In re WICAT Securities Litigation, Civ. No. C83-1117G.
| Decision Date | 08 September 1987 |
| Docket Number | Civ. No. C83-1117G. |
| Citation | 671 F. Supp. 726 |
| Parties | In re WICAT SECURITIES LITIGATION. |
| Court | U.S. District Court — District of Utah |
Peter W. Billings, Jr., Rand M. Elison, Fabian & Clendenin, Salt Lake City, Utah, for plaintiffs Lee and Edith Woods, Bruce Youngman, Robert A. and Lou Ann Greco, William B. Weinberger.
John E. Grasberger, Milberg, Weiss, Bershad, Specthrie & Lerach, San Diego, Cal., for plaintiff William B. Weinberger.
Stanley M. Grossman, Pomerantz, Levy, Haudek, Block & Grossman, New York City, for plaintiff Guillermo Astudillo.
Irving Malchman, Kaufman, Malchman & Kirby, New York City, for plaintiff Lawrence Epstein.
Joseph Weiss, Robert S. Schachter, Goodking, Wechsler, Labaton & Rudoff, New York City, for plaintiff Nessim Husni.
Arthur N. Abbey, Ralph L. Ellis, Abbey & Ellis, New York City, for plaintiffs Robert A. and Lou Ann Greco.
Leonard Barrack, Gerald J. Rodos, Edward M. Gergosian, Barrack, Rodos & Bacine, Philadelphia, Pa., for plaintiffs Lee and Edith Woods.
Harvey Greenfield, New York City, for plaintiff Guillermo Astudillo.
I. Stephen Rabin, Wolf, Popper, Ross, Wolf & Jones, New York City, for plaintiff Bruce Youngman.
David E. West, Armstrong, Rawlings, West & Brown, Salt Lake City, Utah, David B. Gold, Paul F. Bennett, Richard A. Rogoff, San Francisco, Cal., for plaintiff Thomas Quinn.
Daniel L. Berman, Peggy A. Tomsic, Berman & Anderson, Salt Lake City, Utah, for defendants Dustin H. Heuston, Nancy Heuston, Robert Mendenhall, Frank M. Richardson, W. Paul Warnock, Wicat Systems, Inc. & Wicat Educ. Institute.
Dale H. Kimball, Robert S. Clark, James D. Gordon, Rooker, Larsen, Kimball & Parr, Salt Lake City, Utah, Phillip K. Howard, Jack P. Levin, Howard, Darby & Levin, New York City, for defendants C. Victor Bunderson, W.H. Conroy, Seth H. Dubin, Dr. Thomas Duerden, Simon M. Robertson, Arthur G. Altschul and The Independent Inv. Co.
David B. Watkiss, Watkiss & Campbell, Salt Lake City, Utah, Gary L. Francione, Thomas D. Barr, Robert D. Joffe, Cravath, Swaine & Moore, New York City, for defendants Blyth Eastman Paine Webber, Inc., Hambrecht & Quist, Inc., Kleinwort Benson, Inc., and Kleinwort Benson, Ltd.
Neal B. Christensen, Salt Lake City, Utah, for defendant Berman D. Anderson.
The instant case is before the court on a motion by counsel for plaintiffs to receive an award of attorney fees and reimbursement of expenses from a common fund created by reason of the approved settlement of this class action litigation. The procedural history of the case is outlined to facilitate analysis of the fee issue.
1. September 29, 1983: A complaint was filed on behalf of plaintiffs Robert A. Greco and Lou Ann Greco as class representatives of those who purchased the common stock of WICAT Systems, Inc. ("WICAT") from June 30, 1983 through September 16, 1983. WICAT, individual members of the board of directors of WICAT, and the lead underwriters of a public offering of WICAT common stock as representatives of a defendant underwriter class were named as defendants. The complaint set forth five causes of action based upon §§ 11 and 12(2) of the Securities Act of 1933, § 10(b) (and Rule 10b-5) of the Securities Exchange Act of 1933, common law fraud and deceit, and common law negligent misrepresentation.
2. February 10, 1984: An order was entered consolidating into the present action lawsuits filed by plaintiffs Bruce Youngman; Lee and Edith Woods; Guillermo Astudillo; Lawrence Epstein; Nessim Husni; and William B. Weinberger. The law firm of Abbey & Ellis was designated as "Chairmen of Plaintiffs' Executive Committee" and ordered to delegate, monitor and coordinate all work responsibilities to avoid duplication.
