SUPERIOR COURT OF CALIFORNIA

COUNTY OF SANTA CLARA

In re McAFEE, INC. SHAREHOLDER LITIGATION,

Consolidated action, including:

Greenberg v. McAfee, Inc., Santa Clara County Superior Court, Case No. 1:10-cv-180413;

Colwell v. McAfee, Inc., Santa Clara County Superior Court, Case No. 1:10-cv-180420;

Faulkner v. McAfee, Inc., Santa Clara County Superior Court, Case No. 1:10-cv-180597;

Korsinsky v. Bass, Santa Clara County Superior Court, Case No. 1:10-cv-180928.

Case No. 2010-1-CV-180413

TENTATIVE RULING RE: MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT

This Document Relates To:

ALL ACTIONS.

The above-entitled action comes on for hearing before the Honorable Thomas E. Kuhnle on October 4, 2019, at 9:00 a.m. in Department 5. The Court now issues its tentative ruling as follows:

I. INTRODUCTION
II.
This is a certified class action arising out of a merger between McAfee, Inc. and Intel Corporation. The parties have reached a settlement. On May 24, 2019, the Court signed an order granting preliminary approval of the settlement. Plaintiff now moves for final approval of the settlement.

III. LEGAL STANDARD
IV.
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.)

V. DISCUSSION
VI.
The case has been settled on behalf of the following class:

[A]ll holders of McAfee common stock who exchanged their shares for consideration in the acquisition of McAfee by Intel Corporation at the price of $48.00 per share. Excluded from the Class are Defendants and any person, firm, trust, corporation or other entity related to or affiliated with any Defendant. Also excluded from the Class is any Person who validly requested exclusion from the Class following the issuance of the Notice of Pendency.

As discussed in connection with the motion for preliminary approval, defendants Intel Corporation, McAfee, Inc., and David G. DeWalt (collectively, “Defendants”) will pay a total of $11,700,000. This amount includes $3,510,000 for attorneys’ fees, $650,000 in expenses, and $5,000 for an incentive award for Plaintiff. Administration costs are capped at $250,000. If the full amounts of these items are approved, pro rata distributions to class members will be approximately $0.05 per share.

On June 11, 2019, the claims administrator mailed notice to 283 names and addresses from the Notice of Pendency mailed on April 16, 2012, and to 280 brokerages, custodial banks, and other institutions that hold securities in “street name” as nominees for the benefit of their customers who are the beneficial owners of the securities. (Declaration of Carole K. Sylvester Regarding Notice Dissemination and Publication, ¶¶ 5-6.) On the same date, the claims administrator delivered electronic copies of the notice package to 392 registered electronic filers who are qualified to submit electronic claims. (Id. at ¶ 7.) The notice was also published by the Depository Trust Company (“DTC”) on the DTC Legal Notice System on June 11, 2019. (Id. at ¶ 8.) As of July 29, 2019, the claims administrator had mailed a total of 22,090 notice packages to potential class members and nominees. (Id. at ¶ 11.) A summary notice was published on June 17, 2019, in The Wall Street Journal, Investor’s Business Daily, and over the Business Wire. (Id. at ¶ 14.) The claims administrator also established a website in connection with the settlement – www.McAfeeShareholderSettlement.com. (Id. at ¶ 13.)

There has been one objection to the settlement. The objector, who owns 45 shares of McAfee stock, takes issue with the requirement in the settlement that class members be entitled to a minimum payment of $10 to receive a settlement distribution. (Supplemental Declaration of Maxwell R. Huffman in Further Support of Motions for: (1) Final Approval of Class Action Settlement and Approval of Plan of Allocation; and (2) an Award of Attorneys’ Fees and Expenses, Ex. A.) The objector suggests all class members should receive a minimum of $10 from the settlement. (Ibid.)

It has been held that setting a minimum threshold of $10 to receive a distribution from a settlement fund is permissible because issuing very small checks to class members can cause a disproportionate administrative expense due to the costs of mailing checks, tracking and accounting for payments, following up on uncashed checks, and reissuing checks not cashed during their valid periods. (In re MGM Mirage Securities Litigation (9th Cir. 2017) 708 Fed.Appx. 894, 897.) Therefore, the objection is OVERRULED.

The Court previously found that the proposed settlement is fair and the Court continues to make that finding for purposes of final approval.

Plaintiff requests a class representative incentive award of $5,000.

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.)

The class representative, Central Laborers’ Pension Fund (“CLPF”), has filed a declaration through its Executive Director, Dan Koeppel. Koeppel states CLPF’s involvement in the action has included conferring with counsel, reviewing pleadings, searching for and collecting records, preparing for and participating in a deposition, and discussing settlement of the case. (Declaration of Dan Koeppel in Support of Plaintiff’s Motion for Final Approval of Class Action Settlement, ¶ 6.) The Court finds the incentive award is justified and it is approved.

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.) Plaintiff’s counsel requests attorneys’ fees in the amount of $3,510,000. This is 30% of the total settlement amount. Plaintiff’s counsel provides evidence demonstrating a lodestar of $6,650,631.75. (Declaration of Maxwell R. Huffman Filed on Behalf of Robbins Geller Rudman & Dowd LLP in Support of Application for Award of Attorneys’ Fees and Expenses, ¶ 4 and Ex. A.) This results in a negative multiplier for the requested fees. The Court approves the fees.

Plaintiff’s counsel also requests payment of costs totaling $638,123.37. Plaintiff provides evidence supporting those costs. (Declaration of Maxwell R. Huffman Filed on Behalf of Robbins Geller Rudman & Dowd LLP in Support of Application for Award of Attorneys’ Fees and Expenses, ¶ 5 and Ex. B.) The Court approves the costs.

The motion for final approval of class action settlement is GRANTED.

Pursuant to Rule 3.769(h) of the California Rules of Court, this Court retains jurisdiction over the parties to enforce the terms of the Settlement Agreement, and the final Order and Judgment.

The Court now sets a compliance hearing for March 20, 2020 at 10:00 a.m. in Department 5. At least ten court days before the hearing, class counsel and the settlement administrator must submit a summary accounting of the net settlement fund identifying distributions made as ordered herein, the number and value of any uncashed checks, amounts remitted to Defendants, the status of any unresolved issues, and any other matters appropriate to bring to the court’s attention. Counsel may appear at the compliance hearing telephonically.

The Court will prepare the final order and judgment if this tentative ruling is not contested.

NOTICE: The Court does not provide court reporters for proceedings in the complex civil litigation departments. Parties may arrange for a private court reporter to provide services, but those arrangements must be consistent with the local rules and policies posted on the Court’s website.