APPLE INC. S SUBMISSION IN SUPPORT OF FINAL APPROVAL OF SETTLEMENT AND PLAN OF ALLOCATION

Transcription

1 Case5:06-cv JF Document169 Filed03/15/11 Page1 of 6 1 GEORGE A. RILEY (S.B. No ) ROBERT D. TRONNES (S.B. No ) 2 VIVI T. LEE (S.B. No ) O MELVENY & MYERS LLP 3 Two Embarcadero Center 28th Floor 4 San Francisco, California Telephone: (415) Facsimile: (415) griley@omm.com 6 rtronnes@omm.com vlee@omm.com 7 Attorneys for Defendant APPLE INC. 8 9 UNITED STATES DISTRICT COURT 10 NORTHERN DISTRICT OF CALIFORNIA 11 SAN JOSE DIVISION 12 IN RE APPLE INC. SECURITIES Case No. C JF LITIGATION 13 CLASS ACTION 14 THIS DOCUMENT RELATES TO: 15 ALL ACTIONS 16 APPLE INC. S SUBMISSION IN SUPPORT OF FINAL APPROVAL OF SETTLEMENT AND PLAN OF ALLOCATION APPLE S SUBMISSION ISO FINAL APPROVAL - C JF

2 Case5:06-cv JF Document169 Filed03/15/11 Page2 of 6 1 I. INTRODUCTION 2 At the February 25, 2011 Settlement Fairness Hearing, the Court requested the parties 3 provide an update on March 15, 2011 regarding the claims processing and total amount of 4 Recognized Claims. Based on information provided by the Claims Administrator, Apple believes 5 the Net Settlement Fund will be exhausted. Theodore Frank states he has no objection to the 6 Settlement if the Net Settlement Fund is exhausted. (1/21/11 Frank Obj. 2:1-2.) 7 Apple also wishes to inform the Court of a late objection submitted by purported Class 8 Member Geoffrey H. Wood. (Lee Second Supp. Decl., Ex. A.) Mr. Wood s objection, 9 postmarked February 22, 2011, is both untimely and without merit. 10 Because the Settlement and Plan of Allocation are fair, reasonable and adequate, Apple 11 respectfully requests the Court grant final approval. 12 II. CLAIMS PROCESSING 13 As of March 14, 2011, the Claims Administrator has received more than 76,000 Proofs of 14 Claim and has preliminarily processed more than 64,000 of those Proofs of Claim. (Epiq Third 15 Supp. Decl. 4, ) 1 Epiq has estimated that the 64,000 processed claims represent more 16 than $48 million in value of Recognized Claims. (Id. 4, 17.) The claims processing has not 17 yet been completed, but Apple expects the claims will clearly exhaust the $16.5 million in the Net 18 Settlement Fund. 19 III. THE NOTICE PROGRAM 20 As discussed in Apple s briefs in support of final approval of the Settlement and the 21 Claims Administrator s declarations, the Claims Administrator mailed the Notice and Proof of 22 Claim to 5,804 known banks, brokers and other nominees and directed the institutions to 23 (i) forward the Notice directly to Class Members or (ii) provide a list of names or pre-printed 24 labels to the Claims Administrator to provide notice of the Settlement to potential Class 25 Members. (Epiq Third Supp. Decl. 5.) The Claims Administrator directed the institutions to 26 complete their research within 14 days in accordance with the Amended Preliminary Approval 27 1 The Third Supplemental Declaration of Claims Administrator is attached to the Declaration of 28 Michael Barry. APPLE S SUBMISSION ISO FINAL APPROVAL - C JF

