is given final approval and reaches the Effective Date then the Releasing

parties:

(i) shall be deemed to have, and by operation of the Final Judgment and

Order of Dismissal, shall have, fully, finally, and forever waived, released,

relinquished, and discharged to the fullest extent permitted by law, all

Released Claims against each and all of the Released Persons, whether or

not you execute and deliver a Proof of Claim and Release; (ii) shall forever

be barred and enjoined from commencing, instituting, or prosecuting a class

action or any other action or proceeding in any court of law or equity,

arbitration tribunal, or other forum of any kind, directly, representatively,

derivatively, or in any other capacity and wherever filed, any Released

Claims against any of the Released Persons; and (iii) agree and covenant

not to sue any of the Released Persons with respect to any Released Claims

or to assist any third party in commencing or maintaining any suit against

any Released Person related in any way to any Released Claims.

This release will include claims that Settlement Class Members do not know or

suspect to exist in their favor at the time final approval may be granted to the Settlement,

if those claims arise from, are based on, or relate to the Released Claims. If the Settlement

is given final approval and reaches the Effective Date, all Settlement Class Members will

be deemed to have knowingly and voluntarily waived, relinquished and released the

protections of any laws that would limit this release, including, without limitation, Section

1542 of the California Civil Code.1

1 The full terms of the Release are set forth in Section 2 of the Settlement Agreement.

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ARGUMENT

A. NOTICE AND JURISDICTION

1. Distribution and Timing of the Notice

The threshold requirement concerning class notice is that the means employed to

distribute the notices “be reasonably calculated, under all of the circumstances, to apprise

interested parties of the pendency of the settlement proposed and to afford them an

opportunity to present their objections.” Mullane v. Central Hanover Bank & Trust, Co.,

339 U.S. 306, 314 (1950); Arbuthnot v. Pierson, 607 F. App’x 73 (2d Cir. 2015). However,

“[d]ue process does not require that every class member receive notice.” In re AT&T

Mobility Wireless Data Services Sales Tax Litig., 789 F.Supp.2d 935, 968 (N.D. Ill. 2011)

(citing Mullane, 339 U.S. at 314-315).

Both the substance of the Notice and the method of dissemination to members of

the Settlement Class satisfies these standards. As noted above, notice was sent by first

class United States mail to all Settlement Class Members based on information provided

by Stifel Financial Corp. Additionally, a website was created by the Settlement

Administrator which contains detailed information and filings from this Action. In sum,

direct notice was provided to all Class Members for whom Defendants possess accessible

address information. The notice distribution program employed by the parties amply

satisfies not only the requirements of Rule 23, but also of Constitutional Due Process.

The timing of the Class Notice was also sound. The Settlement Administrator

mailed the Notice package to all Class Members on August 2, 2018. The deadline for Class

Members to decide whether to object or request to be excluded from the Settlement was

September 10, 2018. Thus, Class Members had over thirty-five (35) days following the

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mailing of the Class Notice to decide whether to object to the Settlement, and the Class

Notice was mailed more than forty-five (45) days prior to the Final Fairness Hearing.

As set forth hereinafter, the Class Members have responded favorably to the

Settlement. In fact, only 5 class members, or just over 1% of the Settlement Class, have

filed an objection, none of whom object to the Settlement itself, but rather only to Class

Counsel’s fee request. Further, no opt-out notices or requests for exclusion were received

from Settlement Class Members. The form of distribution of the Notice and the

outstanding response rate plainly satisfies Ala. R. Civ. P. 23(c)(2).

2. Content of the Notice and the Opportunity to Object

The content of the Class Notice complies with the requirement of Rule 23. The

Notice advised Class Members that they will be bound by the judgment, and that any Class

Member may enter an appearance or objection with or without counsel if desired. (Class

Notice, ¶ 16). The Notice advises that the Final Hearing in this matter will be held on

September 24, 2018, at which time Class Members or their attorneys may be heard, and

informs Class Members how to object or exclude themselves from the Class.

Additionally, the Notice further informs the Class of the nature of the pending

litigation and claims asserted; a description of the key terms of the Settlement, including

the consideration amount and releases to be given; the parties’ reasons for proposing the

Settlement; an explanation of the Settlement Class member’s right to request exclusion

from the Settlement Class and to object to the Settlement; and the notice of the binding

effect of a judgment on Settlement Class members. The Notice also provides instructions

for submitting a Claim Form in order to be eligible to receive a distribution from the $6.5

Million Payment Fund, relevant deadlines and contact information. Furthermore, Class

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Members were instructed to contact Class Counsel or visit a settlement website for further

inquiry or information concerning the Settlement and applicable deadlines.

The details provided by the Class Notice thus go far beyond the “summary” of

information required by Rule 23(e). Unquestionably, the Class Notice presents “a fair

recital” of the subject matter and proposed terms of the Settlement. Marshall v. Holiday

Magic, Inc., 550 F.2d 1173, 1177 (9th Cir. 1977). The content of the Class Notice was

adequate, comprehensive and timely, and afforded the Settlement Class Members with

information necessary to make an informed and intelligent decision whether to object to

the Settlement.

