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Smilovits v. First Solar, Inc.

United States District Court, D. Arizona

December 16, 2019

Mark Smilovits, Individually and on Behalf of All Others Similarly Situated, Plaintiff,
First Solar, Inc., Michael J. Ahearn, Robert J. Gillette, Mark R. Widmar, Jens Meyerhoff, James Zhu, Bruce Sohn and David Eaglesham, Defendants.


          David G. Campbell Senior United States District Judge

         Class Counsel Robbins Geller Rudman & Dowd LLP moves for entry of a set-aside order which would establish a framework under which Class Counsel could seek Court-approved compensation for work performed in this litigation that benefits all purchasers of First Solar, Inc. stock between May 2, 2008 and February 29, 2012. Doc. 550. Under the proposed order, 12% of any settlement or judgment obtained by a plaintiff that has opted out of the class in this case (the “Class”) would be withheld and deposited by Defendants in an escrow account. Payments from the account would be subject to Court approval after a showing by Class Counsel of the benefits that Class Counsel has conferred on opt-out plaintiffs. Id. Account funds not paid out in this manner would be disbursed to the plaintiffs who secured them by settlement or judgment.

         Maverick Fund, L.D.C., Maverick Fund USA, Ltd., Maverick Fund II, Ltd., Maverick Neutral Fund, Ltd., Maverick Neutral Levered Fund, Ltd., Maverick Long Fund, Ltd., and Maverick Long Enhanced Fund, Ltd. (collectively, “Maverick”) move to intervene in this case for the sole purpose of opposing Class Counsel's motion. Doc. 623. Maverick is the plaintiff in Maverick Fund, L.D.C., et al. v. First Solar, Inc., et al., No. CV15-1156-PHX-DGC (D. Ariz.) (the “Maverick Action”).

         Defendants have taken no position on Class Counsel's request for a set-aside fund.

         These matters are fully briefed, and no party has requested oral argument. For the reasons set forth below, the Court will grant Maverick's motion to intervene for a limited purpose and grant in part Class Counsel's motion to establish the set-aside fund and procedures for seeking compensation from the fund.

         A. Intervention.

         No party opposes Maverick's motion to intervene. Intervention is warranted because Maverick “claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest[.]” Fed.R.Civ.P. 24(a)(2). Intervention is granted for the limited purposes of opposing creation of the set aside fund and participating in any future requests for compensation from the fund.

         B. The Parties' Positions.

         Class counsel argues that the Court's authority to enter a “set-aside order ‘derives from the Supreme Court's common benefit doctrine.'” In re Lidoderm Antitrust Litig., No. 14-md-02521-WHO, 2017 WL 3478810, at *1 (N.D. Cal. Aug. 14, 2017) (quoting In re Bextra & Celebrex Mktg. Sales Practices & Prod. Liab. Litig., No. M:05-cv-01699-CRB, 2006 WL 471782, at *1 (N.D. Cal. Feb. 28, 2006)). Class Counsel notes that “the doctrine is designed to spread litigation costs proportionately among all the beneficiaries so that the active beneficiary does not bear the entire burden alone and the ‘stranger' beneficiaries do not receive their benefits at no cost to themselves.” Vincent v. Hughes Air W., Inc., 557 F.2d 759, 769 (9th Cir. 1977). Class Counsel further asserts that the Court has authority under its inherent management powers and the Private Securities Litigation Reform Act of 1995 (“PSLRA”) to ensure that Class Counsel is fairly compensated for work it performs on behalf of all plaintiffs. See In re Linerboard Antitrust Litig., 292 F.Supp.2d 644, 653 (E.D. Pa. 2003) (“A necessary corollary to court appointment of lead and liaison counsel and appropriate management committees is the power to assure that these attorneys receive reasonable compensation for their work.”); Fed.R.Civ.P. 23(h); 15 U.S.C. § 78u-4(a)(8).

         Maverick argues that a common benefit fund has never been created in a non-MDL securities fraud case, a proposition Class Counsel does not dispute; that such a fund should be created only in extraordinary circumstances, which do not exist here; that the fund is barred by the PSLRA; and that the fund would be contrary to the class notice in this case. Maverick also argues that Class Counsel has not conferred a substantial benefit on Maverick that would warrant payment from a common benefit fund.

         C. Benefits Conferred on Maverick.

         Although the ultimate determination of whether Class Counsel is entitled to compensation from any common benefit fund must await conclusion of this litigation and the Maverick Action, the Court has no difficulty concluding preliminarily that Class Counsel has conferred substantial benefits on Maverick. Over the past seven years, Class Counsel has investigated and drafted a 133-page Class Complaint (Doc. 93); successfully opposed Defendants' motion to dismiss (Docs. 109, 114); negotiated search terms and custodians - and filed motions to compel - resulting in the production of relevant documents; analyzed more than 515, 000 documents from more than 40 First Solar custodians and third-parties; taken 21 fact depositions, which Maverick has obtained and may rely on to reduce the number of depositions in its own case; conducted substantial expert discovery and submitted expert reports which Maverick has obtained; and defeated Defendants' motion for summary judgment, interlocutory appeal to the Ninth Circuit, and petition for a writ of certiorari to the Supreme Court. Maverick has not participated in any of these legal battles, and yet clearly is benefitting from Class Counsel's work.

         D. Maverick's Arguments.

         Maverick contends that the set-aside fund is barred by this provision of the PSLRA: “Restrictions on payment of attorneys' fees and expenses. Total attorneys' fees and expenses awarded by the court to counsel for the plaintiff class shall not exceed a reasonable percentage of the amount of any damages and prejudgment interest actually paid to the class.” 15 U.S.C. § 78u-4(a)(6). This provision is a limitation on the amount of attorneys' fees, not the source. It mandates that the total fees awarded to Class Counsel cannot exceed a reasonable percentage of the amount of damages actually paid to the Class, but it does not state that the fees must come from those damages. The Court interprets this provision to mean that any fees awarded to Class Counsel from the Class recovery, plus any fees awarded to Class Counsel from the set-aside fund - the “total” attorneys' fees awarded by the Court to Class Counsel - cannot collectively exceed a reasonable percentage of the damages actually paid to the Class. But this provision does not bar the Court from applying the common fund doctrine and awarding fees to Class Counsel from the set-aside fund, an issue on which the PSLRA is silent. C.f., Staton v. Boeing ...

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