In re Rite Aid Corp. Securities Litigation
| Citation | 269 F.Supp.2d 603 |
| Decision Date | 02 June 2003 |
| Docket Number | No. Master File No. 99-1349.,No. MDL DOCKET NO. 1360.,MDL DOCKET NO. 1360.,Master File No. 99-1349. |
| Parties | In re RITE AID CORPORATION SECURITIES LITIGATION. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Douglas B. Adler, Skadden Arps Slate Manager & Flom, Los Angles, C.A, David J. Anderson, Bruce A.Hiler, Jeffery W. Kilduff, William J. Stuckwisch, O'Melveny & Myers, Washington, DC, John R. Oller Allison J. Ross, Micheal R. Young, Richard L. Kelien, Traqu Mundia, Willkie Farr & Gallagher, Newyork, NY, Cathgerine Botiticelli, Wallleace L.Timmeney, Dechert Price & Roads, Washington, DC, John E.Caruso, John W. Frazier, IV, Montogony, Mc Cracken, Walker & Rhoads, Philadelphia, PA, David J. Creagen, Eleanor Morries Il loway, Harkins Cunninghamn, Philadelphia, PA. Kelly L. Darr, David M. Haward, Dechert Price & Rohads Philadelphia, PA, Alan J. Davis, Ballard, Spahr, Andrews and Ingersoll, Philadelphia, PA, William H. Jeffress, The Warner, Washington, DC, James J. Rodgers, Kilworth, Paxson, LLP Philadelphia PA, for defedant in No. 2099cv01349. David J. Bershad, William C. P.Sugaraman, Steven G. Schulman, Robert Hynes & Learch LLP, New York, NY, Carole A.Broderick, Staurt J. Guber, Berger & Montague, P.C., Philadelphia, PA. Robert P. Frutkin, Savitt, Frutkin and Ryan, P.C., Philadelphia, PA, William E. Johnson, William E. Johnson Law Offices, Los Angeles, CA, Roger W. Kirby, New York, NY, Peter F. Marvin, Justin K. Miller, Toll, Ebby, Langer & Marvin, Philadelphia, PA, Ira M. Press, New York, NY, Sherrie R. Savett, New York, NY, for plaintiff in No. 2:99cv01349.
Dennis J. Johnson, The Law Offices of Dennis J. Johnson, South Burlington, VT, for movant in No. 2:99cv01349.
Michael J. Boni, Kohn, Swift & Graf, P.C., Philadelphia, PA, Steven Eugene Cauley, Cauley & Geller, LLP, Little Rock, AK, Laura S. Clare, Paul J. Lockwood, Steven J. Rothschild, Skadden, Arps, Slate, Meagher & Flom, Wilmington, DE, J Dennis Faucher, Miller, Faucher, Chertow, Cafferty and Wexler, Philadelphia, PA, David R. Fine, Kirkpatrick and Lockhart, Harrisburg, PA, Jeffrey W. Golan, Barrack, Rodos & Bacine, Philadelphia, PA, Stephen M. Greenberg, Joel M. Silverstein, Herbert Stern, Stern & Greenberg, Roseland, NJ, Dennis J. Johnson, The Law Offices of Dennis J. Johnson, South Burlington, VT, Michael J. Kane, Liebenberg & White, Jenkintown, PA, Joel P. Laitman, Jay P. Saltzman, Samuel P. Sporn, Schoengold & Sporn, P.C., New York, NY, Roberta D. Liebenberg, Fine, Kaplan and Black, Philadelphia, PA, James E. Miller, David R. Scott, Scott & Scott, Colchester, CT, Richard J. Morvillo, Kirkpatrick & Lockhart, Washington, DC, Sherrie R. Savett, Philadelphia, PA, Scott R. Shepherd, Shepherd, Finkelman & Gaffigan, LLC, Media, PA, Jonathan Shub, Sheller, Ludwig & Badey, Philadelphia, PA, for nominal defendant in No. 2:99cv01349.
Joseph T. Baio, Rachel J. Fremmer, John R. Oiler, Allison J. Ross, Michael R. Young, Richard L. Klein, Tariq Mundiya, Willkie Farr & Gallagher, New York, NY, Catherine Botticelli, Wallace L. Timmeny, Dechert Price & Rhoads, Washington, DC, John E. Caruso, Montgomery, Mc Cracken, Walker & Rhoads, Philadelphia, PA, Alan J. Davis, Ballard, Spahr, Andrews and Ingersoll, Philadelphia, PA, David R. Fine, Kirkpatrick and Lockhart, Harrisburg, PA, Stephen M. Greenberg, Joel M. Silverstein, Herbert Stern, Stern & Greenberg, Roseland, NJ, David M. Howard, Dechert Price & Rhoads, Philadelphia, PA, William H. Jeffress, The Warner, Washington, DC, Ivan B. Knauer, Richard J. Morvillo, Kirkpatrick & Lockhart, Washington, DC, Paul J. Lockwood, Steven J. Rothschild, Skadden, Arps, Slate, Meagher & Flom, Wilmington, DE, James J. Rodgers, Kilworth, Paxson, LLP, Philadelphia PA, Andrew B. Weissman, Wilmer, Cutler & Pickering, Washington, DC, for defendant in No. 2:99cv02493.
Joel P. Laitman, Christopher Lometti, Jay P. Saltzman, Samuel P. Sporn, Schoengold & Sporn, P.C., New York, NY, for plaintiff in No. 2:99cv02493.