B. THE SETTLEMENT IS FAIR, REASONABLE AND ADEQUATE

1. The Proposed Settlement Satisfies the Standard Governing Approval

of the Settlement

Because of the substantive identity of Rule 23 of the Alabama Rules of Civil

Procedure and Rule 23 of the Federal Rules of Civil Procedure, federal authority is deemed

persuasive when applying Alabama’s procedural rules in the context of class action

litigation. See e.g., Ex Parte American Bankers Life Assur. Co., 715 So.2d 186 (Ala. 1997);

Adams v. Robertson, 676 So.2d 1265 (Ala. 1995); First Baptist Church of Citronelle v.

Citronelle-Mobile Gathering, Inc., 409 So. 2d 727, 729 (Ala. 1991).

Alabama follows the well-established standards that give effect to the strong policy

favoring class action settlement. There is a “strong judicial policy favoring settlement as

well as the realization that compromise is the essence of settlement,” Bennett v. Behring,

737 F.2d 982, 986 (11th Cir. 1984), and settlements of class actions are “highly favored in

the law and will be upheld whenever possible because they are a means of amicably

resolving doubts and preventing lawsuits.” Bennett v. Behring Corp., 96 F.R.D. 343 (S. D.

DOCUMENT 653

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Fla. 1982), aff’d, 737 F.2d 982 (11th Cir. 1984)(quoting Miller v. Republic Nat. Life Ins.

Co., 559 F.2d 426, 428 (5th Cir. 1977)). See also, Donovan v. Estate of Fitzsimmons, 778

F.2d 298, 307 (7th Cir. 1985)(“there is an overriding public interest in favor of settlement

of class action suits.”).

The courts have recognized that “class action suits have a well-deserved reputation

as being the most complex” and, therefore, compromise is particularly appropriate. Cotton

v. Hinton, 559 F.2d 1326, 1331 (5th Cir. 1977); In re Domestic Air Transportation Antitrust

Litigation, 148 F.R.D. 297, 312 (N.D. Ga. 1993 )(“Settlements of class actions are highly

favored in the law and will be upheld whenever possible because they are a means of

amicably resolving doubts and preventing lawsuits”); In re General Motors Corp. Pick-up

Truck Fuel Tank Litig., 55 F.3d 768, 784 (3rd Cir. 1995)(“The law favors settlement,

particularly in class actions. . . .”).

A court will approve a settlement if it is “fair, reasonable and adequate and not a

product of collusion.” Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 116 (2d Cir.

2005); see, e.g., Maywalt v. Parker & Parsley Petroleum Co., 67 F.3d 1072, 1079 (2d Cir.

1995); In re Paine Webber Ltd. Partnership Litig., 171 F.R.D. 104, 124 (S.D.N.Y. 1997);

Isby v. Bayh, 75 F.2d 1191, 1196 (7th Cir. 1996). The determination of a “reasonable”

settlement is not susceptible to a mathematical equation yielding a particular sum. Rather,

there is a “range of reasonableness” with respect to a settlement. McDonald v. Chicago

Milwaukee Corp., 464 F.2d 416, 428 (7th Cir. 1977); Newman v. Stein, 464 F.2d 689, 693

(2nd Cir. 1972). The authority to approve a class settlement is committed to the sound

discretion of the trial court. Bennett, 737 F.d at 986. If the Court considers the settlement

DOCUMENT 653

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within the range of reason and fairness, its decision is reviewable only for abuse of

discretion. In re U.S. Oil & Gas Litigation, 967 F.2d 489, 493 (11th Cir. 1992).

In assessing a class settlement, the courts are advised to “refrain from making a

precise determination of the parties’ respective legal rights.” EEOC v. Hiram Walker &

Sons, Inc., 768 F.2d 884, 889 (7th Cir. 1985). Similarly, “[t]he proposed settlement is not

to be judged against a hypothetical or speculative measure of what might have been

achieved by the negotiators.” Officers for Justice v. Civil Serv. Comm’n, 688 F.2d 614, 625

(9th Cir. 1982); accord, Armstrong, 616 F.2d at 315 (“[j]udges should not substitute their

own judgment as to the optimal settlement terms for the judgment of the litigants and their

counsel”). Even if “the relief afforded by the proposed settlement is substantially more

narrow than it would be if the suits were successfully litigated,” this is no objection to a

class settlement, since the “public interest may indeed be served by a voluntary settlement

in which each side gives ground in the interest of avoiding litigation.” Air Line Stewards

& Stewardesses Ass’n v. American Airlines, Inc., 455 F.2d 101, 109 (7th Cir. 1972).

Courts may apply a presumption of fairness when a class settlement is the product

of “arm’s-length negotiations between experienced, capable counsel.” In re Citigroup Inc.