3 Case5:06-cv JF Document169 Filed03/15/11 Page3 of 6 1 Order. (Id.) The notice program instituted by the Claims Administrator constitutes the best 2 notice practicable under the circumstances, even though some institutions did not comply with the 3 Claims Administrator s instructions. 4 On December 9, 2010, in the original mailing to banks, brokers and nominees, the Claims 5 Administrator mailed the Notice and Proof of Claim to TD Ameritrade. (Epiq Third Supp. Decl. 6 6.) The Claims Administrator also sent the notice package to TD Ameritrade electronically and 7 followed up by phone and to encourage TD Ameritrade to complete its research for the 8 notice process. (Id.) Despite these repeated instructions, TD Ameritrade did not provide the 9 Claims Administrator with an electronic list of the names and addresses of potential Class 10 Members until February 28, (Id.) The Claims Administrator completed the mailing based 11 on TD Ameritrade s data on March 4, ( Id.) 12 Claims administrators in securities class actions must rely on nominees to notify potential 13 class members. Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1374 (9th Cir. 1993); Silber v. 14 Mabon, 18 F.3d 1449, 1452 (9th Cir. 1994). Notice provided to class members nominees is 15 sufficient even if brokerage houses fail to timely forward the notice to the beneficial owners. 16 Fidel v. Farley, 534 F.3d 508, 514 (6th Cir. 2008). Due process is satisfied as long as the class 17 as a whole had notice adequate to flush out whatever objections might reasonably be raised. 18 Torrisi, 8 F.3d at The Claims Administrator made reasonable efforts to give notice to 19 potential Class Members through a national publication, a national wire service, direct mailings, a 20 website and toll-free number, and by contacting nominees. As of March 14, 2011, Epiq has 21 mailed a total of 1,365,734 copies of the Notice and Proof of Claim to potential Class Members or 22 their banks, brokers or other nominees. (Epiq Third Supp. Decl. 7.) As a result, over 76, Proofs of Claim have been submitted to date; 27,353 visitors have accessed the website; and 24 5,091 callers have called the toll-free number. (Id. 10, 12, 15.) Five purported Class Members 25 have also submitted objections to the Settlement. The Claims Administrator s compliance with 26 the Court-approved notice program satisfies all statutory and due process requirements APPLE S SUBMISSION ISO FINAL APPROVAL - C JF

4 Case5:06-cv JF Document169 Filed03/15/11 Page4 of 6 1 IV. THE UNTIMELY WOOD OBJECTION 2 The Claims Administrator received an objection postmarked February 22, 2011 well 3 after the January 21, 2011 deadline for objections from purported Class Member Geoffrey H. 4 Wood. (Epiq Third Supp. Decl. 14 & Attachment D.) Mr. Wood acknowledges that he failed 5 to file his objection in a timely manner and does not explain why he is submitting his objection 6 late. (Id.) The Claims Administrator mailed the Notice to Mr. Wood on January 7 and again on 7 January 11. (Epiq Third Supp. Decl. 14.) Mr. Wood did not serve his objection on Apple s 8 counsel and did not provide required information regarding his stock transactions. (Lee Second 9 Supp. Decl. 3 & Ex. A.) Accordingly, Mr. Wood has waived any objections he may have to the 10 Settlement. (See Amended Preliminary Approval Order 14-15; Notice ) 11 Even if Mr. Wood s untimely and improper objection is considered, the objection does not 12 show the Settlement is unfair, unreasonable or inadequate. Mr. Wood s arguments have no merit. 13 Required documentation: Mr. Wood contends that requiring Claimants to submit 14 documentation verifying their Apple stock transactions is unreasonable because it is 15 impractical to keep documents over a ten-year period. Courts, however, routinely 16 require documentation of stock transactions in securities class actions to ensure the 17 validity and accuracy of submitted claims. See In re Wireless Facilities, Inc. Sec. 18 Litig., 253 F.R.D. 630, (S.D. Cal. 2008) (requiring documentation to verify 19 stock transactions); In re Cendant Corp. Prides Litig., 189 F.R.D. 321, 328 (D.N.J ) (requiring documentation to verify each claimant is truly a member of the 21 settlement class ). 22 Economic recovery: Mr. Wood argues the economic recovery is insufficient to restore 23 the economic loss to the Class. As Apple explained in its briefs in support of the 24 Settlement, the Settlement is fair, reasonable and adequate to the Class in light of the 25 substantial barriers plaintiffs face to maintain their claims and to recover damages. 26 (Apple Mem. ISO Prelim. Approval 13-21; Apple Mem. ISO Final Approval 8-14.) 27 Plaintiffs claims were likely to be dismissed before trial because they are time-barred 28 by the five-year statute of repose for Section 10(b) claims. Additionally, plaintiffs APPLE S SUBMISSION ISO FINAL APPROVAL - C JF

