Michael Washenik, Orloff Family Trust DTD 10/3/91, Orloff Family Trust DTD 12/31/01, St. Stephen, Inc. v. Pub. Pension Funds, the Pub. Pension Fund Grp., Steven J. Sklar, Bahnmaier, Mark Adams, Elizabeth Eagen, Vernon C. Dailey, Richard Adame, Arlene Kahn, Petra Chatman, Stichting Pensioenfonds Abp, Grant Mitchell, N.Y. State Teachers' Ret. Sys., Pub. Employees' Ret. Ass'n of Colo., Steve R. Graber, Individually, S. Large Co. (In re Bank of Am. Corp.)
| Decision Date | 05 November 2014 |
| Docket Number | 13–1677(con),13–1798(con),Docket Nos. 13–1573(L),13–1853(con).,13–1830(con) |
| Citation | 772 F.3d 125 |
| Court | U.S. Court of Appeals — Second Circuit |
| Parties | In re BANK OF AMERICA CORP. SECURITIES, DERIVATIVE, AND EMPLOYEE RETIREMENT INCOME SECURITY ACT (ERISA) LITIGATION. Michael Washenik, Orloff Family Trust DTD 10/3/91, Orloff Family Trust DTD 12/31/01, St. Stephen, Inc., Leonard Masiowski, Maryann Masiowski, Michael J. Rinis, Babette Rinis, Michael J. Rinis, IRA, Objectors–Appellants, Charles N. Dornfest, Plaintiff, v. Public Pension Funds, The Public Pension Fund Group, Steven J. Sklar, as (IRA Account Beneficiary), on Behalf of himself and all others similarly situated, Rhonda Wilson, Alma Alvarez, Michael R. Bahnmaier, Mark Adams, Elizabeth Eagen, Vernon C. Dailey, Richard Adame, Arlene Kahn, Petra Chatman, Stichting Pensioenfonds ABP, Grant Mitchell, New York State Teachers' Retirement System, Public Employees' Retirement Association of Colorado, Steve R. Graber, Individually, as assignee of claims of the SRG 2008 Trust, Schwab SP500 Index Fund, Schwab 1000 Index Fund, Schwab Institutional Select SP500 Fund, Schwab Dividend Equity Fund, Schwab Core Equity Fund, Schwab Premier Equity Fund, Schwab Fundamental U.S. Large Company Index Fund, Schwab Total Stock Market Index Fund, Schwab SP500 Index Portfolio, Schwab Markettrack Growth Portfolio, Schwab Markettrack Balanced Portfolio, Schwab Investments, Schwab Capital Trust, Dr. Salomon Melgen, Flor Melgen, SFM Holdings Limited Partnership, International Fund Management S.A., Deka International S.A. Luxemburg, Deka Investment GmbH, DI, Aaron Katz, Joel Katz, Sylvia Weissmann, Parker Family Investments L.L.C., Jeffrey R. Parker, The 1997 Jeffrey R. Parker Family Trust, Drew E. Parker, The 1994 Drew E. Parker Family Trust, Keith D. Parker, Julie M. Sorin, The 1991 Jeffrey R. Parker Family Trust, The 1994 Julie P. Mantell Family Trust, Michael A. Parker, Mark D. Wender, Elliot Wender, Penina Wender, Stanley L. Wender, Razelle M. Wender, Jill W. Goldstein, Jerry E. Finger, Ambassador Life Insurance Company, Select Investors Exchange Fund, L.P., Richard Finger, Jef Family Trust, 1976 Real Estate Trust, Walter Finger, The Jerry E. Finger Family Trust D/T/D 12/28/1989, The Jerry E. Finger Family Trust, Leo R. Jalenak, Peggy E. Jalenak, Kers & Co., Robert Gegnas, 198 Locha Drive, Jupiter, FL 334587752, Steven L. Shapiro, Harvey M. Mitnick, Nathan A. Friedman, Bonnie Friedman, Kenneth A. Ciullo, Joanna Ciullo, Thomas P. DiNapoli, Comptroller of the State of New York, as Administrative Head of the New York State and Local Retirement Systems And As Sole Trustee Of The New York State Common Retirement Fund, Schwab Financial Services Fund, Plaintiffs–Appellees, v. Bank of America Corp., Gary A. Carlin, Nelson Chai, Kenneth D. Lewis, John A. Thain, Frank P. Bramble, Sr., William Barnet, III, John T. Collins, Gary L. Countryman, Tommy R. Franks, Charles K. Gifford, Monica C. Lozano, Walter E. Massey, Thomas J. May, Patricia E. Mitchell, Thomas M. Ryan, Meredith R. Spangler, Robert L. Tillman, Jackie M. Ward, Neil A. Cotty, Joe L. Price, Banc of America Securities L.L.C., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bank of America, J. Steele Alphin, Amy Woods Brinkley, Barbara J. Desoer, Liam E. McGee, Timothy J. Mayopoulos, Brian T. Moynihan, Bruce L. Hammonds, Richard K. Struthers, Bank of America Corporation Corporate Benefits Committee Defendants, Bank of America Compensation and Benefits Committee Defendants, Keith T. Banks, Teresa Brenner, Carol T. Christ, Armando M. Codina, Virgis W. Colbert, Gregory Curl, John D. Finnegan, Gregory Fleming, Fox–Pitt Kelton Cochran Caronia Waller (USA) L.L.C., J.C. Flowers & Co., L.L.C., Judith Mayhew Jonas, Aulana L. Peters, Joseph W. Prueher, Ann N. Reese, Michael Ross, Charles O. Rossotti, Peter Stingi, Thomas K. Montag, Kenneth D. Davis, Martin I. Fineberg, Kenneth A. Lewis, Merrill Lynch & Co., Inc., 4 World Financial Center , New York, N.Y. 10080, Bank of America Corporation, 100 N. Tryon Street, Charlotte, NC 28255, Joseph L. Price, Jeremy Fineberg, O. Temple Sloan, Jr., Defendants–Appellees, Peter Kraus, Defendant. |
OPINION TEXT STARTS HERE
Affirmed. Steve A. Miller, Steve A. Miller, P.C., Denver, CO, for Objector–Appellant Michael Washenik.
