Baird v. Blackrock Institutional Tr. Co.

ORDER GRANTING MOTION FOR FINAL SETTLEMENT APPROVAL AND GRANTING IN PART AND DENYING IN PART MOTION FOR ATTORNEYS' FEES, COSTS, AND INCENTIVE AWARDS RE: DKT. NOS. 481, 482

HAYWOOD S. GILLIAM, JR., United States District Judge.

Pending before the Court are Plaintiffs' motions for final approval of class action settlement and for attorneys' fees, costs, and incentive award. Dkt. Nos. 481, 482. The Court held a final fairness hearing on October 21, 2021. For the reasons detailed below, the Court GRANTS final approval. The Court also GRANTS IN PART AND DENIES IN PART Plaintiffs' motion for attorneys' fees, costs, and incentive awards.

I. BACKGROUND

A. Procedural Background

Plaintiff Baird filed his original complaint on April 5, 2017, challenging Defendants' management of the BlackRock Retirement Savings Plan (the “Plan”). Dkt. No. 1. Plaintiffs and Defendants engaged in several rounds of motions to dismiss and amendment, concluding in the Court's order granting in part and denying in part Defendants' motion to dismiss the second amended complaint. Dkt. Nos. 75, 79, 154, 181, 340. The parties then engaged in extensive discovery regarding the claims and defenses in this case, including a substantial number of discovery disputes that required joint letter briefing before Magistrate Judge Westmore. See Dkt. No 482 (or “Mot.”) at 2-3.

Plaintiffs then moved to certify two classes. Dkt. No. 292. One class, the BlackRock Plan

Class, consisted of only current and former participants in the BlackRock Plan. Id. The other class, the putative CTI Class, consisted of participants in numerous retirement plans whose retirement savings were invested in certain BlackRock collective trust investment vehicles that engaged in securities lending. Id. On February 11, 2020, the Court certified the BlackRock Plan Class but denied Plaintiffs' motion to certify the CTI Class. Dkt. No. 360. Plaintiffs sought but were denied a Rule 23(f) appeal of the Court's denial of certification of the CTI Class. Dkt. Nos. 367, 373.

Following class certification, the parties engaged in expert discovery. Plaintiffs' two merits experts provided reports concerning damages and fiduciary process. Mot. at 3. In addition, Class Counsel deposed Defendants' three expert witnesses, and Plaintiffs' experts submitted rebuttal reports addressing three of Defendants' expert reports. Id. After expert discovery closed, Plaintiffs moved for partial summary judgment and Defendants moved for summary judgment on all claims. Dkt. Nos. 385, 396. The Court denied both motions on January 12, 2021. Dkt. No. 455. In preparation for trial, Plaintiffs submitted numerous filings, including two motions in limine and a trial brief and pre-trial conference statement. Dkt. Nos. 453, 459, 464. Shortly before trial was scheduled to begin, the Court referred the Parties to a magistrate judge settlement conference. Dkt. No. 450. At a February 5, 2021 settlement conference facilitated by Magistrate Judge Ryu, the parties reached a settlement in principle. See Dkt. No. 468. Plaintiffs then moved for preliminary approval of the class action settlement on April 23, 2021.

Following the hearing on the motion for preliminary approval, and in response to the Court's concerns about the Settlement Agreement's proposed method of communication with current and former Plan participants, Defendants filed a supplemental declaration. See Dkt. No. 475. That declaration explained that Plan participants affirmatively choose their communication delivery preference to be either email or U.S. mail, and that 88 percent of Plan participants have affirmatively elected to have legal and plan notices communicated to them via email. Id. ¶¶ 3-6. With this concern addressed, the Court granted Plaintiffs' motion for preliminary approval of the Settlement on July 12, 2021 and ordered the parties to implement the proposed class notice plan

and seek independent fiduciary review. See Dkt. No. 476.