5 Case5:06-cv JF Document169 Filed03/15/11 Page5 of 6 1 cannot meet the stringent pleading standards for fraud claims mandated by the Private 2 Securities Litigation Reform Act ( PSLRA ) and Fed. R. Civ. P. 9(b) or plead or 3 prove loss causation. Even if plaintiffs can overcome all of these hurdles and prevail 4 at trial, the PSLRA will still severely limit any recovery. 5 Public benefit: Mr. Wood contends the Settlement does not benefit the public. He 6 appears to oppose class actions generally as a waste of taxpayers resources. Filing an 7 objection to this Settlement, however, is not the proper avenue to raise those issues. 8 The relevant consideration in approving class action settlements is the benefit to the 9 class, not the general public. See Officers for Justice v. Civil Service Comm n of City 10 & Cnty of San Francisco, 688 F.2d 615, 625 (9th Cir. 1982) (citing factors relevant to 11 final approval). Moreover, approval of this Settlement would benefit the public by 12 conserving the Court s resources and advancing corporate reforms. 13 Average per share recovery estimate: Mr. Wood contends Lead Plaintiffs Counsel s 14 estimate of a $0.07 average per share recovery is misleading because actual recovery 15 is dependent on the number of submitted claims. The average per share recovery set 16 forth in the Notice is mandated by the PSLRA and Ninth Circuit precedent. See U.S.C. 78u-4(a)(7)(A); In re Veritas Software Corp. Sec. Litig., 496 F.3d 962, (9th Cir. 2007). Moreover, the Notice addresses Mr. Wood s purported concern about 19 the calculation by expressly stating that Plaintiffs Lead Counsel believes that the 20 average per share recovery will be greater than $0.07 because typically fewer than % of eligible shareholders elect to participate in securities class action 22 settlements. (Notice 1.) The Notice further explains that each Claimant s actual 23 recovery will depend on a number of factors, including (i) when during the Class 24 Period [the Claimant] purchased shares of Apple common stock; (ii) the purchase 25 price paid for the shares; (iii) whether the shares were held at the end of the Class 26 Period or sold during the Class Period; (iv) if sold, when the shares were sold and the 27 amount received; and (v) the number of Recognized Claims. (Id. 24.) APPLE S SUBMISSION ISO FINAL APPROVAL - C JF

6 Case5:06-cv JF Document169 Filed03/15/11 Page6 of 6 1 V. CONCLUSION 2 Based on the foregoing, Apple respectfully requests the Court finally approve the 3 Settlement and Plan of Allocation. 4 Dated: March 15, 2011 O MELVENY & MYERS LLP 5 By: /s/ George A. Riley 6 George A. Riley 7 Attorneys for Defendant Apple Inc APPLE S SUBMISSION ISO FINAL APPROVAL - C JF

7 Case5:06-cv JF Document169-1 Filed03/15/11 Page1 of 6 1 GEORGE A. RILEY (S.B. No ) ROBERT D. TRONNES (S.B. No ) 2 VIVI T. LEE (S.B. No ) O MELVENY & MYERS LLP 3 Two Embarcadero Center 28th Floor 4 San Francisco, California Telephone: (415) Facsimile: (415) griley@omm.com 6 rtronnes@omm.com vlee@omm.com 7 Attorneys for Defendant APPLE INC UNITED STATES DISTRICT COURT 11 NORTHERN DISTRICT OF CALIFORNIA 12 SAN JOSE DIVISION 13 IN RE APPLE INC. SECURITIES Case No. C JF LITIGATION 14 CLASS ACTION 15 SECOND SUPPLEMENTAL THIS DOCUMENT RELATES TO: DECLARATION OF VIVI LEE IN 16 ALL ACTIONS SUPPORT OF FINAL APPROVAL OF SETTLEMENT AND PLAN OF 17 ALLOCATION SECOND SUPP. LEE DECL. C JF