Bond Litig., 296 F.R.D. 147, 155 (S.D.N.Y. 2013)(quoting Wal-Mart, 396 F.3d at 16).

Because counsel are “most closely acquainted with the facts of the underlying litigation,”

courts give “great weight” to the recommendations of counsel regarding settlement,

especially when negotiations are facilitated by an experienced, third party mediator. In re

Telik, Inc. Sec. Litig., 576 F.Supp.2d 570, 576 (S.D.N.Y. 2008); see also D’Amato v.

Deutsche Bank, 236 F.3d 78, 85 (2d Cir. 2001)(finding that a mediator’s involvement in

settlement negotiations “helps to ensure that the proceedings were free of collusion and

DOCUMENT 653

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undue pressure”). As a result, considerable weight should be given to the views of

experienced counsel on the merits of the settlement. Gautreaux v. Pierce, 690 F.2d 616,

631 (7th Cir. 1982). There is a “strong initial presumption” that an arm’s-length settlement

arrived at by counsel experienced in the type of litigation involved on the basis of sufficient

information concerning the claims at issue is fair. Feder v. Harrington, 58 F.R.D. 171, 175

(S.D.N.Y. 1975). Stated another way, “[t]he trial judge, absent fraud, collusion, or the like,

should be hesitant to substitute its own judgment for that of the counsel.” Cotton v. Hinton,

559 F.2d 1326, 1330 (5th Cir. 1977)(citing Flinn v. FMC Corp., 528 F.2d 1169, 1173 (4th

Cir. 1975)); Pettway v. American Cast Iron Pipe Co., 57 F.2d 1157, 1214 (5th Cir. 1978)

cert. denied, 439 U.S. 1115 (1979). Also it is essential that the Court not examine the

settlement as if the defendants had been found liable. See, e.g., City of Detroit v. Grinnell

Corp., 495 F.2d 448, 455-56 (2nd Cir. 1974); Cf. Cotton, 559 F.2d at 1330 )(“Inherent in

compromise is a yielding of absolutes and an abandoning of highest hopes”)(quoting

Milstein v. Werner, 57 F.R.D. 515, 524-25 (S.D.N.Y. 1972).

A non-exhaustive list of factors that trial courts may consider in evaluating the

fairness of a class settlement is as follows:

1. The likelihood of success at trial;

2. The range of possible recovery;

3. The point on or below the range of possible recovery at which the settlement

is fair, adequate and reasonable;

4. The complexity, expense and duration of the litigation;

5. The substance and amount of opposition to the settlement;

6. The state of the proceedings at which the settlement was achieved.

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Bennett v. Behring Corp., 737 F.2d 982, 986 (11th Cir. 1984). Also, the opinion of

competent counsel as to the reasonableness of the settlement must be given substantial

weight by the Court. See, e.g., Cotton, 559 F.2d at 1330. Consideration of these factors

in the context of this litigation demonstrates that this settlement is fair, reasonable,

adequate and in the best interest of the Class.

2. Factors Supporting Approval of the Settlement

a. Likelihood of Success at Trial

In assessing the likelihood of success at trial for purposes of determining whether

the settlement is fair, adequate and reasonable, the Court need only make a “limited inquiry

into whether the possible rewards of continued litigation with its risks and costs are

outweighed by the benefits of settlement.” Ressler v. Jacobson, 822 F.2d 1551, 1553 (M.D.

Fla. 1992); see also Garst v. Franklin Life Ins. Co., 1999 LEXIS 226666 *62 (N.D. Ala.

1999). Here, Class Counsel assessed the probability of ultimate success on the merits vis-

à-vis the risks of establishing liability.

While Plaintiff believes this case has substantial merit, Plaintiff recognizes the risks

involved in complex litigation, both in establishing liability and in obtaining class

certification. Defendants are represented by experienced counsel, who no doubt would

continue to mount a vigorous and thorough defense to Plaintiff’s claims for relief.

Although class certification had not yet been briefed in this case, Defendants would

undoubtedly have raised vigorous challenges to class certification, and such disputes

“could well devolve into yet another battle of the experts.” Bear Stearns, 909 F.Supp.2d at

268. If a class were to be certified, Defendants could move to decertify the class at any

DOCUMENT 653

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time. See Fed. R. Civ. P. 23(c)(2); Global Crossing, 225 F.R.D. at 460 (“[E]ven if plaintiffs

could obtain class certification, there could be a risk of decertification at a later stage”).

Here, “the uncertainty surrounding class certification supports approval of the Settlement,”

Marsh & McLennan, 2009 WL 5178546, at *6, because “even the process of class

certification would have subjected Plaintiffs to considerably more risk than the unopposed

certification that was ordered for the sole purpose of the Settlement.” AOL Time Warner,

2006 WL 903236, at *12. While it is easy to hope for an astronomical recovery, as one

federal district court reminded several objectors to a class settlement, “[i]n the real world .

