Voulgaris v. Array Biopharma, Inc.
No. 22-1003. 2/27/2023. D.Colo. Judge Carson. Federal Securities Class Action—Settlement—Shareholder Objection—Attorney Fees—Factors Affecting Award—Lodestar Calculation.
February 27, 2023
Plaintiffs Voulgaris, Rose, and Nauman are shareholders in Array Biopharma, Inc. (Array). They brought a federal securities class action against Array and its executives (collectively, defendants) alleging that defendants made fraudulent statements about a clinical trial, which caused significant shareholder losses. After several years, the parties reached a proposed settlement that resolved claims on behalf of the class for a payment of $8.5 million. Pampena, a class member, objected to the proposed settlement and request for attorney fees. The district court approved the settlement and awarded plaintiffs’ counsel attorney fees of one-third of the common fund.
On appeal, Pampena argued that the district court erred in determining that the attorney fees were reasonable because it did not start its analysis with a 25% benchmark as previously adopted by the Tenth Circuit. However, the Tenth Circuit has never adopted such a benchmark. Instead, the Tenth Circuit recognizes that awards across a range of percentages may be reasonable. Here, the district court properly exercised its discretion in determining that 33% is within the range of fee percentages awarded in securities class actions and other comparable complex class actions in the Tenth Circuit.
Pampena also argued that that the district court did not explain why three factors required by Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974), support the fee award. First, Pampena challenged the court’s analysis on the amount involved and the results obtained, but he cited no caselaw suggesting that the district court’s analysis was insufficient. Here, the district court relied on plaintiffs’ expert damage analysis and economic reports from Cornerstone Research, and district courts commonly rely on these types of analyses and reports in assessing the fairness, reasonableness, and adequacy of class action settlements. The court determined that the $8.5 million recovery will provide the class with between 25% and 35% of total recoverable damages, which, according to the Cornerstone Research reports, is much larger than the median class action settlement for similar cases in the Tenth Circuit between 2010 and 2019. This confirmed the above-average results obtained by plaintiffs’ counsel. Accordingly, the district court was within its discretion to determine that the amount involved and results obtained supported an attorney fees award of 33%.
Second, Pampena challenged the court’s analysis on the Johnson factor concerning the novelty and difficulty of the questions at issue. Although the district court could have explored the complexity of this action compared to others, Pampena cited no cases suggesting that such an analysis is required, outlining what the district court should have done, or explaining why what the district court did amounts to error. Given Pampena’s failure to articulate how the findings on this factor were insufficient or incorrect, the Tenth Circuit found no abuse of discretion.
Third, Pampena argued that this case required no exceptional experience, reputation, or ability from class counsel and that the district court insufficiently supported its contrary finding. However, the court made findings that plaintiffs’ counsel and counsel’s firm have extensive and significant experience in the highly specialized field of securities class action litigation and faced opposing counsel who were similarly qualified. Therefore, the district court did not abuse its discretion as to this Johnson factor.
Pampena further contended that the district court relied on inflated numbers in calculating the lodestar. However, the district court was not required to perform a lodestar cross-check, and its lodestar calculation was not erroneous.
Plaintiffs requested sanctions against Pampena because neither law nor facts supported his arguments. Although Pampena’s appeal lacked merit, he used the available process for colorable objection and appeal as a class member, so the Tenth Circuit declined to exercise its discretion to sanction him.
The attorney fees award was affirmed and the sanctions request was denied.