8 Case5:06-cv JF Document169-1 Filed03/15/11 Page2 of 6 1 SECOND SUPPLEMENTAL DECLARATION OF VIVI LEE 2 I, VIVI LEE, declare as follows: 3 1. I am an attorney duly licensed before all of the courts of the State of California and 4 the United States District Court for the Northern District of California. I am an associate in the 5 law firm of O Melveny & Myers LLP, counsel of record for defendant Apple Inc. ( Apple ). I 6 make this second supplemental declaration in support of the Motion for Final Approval of Class 7 Action Settlement and Plan of Allocation. I have personal knowledge of the matters stated herein 8 and, if called upon, could competently testify thereto Attached hereto as Exhibit A is a true and correct copy of an objection from 10 purported Class Member Geoffrey H. Wood, dated February 18, 2011, and postmarked February 11 22, To my knowledge, as of March 15, 2011, no attorney for Apple has received a 13 service copy of Mr. Wood s objection in accordance with the terms of the Notice and the 14 Amended Preliminary Approval Order I declare under penalty of perjury under the laws of the United States of America that the 17 foregoing is true and correct. Executed this 15th day of March 2011 at Menlo Park, California /s/ Vivi Lee Vivi Lee SECOND SUPP. LEE DECL. C JF

9 Case5:06-cv JF Document169-1 Filed03/15/11 Page3 of 6 Exhibit A

10 Case5:06-cv JF Document169-1 Filed03/15/11 Page4 of 6 Claims Administrator In re Apple Inc. Securities Litigation P. O. Box 6809 Portland, OR Dear Sirs: February 18, 2011 I am a member of the class of this questionable litigation by reason of the fact that my family and I owned approximately 180 shares of Apple Stock at various times during the period in question August 24, 2001 and September 30, (71533,34,35,36) However, since I may not have standing to object as a class member, I oppose this litigation as a member of the public for the following reasons: 1. The safekeeping of documents for a period of over 10 years is impractical and not practiced or recommended by any customary investment or tax standard today. Requiring accurate records more than five years old to participate in this settlement is unreasonable and shows poor judgment and practice by a Federal Appeals Court. 2. Approving a case from these facts where the economic recovery and benefit to the class is estimated to be $0.07 per share is sheer legal fiction. Since the two main purposes for class action lawsuits seems to be missing here that of penalizing the defendant and restoring economic loss to the class, the only benefit here seems to be to the lawyers and judges who have kept this fiction alive. If it could be shown that the class itself and not just the lead plaintiff (NYCERS) were economically benefited to any significant degree 1 this action, this class action might have some validity. This case fails in this regard. 3. The public is really not interested in repairing the contrived woes of a highly sophisticated investor such as NYCERS at minimal shareholder expense. Therefore, the Court of Appeals should be mindful of spending taxpayer time approving a case with such limited recovery benefits for the public, both economic and social. 4. For a class action to be valid and confer benefits to the public a class action lawsuit must have some connection to public reality and public benefit; it must be clear in its solution for the class and it must be easily documented and submitted by the class. This case seems to fail in most of these areas. For example, all action by members of the class, the exclusion date, proof date and objection date should all be executable through the same cutoff date. The convenience of the court or attorneys is secondary here. 5. This case has been heard, tried and re-tried by lower courts with the same outcome dismissal probably because of its limited benefit to the class. 6. Denying approval of this settlement would actually benefit the class by a greater economic degree than the 7-cent estimated recovery through the court system: To argue that past shareholders have no other way to recover damages is more fiction.

11 Case5:06-cv JF Document169-1 Filed03/15/11 Page5 of 6 7. Estimates of class recovery are highly dependent on the final number in the class. Any estimate is likely to be highly misleading in a case where the recovery is perceived by the class to be economically irrelevant as it is in this case. At $0.07 per share, most members of the class would just as soon waive their right to this penurial recovery and enjoy the benefits as a current shareholder, avoiding the compounded cost of litigation and the unreasonable annoyance of documentation and submission. For all of the above reasons, the Ninth Circuit should deny approval of this class action allowing all present shareholders to benefit from the elimination of legal waste. In spite of my failure to file this objection in a timely manner, the points made here are material and should still be heard as hart of the discussion. It is awards like these that drive bli to question the role of trivial class action lawsuits in our society. Si ere Geoffrey H. Wood 2760 Baker Street San Francisco, CA 94123

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