. . the path to a large damage award is strewn with hazards.” In re Gulf Oil/Cities Serv.

Tender Offer Litigation, 142 F.R.D. 588, 595 (S.D.N.Y. 1992). This settlement replaces

the risks of establishing liability and damages with immediacy and certainty of a substantial

recovery. See, e.g., Girsh v. Jepson, 521 F.2d 153, 157 (3rd Cir. 1975).

In assessing the fairness, reasonableness and adequacy of the Settlement, therefore,

the Court must balance those risks of establishing liability and damages against the benefits

afforded to the class members, and the immediacy and certainty of a substantial recovery

against the risks of continued litigation. Maley v. Del Global Techs. Corp., 186 F.Supp.2d

358, 364 (S.D.N.Y. 2002); Weiss v. Mercedes Benz of North America, Inc., 899 F.Supp.

1297, 1301 (D.N.J. 1995)(“[T]he risks surrounding a trial on the merits are always

considerable”); see also, West Virginia v. Chas. Pfizer & Co., 314 F.Supp. 710 743-44

(S.D.N.Y. 1970)(“[N]o matter how confident one may be of the outcome of the litigation,

such confidence is often misplaced”), aff’d, 440 F.2d 1079 (2d Cir. 1971). These risks are

especially acute when defendants have a large litigation war chest at their disposal, and

have evidenced a willingness to expend significant resources.

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b. Range of Possible Recovery and Point At or Below the Range of

Possible Recovery Which is Fair

In assessing the Settlement, the Court must also consider the range of possible

damages the could be recovered at trial and then combine this possibility with the

Plaintiff’s likelihood of prevailing at trial, and other relative factors, to determine if the

settlement falls at a point in the possible recovery range that is fair to the Class.

In determining whether the amount of the Settlement is reasonable, “the Court is

not confined to the mechanistic process of comparing the settlement to the estimated

recovery times the multiplier derived from the likelihood of prevailing on the merits.” In

re Corrugated Container Antitrust Litigation, 643 F.2d 195, 217 (5th Cir. 1981). Instead,

the Court must recognize that, “[i]n any case, there is a range of reasonableness with respect

to a settlement – a range which recognizes the uncertainties of law and fact in a particular

case and the concomitant risks and cost necessarily inherent in taking any litigation to

completion.” Newman v. Stein, 464, F.2d 689, 693 (2ndCir. 1972), cert denied sub nom.,

409 U.S. 1039 (1972).

There is no fixed point above or below which a settlement is fair or not fair. Indeed,

“[t]he fact that a proposed settlement may only amount to a fraction of the potential

recovery does not, in and of itself, mean that the proposed settlement is inadequate; there

is no reason why a satisfactory settlement could not amount to a hundredth or even a

thousandth part of a single percent of the potential recovery.” In re TBK Partners, Limited

v. Western Union Corp., 675 F.2d 456, 463-64 (2nd Cir. 1982); Garst , 1999 LEXIS 22666

at *64-65. In the instant action, a Total Settlement of at least $23 Million will be distributed

among the Settlement Class Members based on their pro rata share of Sterne Agee Group

as of June 5, 2015. This is hardly insignificant or inadequate relief.

DOCUMENT 653

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c. The Complexity, Expense and Duration of Litigation

Courts have consistently viewed the expense and possible duration of litigation as

factors appropriately considered in evaluating the reasonableness of a settlement. See Class

Plaintiffs v. City of Seattle, 955 F.2d 1268, 1292 (9th Cir. 1992)(“complexity, duration and

sheer enormity of the pending class action weighed heavily against a conclusion that the

district court abused its discretion in approving the settlement”). Continued litigation of

all issues by the Defendants, who are represented by highly experienced counsel, would

have prolonged any recovery to Settlement Class Members. Even if Plaintiff was

successful in the continued prosecution of a case through trial, appeals taken by the

determined Defendants would entail enormous additional effort, risk and expense with no

promise of a greater recovery. Inevitable motion practice would further extend the

litigation for years, and any trial of the action could last for several weeks. Moreover, the

available Directors’ and Officers’ insurance coverage, as well as, the Indemnity Holdback

from the merger, would be substantially depleted, if not exhausted, by defense costs, and

any resulting judgment, in this litigation.

The Settlement assures substantial benefits to the Class without the further delay,

expense and risks that would be unavoidable in further litigation. This factor supports the

approval of the settlement. See Garst, 1999 LEXIS 22666 at *69; In re Prudential Ins. Co.

of America Sales Practices Litigation, 148 F.3d at 318; In re Manufacturers Life Ins. Co.

Premium Litigation, 1998 LEXIS 23217 *10 (S. D. Cal. Dec. 21, 1998). Plaintiff submits

that the Settlement grants the Class members timely relief without the unwarranted risks,

complexity, duration and expense inherent in continuing uncertain litigation.