B. Settlement Agreement

The proposed Settlement releases the claims of the BlackRock Plan Class (and only the BlackRock Plan Class) in this case in return for a payment of $9, 650, 000. Mot. at 4. That money will be distributed by the Settlement Administrator, Settlement Services, Inc. (“SSI”), according to a Plan of Allocation that allocates settlement funds proportional to the assets each Class member held in BlackRock-managed funds in the Plan. Id.

i. The BlackRock Plan Class

The Settlement Agreement resolves all the claims asserted by the certified BlackRock Plan Class (the “Class”), which is defined as follows: “All participants (and their beneficiaries) in the BlackRock Retirement Savings Plan during the Class Period.” Dkt. No. 471-2 (“Settlement Agreement”) ¶ 1.8. Excluded from the Class are the individuals named in the case at any time as Defendants. Id. The Class Period is the period from April 5, 2011 through the date of the entry of the Preliminary Approval Order in this case (July 12, 2021). Settlement Agreement ¶ 1.14. There are 18, 289 Class members. Mot. at 4.

ii. Monetary Relief and Plan of Allocation

Under the Settlement Agreement, Defendants will pay $9, 650, 000 into an escrow account established for the benefit of the Class by Class Counsel and trusteed by an escrow agent (the “Qualified Settlement Fund” or “QSF”). Mot. at 4-5. Following deductions for (i) any Court-approved Attorneys' Fees and Expenses; (ii) any Court-approved Class Representative Service Awards; and (iii) Administrative Expenses, the Net Settlement Amount will be distributed to the Class in accordance with the Plan of Allocation attached to the Settlement Agreement as Exhibit E. Id. at 5.

The Plan of Allocation provides that each Class member will receive a share of the Net Settlement Amount that is proportionate to the value of her individual account allocations to BlackRock-managed investments relative to the aggregate value of all Class members' allocations to BlackRock-managed investments. Id. Specifically, each Class member's Distribution shall be calculated as follows:

a. First, the Settlement Administrator shall determine the aggregate value of the portion of each Class Member's account allocated to BlackRock-managed investments during the Class Period by summing the value of the Class Member's positive (greater than zero) account balance allocations to BlackRock-managed investments at the end of each quarter during the Class Period.

b. Second, the Settlement Administrator shall determine the aggregate value of the Plan's investment in BlackRock-managed funds across all quarters of the Class Period by summing the aggregate values of all Class Members' positive account balance allocations to BlackRock-managed investments.

c. Third, the Settlement Administrator shall, for each Class Member, divide the aggregate value of each Class Member's account balance allocations to BlackRock-managed investments by the Plan's aggregate investment in BlackRock-managed funds across all quarters of the Class Period; this is the Pro Rata Share.

d. A Class Member's settlement payment is equal to the product of the Pro Rata Share value and the Net Settlement Amount value.

Settlement Agreement, Ex. E at Part B.

Current Participants with a greater than zero ($0) account balance on the date settlement payments are made will have their Plan accounts credited with their share of the Net Settlement Amount. Settlement Agreement ¶ 6.6.2. The settlement payment will be invested in accordance with and proportionate to the investment elections then on file for each Current Participant. Id. ¶¶ 6.6, 6.6.3. If the Current Participant does not have an investment election on file, then the settlement payment will be invested in the Plan's Qualified Default Investment Alternative. Id. ¶ 6.6.3.

Former Participants will receive a check sent to the address on file with the Plan's Recordkeeper. Id. ¶ 6.8.2. To increase uptake of the settlement payments, Former Participants will not be required to submit a claim form to receive their settlement payment. Mot. at 6. For each check issued to a Former Participant, the Settlement Administrator will calculate and withhold applicable taxes associated with the payment and will issue necessary tax forms to the

Former Participant. Settlement Agreement ¶ 6.8.2(a). Further, the Settlement Administrator will advise the Former Participant: first, that the settlement payment is rollover eligible; and second, that if a Qualified Domestic Relations Order applies to the payment, they are responsible for complying with such Order. Id. ¶¶ 6.8.2(b)-(c). Similarly, the Settlement Administrator will issue checks to any Current Participants who have a greater than zero-dollar ($0) account balance as of the date settlement payments are made (e.g., Current Participants who close their Plan account before settlement payments are made shall receive a check), with appropriate taxes withdrawn. Id. ¶¶ 6.7, 6.7.1.

iii. Release of Claims

In exchange for the relief provided in the Settlement, the Class releases the Released Parties from the following Released Claims:

a. That were asserted in the Complaint or Action, or that arise out of the conduct alleged in the Complaint whether or not pleaded in the Complaint;

b. That arise out of, relate to, are based on, or have any connection with (1) the selection, oversight, retention, or performance of the Plan's investment options and service providers; (2) fees, costs, or expenses charged to, paid by, or reimbursed by the Plan, directly or indirectly, including, without limitation, all fees charged against collective trust fund assets, including fees for managing