3. February 29, 1984: A meeting of plaintiffs' counsel was held at which time the law firms representing plaintiffs were assigned the following responsibilities:
4. March 12, 1984: A consolidated complaint was filed alleging the same essential counts as contained in the Greco complaint with the addition of a count under § 61-1-22(2) of the Utah Uniform Securities Act as well as the naming of four additional parties. The complaint alleges material misrepresentations and omissions in connection with the Registration Statement and Prospectus of a public offering of 4,000,000 shares of WICAT common stock at $18 per share. One critical alleged misrepresentation was a statement that WICAT "expects profits during the remainder of Fiscal 1984."
5. March 26, 1984: The law firm of David B. Gold, a professional corporation ("Gold", San Francisco) joined in the consolidated complaint on behalf of plaintiff Thomas Quinn. The law firm of Armstrong, Rawlings, West & Brown ("Armstrong") was retained by Gold as local counsel.
6. April 2, 1984: Interrogatories and requests for production of documents were served by plaintiffs on WICAT.
7. April 29, 1984: Interrogatories and requests for production of documents were served by plaintiffs on the defendant underwriters.
8. November 6, 1984: Plaintiffs filed a memorandum in opposition to a motion by defendants for protective order.
9. November 27, 1984: Plaintiffs filed an untimely but accepted memorandum in opposition to a motion by defendants to dismiss the § 12(2) count of the complaint.
10. November 29, 1984: Oral argument was heard regarding the motion to dismiss and the matter was taken under advisement by the court.
11. December 3, 1984: A Memorandum Decision and Order of the United States Magistrate was issued in response to defendants motion for protective order. The motion was granted and accordingly it was ordered that no discovery on the merits would be permitted until the issue of class certification was decided.
12. December 11, 1984: Plaintiffs filed a motion for class certification and supporting memorandum.
13. December 20, 1984: Memorandum Decision and Order was issued by the Honorable David K. Winder ruling that the § 12(2) count be dismissed with prejudice unless the plaintiff amend to allege facts akin to agency rather than an arms-length "firm commitment" underwriting between WICAT and the underwriters. In re WICAT Securities Litigation, 600 F.Supp. 1236 (D.Utah 1984).
14. January 14, 1985 — January 16, 1985: Plaintiffs filed a joint objection to interrogatories of defendants as well as responses by each individual plaintiff to those interrogatories.
15. May 16, 1985: The instant case was reassigned to this judge.
16. June 28, 1985: A status conference was held and attended by local counsel on plaintiffs' behalf.
17. July 16, 1985: A stipulation and order was executed allowing discovery on the merits of the case to proceed pursuant to an agreed upon schedule thereby modifying the Magistrate's prior order.
18. October 1985 — April 1986: Plaintiffs took the following depositions: Robert W. Mendenhall, Dustin H. Heuston, Thomas A. Duerden, Paul Wainock and Frank M. Richardson (officers or directors of WICAT); Timothy E. Howard, John R. Cullinane and Dominic Sebastian Solly (representatives of the lead underwriters); Charles E. Johnson (partner of WICAT's independent auditor); and Mark Nelson (WICAT's Sales Administration Manager).
19. April 1986 — October 1986: During this period no apparent formal discovery was conducted but meetings of counsel and settlement discussions were held. Various stipulations of continuances were filed with the court.
20. October 2, 1986: A report was held before the court at which time counsel outlined the proposed procedure for notification of class action parties.
21. October 6, 1986: A stipulation of settlement was filed. The settlement document sets forth that WICAT will place $6,250,000 in an account earning interest of 7% from April 1, 1986 through June 25, 1986 and thereafter interest is to be earned at the prevailing rates of an agreed escrow agent. The parties requested that a hearing be held to certify the plaintiff and defendant classes for purposes of settlement and that the court hear argument on whether the settlement is fair, reasonable and adequate and on the issue of attorney's fees. The stipulation also provides that plaintiffs' counsel will not seek fees in excess of $1,000,000, plus the reimbursement of expenses to the date of hearing, together with interest on such requested fees, and the defendants agreed that they will not challenge an application by plaintiffs' counsel for fees which do not exceed $1,000,000.1
22. December 29, 1986: Plaintiffs filed an extensive memorandum and affidavit in support of settlement as well as a joint petition for an award of attorneys' fees and reimbursement of...
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