Harvey Greenfield, Law Firm of Harvey Greenfield, New York, NY, for Rite Aid in No. 2:99cv02493.
Alan J. Davis, Ballard, Spahr, Andrews and Ingersoll, Philadelphia, PA, for nomdft in No. 2:99cv02493.
We here consider the sequel to the partial settlement of this class action that we approved in 2001. See In re Rite Aid Corp. Securities Litig., 146 F.Supp.2d 706 (E.D.Pa.2001) ("Rite Aid F). The settlements before us involve those defendants who did not participate in the 2001 settlement; indeed, all but one had appealed our decision in Rite Aid I. The pendency of those appeals has prevented the distribution of the $193 million partial settlement that we approved two years ago.1
In fidelity to our duty under Fed. R.Civ.P. 23(e), we here consider the fairness of the proposed settlements between the class and defendants KPMG LLP, Timothy J. Noonan, and Martin L. Grass, whom we will collectively refer to as the "Settling Defendants". Plaintiffs also seek our approval of the dismissal of defendant Franklyn Bergonzi.
The proposed settlements total $126,641,315.00, which will be added to what is now the $207,420,598.06 held from the 2001 settlement.
The three Stipulations and Agreements of Settlement provide that KPMG will pay $125 million, and Grass will pay $1,450,000.00; Noonan remitted Rite Aid common stock that plaintiffs later sold for proceeds of $157,453.60, which now has a value, with interest, of about $157,905.00. The settlements also provide that these defendants will withdraw their appeals in Rite Aid I.
Having discussed at length in Rite Aid I the definition of the class and of the claims at issue, id. at 711 notes 3 and 4, we will not cover that ground again here. It will suffice to note that, during the relevant time, Grass served as Rite Aid's Chief Executive Officer, Noonan was Chief Operating Officer, and Bergonzi, Chief Financial Officer. KPMG served as independent auditors of Rite Aid's financial statements during the relevant period.
We now turn briefly to the background that led to the settlements we considered at a hearing on May 30, 2003.
While Rite Aid I was on appeal, class counsel engaged in protracted negotiations with KPMG that ultimately resulted in an agreement in principle in September of 2002. As the negotiations with KPMG proceeded, counsel initiated discussions with the individual defendants. Discussions achieved sufficient success that the parties agreed, on the day of the oral argument in the Court of Appeals (September 19, 2002), to ask that Court to stay further action on the appeals. The Court of Appeals therefore took no further action, pending the parties' consummation of their documents.2
This latter goal proved to be so elusive that on January 22, 2003 we ordered the parties to participate in a mediation before the Honorable Jacob P. Hart, United States Magistrate Judge. Judge Hart's ministrations bore fruit rather quickly with KPMG, which entered into its Stipulation and Agreement of Settlement on March 11, 2003. The resolution of issues involving Grass proved far more difficult, but as a result of Judge Hart's tireless and creative efforts, that Stipulation was entered into on April 7, 2003. The Noonan Stipulation had been entered into on December 27, 2002.
We gave preliminary approval to the KPMG and Noonan settlements, and the Bergonzi dismissal, on March 13, 2003. We gave preliminary approval to Grass's settlement on April 8, 2003.
In accordance with our Order, class counsel's administrator mailed 223,740 copies of the notice involving the proposed settlements and dismissal. Aff. of Carole K. Sylvester at ¶ 3. These notices were mailed on April 15, 2003, and the administrator has advised us that it "caused to be mailed directly to potential Class Members or delivered in bulk to nominees an additional 90,639 envelopes containing the Notice and the Proof of Claim form." Id. at ¶ 6. Thus, class counsel caused to be mailed a total of 314,379 notices and proof of claim forms to all potential class members. Id. Also in accordance with our Order, class counsel caused a summary notice to be published in the National Edition of The Wall Street Journal on April 22, 2003. Id. at ¶ 8. Notice thus was in all respects adequate.
As of the deadline for filing objections, not one class member has filed an objection to the settlements and dismissal. The administrator has, as of May 23, 2003, "received four timely requests for exclusion and seven late requests for exclusion." Id. at ¶ 9.3
The class notice also contained the terms of the proposed Plan of Allocation. Since that Plan is the same as we approved in Rite Aid I, there is no point in belaboring that aspect of these settlements' implementation. Suffice it to say, the settlement fund—which includes all interest earned on the settlements, less all taxes, approved costs, fees and expenses—will be distributed to class members who file proper Proofs of Claim. Authorized claimants will receive their share of the settlement fund on a pro rata basis.
Having at length in Rite Aid I considered the fairness factors our Court of Appeals first identified in Girsh v. Jepson, 521 F.2d 153, 157 (3d Cir.1975),4 we will not belabor them here except insofar as they involve issues unique to the new Settling Defendants.
Taking the first Girsh factor—"complexity, expense and likely duration of the litigation"—a glance at our analysis in Rite Aid I demonstrates how daunting the task would have been merely for the Court of Appeals to appraise the settlement in Rite Aid I. In our lengthy approval of that settlement, we canvassed many issues that, on our research, were largely or entirely of first impression. Thus, it was well within the realm of possibility that the Court of Appeals could have taken exception to some of our rulings, thereby undermining any settlement the class might ultimately receive. On this point alone, the withdrawal of the appeals provided for in the instant...
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