The above-entitled action comes on for hearing before the Honorable Thomas E. Kuhnle on August 18, 2017, at 9:00 a.m. in Department 5. The Court now issues its tentative ruling as follows:
This is a securities class action for violations of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (the “Securities Act”) on behalf of all purchasers of MobileIron common stock in and/or traceable to MobileIron’s June 12, 2014 initial public offering (“IPO”) against MobileIron and certain of MobileIron’s senior executives and directors who signed the June 12, 2014 Registration Statement issued in connection with MobileIron’s IPO of over 12.77 million shares of common stock. Plaintiffs Warren Schneider, Jay Kerley, and Chaile Steinberg (collectively, “Plaintiffs”) allege that the Registration Statement and Prospectus incorporated therein (collectively, the “Registration Statement”) issued in connection with the IPO contained materially incorrect or misleading statements and/or omitted material information that was required to be disclosed.
MobileIron “went public” on June 12, 2014 at an IPO price of $9 per share and closed its first day of public trading at $11.02 per share. At the time of the filing of this action, MobileIron’s stock traded in the range of $3-$4 per share.
The First Amended Complaint, filed on October 21, 2016, sets forth the following causes of action:  Violations of § 11 of the Securities Act (against all defendants);  Violations of § 12(a)(2) of the Securities Act by Plaintiffs Kerley and Steinberg (against MobileIron); and  Violation of § 15 of the Securities Act (against all defendants).
The parties have reached a settlement. On June 9, 2017, the Court granted preliminary approval of the settlement. Plaintiffs now move for final approval of the settlement, including an award of attorneys’ fees and expenses.
II. LEGAL STANDARD
Generally, “questions whether a settlement was fair and reasonable, whether notice to the class was adequate, whether certification of the class was proper, and whether the attorney fee award was proper are matters addressed to the trial court’s broad discretion.” (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 234-235, citing Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794.)
In determining whether a class settlement is fair, adequate and reasonable, the trial court should consider relevant factors, such as “the strength of plaintiffs’ case, the risk, expense, complexity and likely duration of further litigation, the risk of maintaining class action status through trial, the amount offered in settlement, the extent of discovery completed and the stage of the proceedings, the experience and views of counsel, the presence of a governmental participant, and the reaction of the class members to the proposed settlement.”
(Wershba v. Apple Computer, Inc., supra, 91 Cal.App.4th at pp. 244-245, citing Dunk, supra, 48 Cal.App.4th at p. 1801 and Officers for Justice v. Civil Service Com’n, etc. (9th Cir. 1982) 688 F.2d 615, 624.)
“The list of factors is not exclusive and the court is free to engage in a balancing and weighing of factors depending on the circumstances of each case.” (Wershba v. Apple Computer, Inc., supra, 91 Cal.App.4th at p. 245.) The court must examine the “proposed settlement agreement to the extent necessary to reach a reasoned judgment that the agreement is not the product of fraud or overreaching by, or collusion between, the negotiating parties, and that the settlement, taken as a whole, is fair, reasonable and adequate to all concerned.” (Ibid., quoting Dunk, supra, 48 Cal.App.4th at p. 1801 and Officers for Justice v. Civil Service Com’n, etc., supra, 688 F.2d at p. 625, internal quotation marks omitted.)
The burden is on the proponent of the settlement to show that it is fair and reasonable. However “a presumption of fairness exists where: (1) the settlement is reached through arm’s-length bargaining; (2) investigation and discovery are sufficient to allow counsel and the court to act intelligently; (3) counsel is experienced in similar litigation; and (4) the percentage of objectors is small.”
(Wershba v. Apple Computer, Inc., supra, 91 Cal.App.4th at p. 245, citing Dunk, supra, 48 Cal.App.4th at p. 1802.)
As discussed in connection with the motion for preliminary approval of the settlement, Plaintiffs seek to settle this case on behalf of a class of all persons or entities who purchased the common stock of MobileIron, Inc. pursuant and/or traceable to the Registration Statement issued in connection with the June 12, 2014 IPO. Pursuant to the settlement, defendants MobileIron, Robert Tinker, Todd Ford, Gaurav Garg, Aaref Hilaly, Matthew Howard, Frank Marshall, Tae Hea Nahm, and James Tolonen (collectively, “Defendants”) will pay a total of $7,500,000. The settlement is non-reversionary and any funds that are not distributed to class members will be donated to Bay Area Legal Aid. The settlement authorizes Plaintiffs’ counsel to seek attorneys’ fees of up to 33% of the total settlement fund plus costs and expenses not to exceed $150,000. Plaintiffs’ counsel now seeks costs of $118,859.20. (Plaintiffs’ Notice of Non-Objection to Motions for: (1) Final Approval of Class Action Settlement and Approval of Plan of Allocation; and (2) an Award of Attorneys’ Fees and Expenses, pp. 2:27-3:2.) The settlement also provides that Plaintiffs will request a class representative incentive award of up to $1,000 for each named plaintiff, and up to $300,000 will be used to pay the claims administrator costs.