DOCUMENT 653

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d. The Stage of Proceedings At Which The Settlement Was Achieved

In assessing this factor, the relevant inquiry is whether the parties have conducted

sufficient discovery to assess the strengths and weaknesses of the claims and defenses to

be asserted in the action. Garst, 1999 LEXIS 22666 at *70. Comprehensive discovery is

not required. Woodward v. Nor-Am Chemical Co., 1996 WL 1063670 at *21. To satisfy

this factor, the parties “need not have engaged in extensive discovery as long as they have

engaged in sufficient investigation of the facts to enable the Court to intelligently make . .

. an appraisal of the settlement.” AOL Time Warner, 2006 WL 903236, at *10; IMAX, 283

F.R.D. at 190 (“The threshold necessary to render the decisions of counsel sufficiently well

informed, however, is not an overly burdensome one to achieve –indeed, formal discovery

need not have necessarily been undertaken yet by the parties”).

By the time the parties agreed to settle, Plaintiff and Class Counsel understood the

strengths and weaknesses of the claims and defenses asserted, and could make an informed

evaluation regarding the chances of success. Class Counsel expended significant time and

resources analyzing and litigating the legal and factual issues in the action. Further, Class

Counsel reviewed publicly available information, interviewed former employees of SAG,

and engaged in certain discovery with the parties in furtherance of Plaintiff’s investigation

of claims, and due diligence in preparation for mediation. Plaintiffs also obtained third

party discovery from a former CFO of Sterne Agee Group. In light of these efforts, Class

Counsel had a strong and sufficient understanding of the case to assess the legal and factual

merits of the claims at issue, and the risks, in order to intelligently negotiate a settlement

that provides relief to meet the needs of Class Members in light of the risks associated with

the continued litigation. See, e.g., Ressler v. Jacobson, 822 F. Supp. 1154-55 (“Plaintiffs

DOCUMENT 653

23

have conducted sufficient discovery to be able to determine the probability of the success

on the merits, the possible range of recovery, and the likely expense and duration of the

litigation”); AOL Time Warner, 2006 WL 903236, at *10; see also In re Advanced Battery

Techs., Inc. Sec. Litig., 298 F.R.D. 171, 177 (S.D.N.Y. 2014) (where “no merits discovery

occurred,” counsel that had conducted their own investigation, engaged in detailed

briefing, and conducted targeted due diligence discovery were “knowledgeable with

respect to possible outcomes and risks in this matter and, thus, able to recommend the

Settlement”). This factor favors approval of the settlement.

e. The Absence of Collusion Among the Parties

This Settlement is the product of extensive arm’s-length negotiations, including

two (2) mediation sessions, by experienced counsel, after substantial factual investigation

and legal analysis. The Settlement reached is the culmination of negotiations by

experienced and informed counsel vigorously pursuing their respective clients’ interests.

Class Counsel, who collectively have vast experience in complex class and derivative

action work, negotiated the settlement with a view toward resolving the issues in dispute

on the most favorable terms for the Class.

Class Counsel considered, among other things, the strength and weaknesses of

Plaintiff’s claims against the Defendants, the uncertainties inherent in this complex

litigation, and the substantial benefits provided by the settlement to the members of the

Class. In light of the benefits available under the Settlement and the costs, risks, and

inevitable delay involved in continued litigation and likely appeals, Class Counsel believes

that this Settlement is in the best interest of the Class and is in all respects fair, reasonable

DOCUMENT 653

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and adequate. The opinion of competent and experienced counsel as to the reasonableness

of the settlement is an important consideration. In re Domestic Air Transportation

Antitrust Litigation, 148 F.R.D. at 312. In fact, when a proposed settlement is the result of

arm’s-length negotiations by capable counsel, the settlement is presumed to be fair and

reasonable. See Newberg on Class Actions, § 11.41, 11-88, 3rd edition, (1992); see also,

e.g., In re NASDAQ Marketmakers Antitrust Litigation, 187 F.R.D. 464, 474 (S.D.N.Y.

1998).

f. Substance and Amount of Opposition to the Settlement

It is well settled that “the reaction of the Class to the settlement is perhaps the most

significant factor to be weighed in considering its adequacy.” Sala v. National Railroad

Passenger Corp, 721 F.Supp. 80, 83 (E.D. Pa. 1989); Donovan, 778 F.2d 308; EEOC, 768

F.2d 889; In re Bear Stearn Cos. Sec., Deriv. & ERISA Litig., 909 F.Supp.2d 259 (S.D.N.Y.

2012). A favorable reception by the Class constitutes “strong evidence” of the fairness of

the settlement and supports judicial approval. In re Paine Webber Limited Partnership

Litig., 171 F.R.D. 104, 126 (S.D.N.Y 1997), aff’d, 117 F.3d 721 (2nd Cir. 1997)(citing

Detroit v. Grinnell Corp., 495 F.2d 448, 462 (2nd Cir. 1974).