N. Albert Bacharach, Jr., N. Albert Bacharach, Jr., PA, Gainesville, FL, for Objectors–Appellants Leonard Masiowski, MaryAnn Masiowski, Michael J. Rinis, Babette Rinis; and Michael J. Rinis, IRA.
Robert N. Kaplan, Kaplan Fox & Kilsheimer LLP, New York, NY, (Steven B. Singer, John J. Rizio–Hamilton, Bernstein Litowitz Berger & Grossman LLP, New York, NY; David Kessler, Sharan Nirmul, Kessler Topaz Meltzer & Check LLP, Radnor, PA; Frederic S. Fox, Kaplan Fox & Kilsheimer LLP, New York, NY, on the brief) for Plaintiffs–Appellees Public Pension Funds and Grant Mitchell.
Daniel J. Kramer, Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, NY, (Brad S. Karp, Audra J. Soloway, Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, NY; Mitchell A. Lowenthal, Lewis J. Limin, Cleary Gottlieb Steen & Hamilton LLP, New York, NY; Julia Guttman, Baker Botts LLP, Washington D.C.; Colby A. Smith, Debevoise & Plimpton LLP, Washington D.C.; Adam S. Hakki, Shearman & Sterling LLP, New York, NY, on the brief) for Defendants–Appellees.
In this appeal, we consider several challenges to the district court's approval of a settlement agreement between representative plaintiffs and the defendant Bank of America in a class action lawsuit alleging violations of the Securities Act of 1933, 15 U.S.C. § 77a et seq., and the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq. The underlying litigation traces its origins to Bank of America's negotiations with Merrill Lynch in the Fall of 2008, which culminated in the two financial institutions merging in January 2009. Holders of Bank of America stock and derivative options brought claims against Bank of America when it was discovered that senior officers at the Bank had withheld information leading up to the shareholder vote on the merger—information that included Merrill Lynch's losses of more than $20 billion in the final quarter of 2008 and agreements regarding bonuses orchestrated by the two financial institutions in anticipation of the merger. The district court consolidated these claims and named lead plaintiffs to pursue the actions on behalf of the larger class in conformance with the Private Securities Litigation Reform Act, 15 U.S.C. § 78u–4(a)(3)(B)(i). Before trial commenced, the parties negotiated a settlement agreement. Pursuant to Federal Rule of Civil Procedure 23(e), the district court approved the notice of the settlement to class members. After that notice issued, certain nonnamed class members objected to the settlement. We address these objections.4
In November 2012, the class representatives filed a motion for preliminary approval of a negotiated settlement of $2,425,000,000.00. The motion included the proviso that funds from the settlement would go toward paying any litigation costs and attorneys' fees awarded by the court. The district court preliminarily approved the settlement in December 2012, and notice was provided to class members. The notice also allowed class members the opportunity to opt back into the class if they had previously opted out, and an opportunity to object to the settlement. Following notice of the preliminary approval of the settlement, several persons filed objections.
The objections at issue in this appeal were originally raised in the district court by the Washeniks, the Masiowskis and Rinises, St. Stephen, Inc., and the Orloff Family trusts. The substance of these objections focused on whether attorneys' fees under the settlement agreement were reasonable, whether representative plaintiffs were entitled to reimbursement for litigation costs, and whether the notice complied with due process requirements, the Private Securities Litigation Reform Act, and Federal Rule of Civil Procedure 23.
The district court conducted a hearing in April to discuss the substance of these challenges and those asserted by other class members. Relevant to this appeal, the court found that the notice of the settlement complied with the preliminary approval order, constituted the best notice practicable under the circumstances, amounted to a notice that was reasonably calculated to inform class members of their rights under the settlement, and complied with Federal Rule of Civil Procedure 23, the United States Constitution, and the Private Securities Litigation Reform Act. The objectors appealed.
We review a district court's approval of a settlement agreement for abuse of discretion. See, e.g., Masters v. Wilhelmina Model Agency, Inc., 473 F.3d 423, 435 (2d Cir.2007) (); see also McReynolds v. Richards–Cantave, 588 F.3d 790, 800 (2d Cir.2009) . “[A] district court abuses its discretion when ‘(1) its decision rests on an error of law (such as application of the wrong legal principles) or a clearly erroneous factual finding, or (2) its decision—though not necessarily the product of a legal error or a clearly erroneous factual finding—cannot be located within the range of permissible decisions.’ ” Masters, 473 F.3d at 435 (quoting Zervos v. Verizon New York, Inc., 252 F.3d 163, 169 (2d Cir.2001)).
Objectors-appellants first argue the district court violated the Private Securities Litigation Reform...
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