In addition to approving the monetary amounts in the settlement, Plaintiffs request the Court approve the Plan of Allocation of the settlement proceeds. Plaintiffs state the Plan of Allocation will govern how class members’ claims will be calculated and how money will be distributed to valid claimants. Plaintiffs assert the Plan of Allocation was prepared with the assistance of Plaintiffs’ damages expert and provides for the pro rata distribution of settlement proceeds based on each class member’s recognized loss.
The settlement administrator, Gilardi & Co., LLC (“Gilardi”), disseminated the notice and claim form to potential class members in the forms approved by the Court. (Declaration of Carole K. Sylvester Regarding Dissemination of the Notice and Proof of Claim, Publication of the Summary Notice, and Requests for Exclusion Received to Date, ¶ 4.) As of August 4, 2017, Gilardi mailed 13,991 claim packages. (Id. at ¶ 10.) Gilardi has also established a toll-free telephone number, 1-866-684-3881, and a website, www.mobileironshareholdersettlement.com, both of which became operational on June 30, 2017. (Id. at ¶¶ 11-12.) Additionally, Gilardi caused the summary notice to be published in the Wall Street Journal and over the Business Wire on July 3, 2017. (Id. at ¶ 13.) As of August 11, 2017, there have been no objections and no requests for exclusion. (Plaintiffs’ Notice of Non-Objection to Motions for: (1) Final Approval of Class Action Settlement and Approval of Plan of Allocation; and (2) an Award of Attorneys’ Fees and Expenses, p. 2:18-20.)
The Court previously found that the proposed settlement is fair and the Court continues to make that finding for purposes of final approval.
Plaintiffs request class representative incentive awards for plaintiffs Schneider, Kerley, and Steinberg in the amounts of $1,000, $985, and $1,000, respectively.
The rationale for making enhancement or incentive awards to named plaintiffs is that they should be compensated for the expense or risk they have incurred in conferring a benefit on other members of the class. An incentive award is appropriate if it is necessary to induce an individual to participate in the suit. Criteria courts may consider in determining whether to make an incentive award include: 1) the risk to the class representative in commencing suit, both financial and otherwise; 2) the notoriety and personal difficulties encountered by the class representative; 3) the amount of time and effort spent by the class representative; 4) the duration of the litigation and; 5) the personal benefit (or lack thereof) enjoyed by the class representative as a result of the litigation. These “incentive awards” to class representatives must not be disproportionate to the amount of time and energy expended in pursuit of the lawsuit.
(Cellphone Termination Fee Cases (2010) 186 Cal. App. 4th 1380, 1394-1395, quotation marks, brackets, ellipses, and citations omitted.)
Schneider, Kerley, and Steinberg have submitted declarations supporting their requests. The Court notes they state they are requesting “reimbursement” and Kerley even goes so far as to provide an “hourly rate.” The incentive awards are not intended as “reimbursement” and individual class representatives certainly cannot charge for their time at an hourly rate. Nevertheless, Schneider and Kerley have provided details regarding their participation in the case and the number of hours expended. (Declaration of Warren Schneider in Support of Plaintiffs’ Final Approval of Settlement and Request for Service Award, ¶¶ 3, 6; Declaration of Jay Kerley in Support of Plaintiffs’ Motion for Final Approval of Class Action Settlement, ¶¶ 2, 4.) The Court finds incentive awards for Schneider and Kerley are justified and they are approved. Steinberg has submitted a declaration, but has not provided any details regarding her participation in the action or the number of hours expended. (See Declaration of Chaile Steinberg in Support of Plaintiffs’ Motion for Final Approval of Settlement.) Steinberg must provide the Court with a supplemental declaration including this information at the time of the hearing.
The Court also has an independent right and responsibility to review the requested attorneys’ fees and only award so much as it determines reasonable. (See Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 127-128.) Plaintiffs’ counsel seeks attorneys’ fees of up to 33% of the total settlement fund (plus costs and expenses not to exceed $150,000). As a cross-check on the reasonableness of the fee award, Plaintiffs’ counsel provide a lodestar figure of $1,602,845. (Declaration of James I. Jaconette Filed on Behalf of Robbins Geller Rudman & Dowd LLP in Support of Application for Award of Attorneys’ Fees and Expenses, ¶ 4; Declaration of Daryl F. Scott Filed on Behalf of Scott+Scott, Attorneys at Law, LLP in Support of Application for Award of Attorneys’ Fees and Expenses, ¶ 4; Declaration of George C. Aguilar Filed on Behalf of Robbins Arroyo LLP in Support of Application for Award of Attorneys’ Fees and Expenses, ¶ 4.) An award of the requested fee amount would result in a multiplier of 1.56. The Court notes some of the hourly rates used to calculate the lodestar are somewhat high (e.g. $870, $950). Nevertheless, 33% of the common fund for attorneys’ fees is generally considered reasonable. The fee amount is approved. The Court also approves the incurred costs of $118,859.20.
The motion for final approval of the class action settlement is GRANTED. Plaintiffs’ motion for attorneys’ fees and expenses is GRANTED with the exception of Steinberg’s request for an incentive award. The basis for Steinberg’s award, as noted above, needs to be set forth in a supplemental declaration.
The Court will prepare the final order if this tentative ruling is not contested.