Pursuant to the Preliminary Approval Order, the Court approved Tilghman & Co.,

P.C. (“Tilghman”), to serve as the Claims Administrator. On August 2, 2018, in

accordance with the Preliminary Approval Order, Tilghman mailed by USPS First Class

Mail the Court-approved Class Notice, Proof of Claim and Release Forms and Request for

Exclusion Forms (together, the “Notice Packet”) to the 390 putative Settlement Class

Members. See Declaration of L. Stephens Tilghman, attached as Exhibit 3. Thereafter,

DOCUMENT 653

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Tilghman re-mailed the Notice Packets with updated address information to 15 Settlement

Class Members whose Notice Packets were returned as undeliverable. Id. Tilghman was

unable to deliver just three (4) Class Notice Packets, which amounts to 1.02% of the

putative Settlement Class of 390 persons. Id.

Pursuant to the Court’s Preliminary Approval Order, the deadline for members of

the Settlement Class to object or exclude themselves from the Settlement Class was

September 10, 2018. As of this date, the Claims Administrator had received zero opt-out

notices or Requests for Exclusion. Id. Similarly, as of this deadline, the Claims

Administrator had received 268 timely Proof of Claim and Release forms, which represent

88.81% of the outstanding shares held by Settlement Class Members. Id. As of September

17, 2018, Tilghman has received an additional five (5) untimely Proof of Claim and

Release forms.2 Id. Finally, as of the September 10, 2018 deadline, while no objections

were filed as to the terms of the Settlement Agreement, there were two objections to Class

Counsel’s Fee and Expense Application filed with the Court.3

The paucity of objections weighs heavily in favor of approval. Bell Atlantic Corp.

v. Bolger, 2 F.3d 1304, 1313-14 (3rd Cir. 1993)(small numbers of objectors favors a

settlement); Maher v. Zapata Corp., 714 F.2d 436, 456 (5th Cir. 1983)(minimal shareholder

objection is another factor favoring approval of the settlement); In re Beef Indus. Antitrust

Litig., 607 F.2d 167, 180 (5ht Cir. 1979). The Settlement Class’s favorable reaction

supports the conclusion that the settlement is fair, reasonable and adequate and militates in

2 Class Counsel intends to petition the Court to accept these untimely Proof of Claim and Release forms,

which if approved by the Court, will reflect a total of 273 Proof of Claim and Release forms submitted by

Settlement Class Members, comprising 89.11% of the outstanding shares held by the Settlement Class. Id. 3 These two Objections were filed on behalf of 5 Settlement Class Members, which equates to just 1.28% of

the Class.

DOCUMENT 653

26

favor of approving the Settlement. Grinnell Corp., 495 F.2d at 462 (“[a]ny claim by

appellants that the settlement offer is inadequate is belied by the fact that . . . (o)nly twenty

objectors appeared from the group of 14,156 claimants.”); see Bear Stearns, 909 F.Supp.2d

at 267 (“Given the absence of significant exclusion or objection –the rate of exclusion is

5.1% and the rate of objection is less than 1%-- this factor weighs strongly in favor of

approval).

C. THE PLAN OF ALLOCATION SHOULD BE APPROVED

“When formulated by competent and experienced counsel, a plan for allocation of

net settlement proceeds need only have a reasonable, rational basis.” In re IMAX Sec. Litig.,

283 F.R.D. 178, 192 (S.D.N.Y. 2012); Bear Stearns, 909 F.Supp.2d at 270. “In

determining whether a plan of allocation is fair, courts look largely to the opinion of

counsel.” Marsh v. McLennan, 2009 WL 5178546, at *13.

The net Settlement Fund will be allocated among the Settlement Class Members on

a pro rata basis based on their respective shareholder interest in Sterne Agee Group, Inc. at

the time of the June 5, 2015 Merger.

Class Counsel believes that the proposed Plan of Allocation provides a fair and

reasonable method to equitably allocate the Net Settlement Fund among the Settlement

Class Members. To date, no objections to the Plan of Allocation have been received,

suggesting that the Settlement Class also finds the Plan of Allocation to be fair and

reasonable. In re Nasdaq Mkt.-Makers Antitrust Litig., No. 94 Civ. 3996 RWS, 2000 WL

37992, at *2 (S.D.N.Y. Jan 18, 2000)(holding that the “small number of objections to the

Proposed Plan” was entitled to “substantial weight” in approving the plan).

DOCUMENT 653

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For each of the foregoing reasons, Plaintiff respectfully submits that the proposed

Plan of Allocation is fair and reasonable and merits final approval from the Court.

D. FINAL CERTIFICATION OF THE SETTLEMENT CLASS

The Court’s July 23, 2018 Preliminary Approval Order conditionally certified the

Settlement Class for settlement purposes only, finding that it satisfied the requirements of

Ala. R. Civ. P. 23(a) and 23 (b)(2) and (b)(3). There have been no changes to alter the

propriety of class certification for settlement purposes. Thus, for the reasons stated in

Plaintiff’s Motion for Preliminary Approval, Plaintiff respectfully requests that the Court

affirm its determinations in the Preliminary Approval Order certifying the Settlement Class

under Rules 23(a) and 23(b)(2) and 23(b)(3).

CONCLUSION

For all the foregoing reasons, Plaintiff respectfully requests that the Court grant

the Motion for Final Approval of Class Settlement and Plan of Allocation.

/s/Thomas E. Baddley, Jr.

THOMAS E. BADDLEY, JR.

/s/ Jeffrey P. Mauro

JEFFREY P. MAURO

/s/John Parker Yates

JOHN PARKER YATES

Attorneys for Plaintiff

BADDLEY, MAURO & YATES, L.L.C.

850 Shades Creek Parkway, Ste. 310

Birmingham, AL 35209

DOCUMENT 653

28

(205) 939-0090

/s/Stephen D. Wadsworth

Andrew P. Campbell

Stephen D. Wadsworth

Yawanna McDonald

OF COUNSEL:

Andrew P. Campbell

Stephen Wadsworth

Yawanna McDonald

CAMPBELL GUIN, LLC

505 20th Street North, Ste. 1600


CERTIFICATE OF SERVICE

I hereby certify that on September 17, 2018, I electronically filed the

foregoing with the Clerk of the Court using the Alafile system, which will send

notification of such filing to the following:

Will Hill Tankersley

Adam K. Israel

Gregory C. Cook

BALCH, BINGHAM, LLP

1901 6th Avenue North, Suite 1500


Bruce L. Gordon

John Dana

GORDON, DANA &GILMORE, LLC

600 University Park Place, Suite 100


Gregory H. Hawley

JONES & HAWLEY, P.C.

2001 Park Place, Suite 830


Carole G. Miller

Matthew I. Penfield

BRESSLER, AMERY &ROSS, P.C.

2000 Park Place, Ste. 1500


DOCUMENT 653

29

David G. Hymer

Bradley Arant Boult Cummings LLP

One Federal Place

1819 Fifth Avenue

North Birmingham,

AL 35203

Phone: (205) 521-8000

/s/ Thomas E. Baddley, Jr.

THOMAS E. BADDLEY, JR

DOCUMENT 653

EXHIBIT 1




DOCUMENT 654

DO

CU

ME

NT

654

EXHIBIT 2




DOCUMENT 655

1

AFFIDAVIT OF ANDREW P. CAMPBELL

Before me, the undersigned Notary Public, in and for said State and County, personally

appeared Andrew P. Campbell, who after being duly sworn, states as follows:

1. My name is Andrew P. Campbell, I am over the age of nineteen years, I am an

attorney licensed to practice law in Alabama, and I am the managing partner of the law firm

Campbell Guin, LLC. I have personal knowledge concerning the following facts.

2. I have been a member of the Alabama State Bar for over thirty-eight (38) years.

During the course of my practice, I have served as lead or co-counsel of many class-action matters,


BIRMINGHAM DIVIS IN THE CIRCUIT COURT OF JEFFERSON COUNTY,

ALABAMA

TRACI SALINAS and SHARON LEE )

STARK, derivatively on behalf of )

STERNE AGEE GROUP, INC., )

)

Plaintiffs, )

)

v. ) CASE NO: CV-2014-902794

)

JAMES S. HOLBROOK, JR., )

WILLIAM K. HOLBROOK, )

JON S. SANDERSON, ERIC B. )

NEEDLEMAN, SAL A. NUNZIATA, )

ROBERT G. NUNZIATA, WALTER )

S. ROBERTSON, III, WATLER A. )

RUCH, III, HENRY S. LYNN, JR., )

LINDA M. DANIEL, JAY W. CARTER, )

JOE R. ROBERTS, JR. and )

STERNE AGEE GROUP, INC., )

FICTITIOUS DEFENDANTS A through )

Z )

)

Defendants. )

DOCUMENT 655

2

including, but not limited to, 2:12-CV-04269 Cromeans et al., v. Morgan Keegan & Co., et al and

CV-2010-900013, Green, et al. v Boozer, et al.

3. I, along with my co-counsel, Baddley, Mauro & Yates, LLC, have worked this case

diligently for the last four (4) years. Plaintiffs have had to overcome many obstacles, including,

but not limited to, transfer and/or recusal of this matter to three (3) different judges, dismissal of

named plaintiffs, several motions to dismiss, and numerous motions for summary judgment.

Moreover, Defendants repeatedly petitioned the Alabama Supreme Court for mandamus relief, as

well as appealed this Court’s order overturning dismissal of Plaintiff’s claims.

4. During the course of this litigation, Defendant Sterne Agee merged with Stifel

Financial Corp., (“Stifel”) which presented a set of new issues.

5. Additionally, Plaintiffs had to vigorously fight to maintain standing to prosecute

the claims, as well as withstand challenges as to the Court’s subject matter jurisdiction over post-

merger claims which Defendants sought to litigate in Delaware.

6. This case involved extraordinarily complex issues and questions of law which

required specialized experience and expertise in shareholder derivative actions. First, counsel had

to fight to retain named plaintiffs in this action. When the action commenced in 2014, two

plaintiffs were designated as class representatives; however, during the course of the litigation the

original named plaintiffs withdrew; thus, requiring Class counsel to add additional representatives

to maintain the suit. All named Plaintiffs faced harassment, intimidation and/or fear of retribution

from Defendants, causing several to decide that they no longer wanted to pursue the action.

Second, because Sterne Agee merged with Stifel during the course of this litigation, it required

counsel to modify its case strategies. Thus instead of a derivative suit, Plaintiff then had to assert

direct class claims against Defendants arising out of the fraudulent merger between Sterne Agee

DOCUMENT 655

3

and Stifel, as contemplated under Delaware law. Further, the Defendants raised the releases

required to be executed by the shareholders in the merger documents as a defense. As a result,

there was a significant legal dispute over the enforceability of these releases.

7. Moreover, even after Plaintiff had amended his complaint to include direct claims,

Defendants nonetheless filed motions to dismiss and motions for summary judgment which were

granted in their entirety. However, after filing a motion to reconsider, this Honorable Court

reversed that decision and allowed Plaintiff’s claims to proceed. The Alabama Supreme Court

affirmed this Court’s reversal. These claims all presented additional complex questions of law

which posed great risks of an adverse ruling at summary judgment or at trial. Added to the

difficulties, was the opposition of the purported Shareholders Committee to any efforts by us to

recover for the Shareholders. It is quite ironic that this group of shareholders has objected to

attorney fees when they did not assist us or the shareholders they were appointed to represent; but

rather remained firmly embedded in the pocket of their employer Stifel.

8. Then on May 2-3, 2018, the parties mediated the case over two (2) days before the

well-recognized and highly experienced mediator, Ralph Levy, Esq. Prior to the mediation, the

Parties exchanged financial and accounting information regarding the Sterne Agee-Stifel merger.

At the conclusion of the mediation, the parties had not yet reached a settlement; however,

settlement negotiations continued. The parties spent considerable time negotiating the terms of

the settlement and ultimately were able to reach a global settlement for all of the litigation

involved, including Sterne Agee v. Holbrook.

9. The settlement provides that Plaintiff and the class will receive a benefit of at least

twenty-three million dollars in cash ($23,000,000.00) from Defendants for the benefit of Sterne

Agee Group’s former shareholders. Pursuant to the Settlement, Defendants agreed to make

DOCUMENT 655

4

available three (3) separate settlement funds for a Total Settlement Amount consisting of the

following:

A. a $6.5 Million Payment Fund;

B. a $15 Million Indemnity Earnout Payment Fund; and

C. a XL Claim Amount Fund (approximate value between $1.5 - 2.8 million)

See Stipulation of Settlement and Release, ¶¶ 4.1-4.3

10. All three (3) of the separate settlement funds are a direct result of Plaintiff’s

counsels hard work and due diligence in this matter. Those sums are part of a class pool which

would not have been paid but for our efforts. The Parties spent considerable time drafting the

Settlement Agreement, which ensures that the Settlement Class Members are provided with

notice of the Settlement Agreement and its terms.

11. Plaintiff and Plaintiff’s counsel believe that this Settlement represents an excellent

result for the Settlement Class Members due to (1) the complexity of the claims and defenses; (2)

duration of case; (3) uncertainty and inherent risks of continued litigation; (4) Defendants’

continued denial of liability and aggressiveness of litigating and appealing the case; (5) best

interest of the Plaintiff and Settlement Class members; (6) puts an end to protracted litigation and

appeals process; (7) pays Settlement Class Members cash; (8) a direct result of at-arm’s length;

(9) the settlement is fair, reasonable, and adequate; and (10) caps the litigation expenses.

12. Out of the 390 Settlement Class Members, there were zero objections to the

Settlement itself, with just five (5) shareholders filing objection to Class Counsel’s Fee and

Expense Petition. Further, there have be no opt-outs or requests to be excluded from the Settlement

Class. As a result, it is apparent that the Settlement has been well-received by the Class. The fact

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that the Settlement Class approves of the Settlement demonstrates that the Settlement is fair,

reasonable and adequate.

13. As a result, undersigned counsel believes and recommends that the Court approve

this Settlement for the Class Members and award attorneys’ fees and expenses commensurate with

Plaintiff’s counsel hard work and dedication in this matter and obtaining substantial and significant

benefits to Class members. I would add that the counsel opposing the attorney’s fees have alleged

that the case presented no novel questions of law, which I can only attribute to counsels’ lack of

experience in handling these type of claims.

DOCUMENT 655

DOCUMENT 655

EXHIBIT 3




DOCUMENT 656

DOCUMENT 656

notice of electronic filing · 2018-09-19 · alafile e-notice to: degruy tiffany johnson...

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