In re Allergan, Inc., Case No. 8:14-cv-02004-DOC-KESx

IN RE ALLERGAN, INC. PROXY VIOLATION SECURITIES LITIGATION

Case No. 8:14-cv-02004-DOC-KESx

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION

August 13, 2018

CLASS ACTION

JUDGMENT APPROVING CLASS ACTION SETTLEMENT

WHEREAS, a class action is pending in this Court entitled In re Allergan, Inc. Proxy Violation Securities Litigation, Case No. 8:14-cv-2004-DOC-KESx (C.D. Cal.) (the "Action");

WHEREAS, by Order dated March 15, 2017, this Court certified the Action to proceed as a class action on behalf of all persons who sold Allergan, Inc. ("Allergan") common stock contemporaneously with purchases of Allergan common stock made or caused by Defendants during the period February 25, 2014 through April 21, 2014, inclusive (the "Class Period") and were damaged thereby (the "Class");¹ WHEREAS, pursuant to this Court's Order dated June 14, 2017, the Notice of Pendency of Class Action (the "Class Notice") was mailed to potential members of the Class to notify them of, among other things: (i) the Action pending against Defendants; (ii) the Court's certification of the Action to proceed as a class action on behalf of the Class; and (iii) their right to request to be excluded from the Class, the effect of remaining in the Class or requesting exclusion, and the requirements for requesting exclusion;

WHEREAS, (i) State Teachers Retirement System of Ohio, Iowa Public Employees Retirement System, and Patrick T. Johnson (collectively, "Plaintiffs"), on behalf of themselves and the other members of the Class (defined below); and (ii) defendants Valeant Pharmaceuticals International, Inc., Valeant Pharmaceuticals International, and J. Michael Pearson (collectively, the "Valeant Defendants") and Pershing Square Capital Management, L.P., PS Management GP, LLC, PS Fund 1, LLC, Pershing Square, L.P., Pershing Square II, L.P., Pershing Square GP, LLC, Pershing Square Holdings, Ltd., Pershing Square International, Ltd., and William Ackman (collectively, the "Pershing Defendants," together with the Valeant Defendants, "Defendants," and, together with Plaintiffs, the "Parties") have enteredinto a Stipulation and Agreement of Settlement dated January 26, 2018 (the "Stipulation"), that provides for a complete dismissal with prejudice of the claims asserted against Defendants in the Action on the terms and conditions set forth in the Stipulation, subject to the approval of this Court (the "Settlement");

WHEREAS, unless otherwise defined in this Judgment, the capitalized terms herein shall have the same meaning as they have in the Stipulation;

WHEREAS, by Order dated March 19, 2018 (the "Preliminary Approval Order"), this Court: (i) preliminarily approved the Settlement; (ii) ordered that notice of the proposed Settlement be provided to the Class; (iii) provided Class Members with the opportunity to object to the proposed Settlement; and (iv) scheduled a hearing regarding final approval of the Settlement;

WHEREAS, due and adequate notice has been given to the Class;

WHEREAS, the Court conducted a hearing on June 12, 2018 (the "Settlement Hearing") to consider, among other things, (i) whether the terms and conditions of the Settlement are fair, reasonable, and adequate to the Class, and should therefore be approved; and (ii) whether a judgment should be entered dismissing the Action with prejudice as against the Defendants; and

WHEREAS, the Court having reviewed and considered the Stipulation, all papers filed and proceedings held herein in connection with the Settlement, all oraland written comments received regarding the Settlement, and the record in the Action, and good cause appearing therefor;

IT IS HEREBY ORDERED, ADJUDGED, AND DECREED:

1. Jurisdiction - The Court has jurisdiction over the subject matter of the Action, and all matters relating to the Settlement, as well as personal jurisdiction over all of the Parties and each of the Class Members.

2. Incorporation of Settlement Documents - This Judgment incorporates and makes a part hereof: (i) the Stipulation filed with the Court on January 26, 2018; and (ii) the Settlement Notice and the Summary Settlement Notice, both of which were filed with the Court on January 26, 2018.

3. Settlement Notice - The Court finds that the dissemination of the Settlement Notice and the publication of the Summary Settlement Notice: (i) were implemented in accordance with the Preliminary Approval Order; (ii) constituted the best notice practicable under the circumstances; (iii) constituted notice that was reasonably calculated, under the circumstances, to apprise Class Members of (a) the effect of the proposed Settlement (including the Releases to be provided thereunder), (b) Lead Counsel's motion for an award of attorneys' fees and reimbursement of Litigation Expenses; (c) their right to object to any aspect of the Settlement, the Plan of Allocation, and/or Lead Counsel's motion for attorneys' fees and reimbursement of Litigation Expenses, and (d) their right to appear at the Settlement Hearing; (iv)constituted due, adequate, and sufficient notice to all persons and entities entitled to receive notice of the proposed Settlement; and (v) satisfied the requirements of Rule 23 of the Federal Rules of Civil Procedure, the United States Constitution (including the Due Process Clause), the Private Securities Litigation Reform Act of 1995, 15 U.S.C. § 78u-4, as amended, and all other applicable law and rules.

4. Final Settlement Approval and Dismissal of Claims - Pursuant to, and in accordance with, Rule 23 of the Federal Rules of Civil Procedure, this Court hereby fully and finally approves the Settlement set forth in the Stipulation in all respects (including, without limitation: the amount of the Settlement, the Releases provided for therein, and the dismissal with prejudice of the claims asserted against Defendants in the Action), and finds that the Settlement is, in all respects, fair, reasonable, and adequate to the Class. To provide additional context and support for the reasonableness of the Settlement, the Court attaches as Exhibit 2 to this Order a lightly revised version of the tentative summary judgment order the Court issued to the parties ("Summary Judgment Order"), which the Court was finalizing and preparing to issue when the parties settled.² While the Summary Judgment Order is overall quite favorable to Plaintiffs, it also evinces several significant obstacles to recovery that Plaintiffs faced and that thus inform the fairness of the Settlement:

(a) First, the actions and non-actions of the SEC may have presented difficulties for Plaintiffs at jury trial. In a Comment Letter, the SEC asked Valeant to amend its Schedule TO to list Pershing as a "co-bidder." Next, although the SEC did also ask Valeant to "provide [its] analysis as to why PS Fund 1, LLC's acquisition of Allergan's shares beginning in February 2014 did not violate Rule 14e-3," the SEC never appeared to follow up on the issue of a potential Rule 14e-3 violation. Although the Court was prepared to exclude some SEC evidence or provide limiting instructions, the absence of a corresponding government e in the context of such a highly publicized and large transaction would have been a significant hurdle for Plaintiffs to overcome in convincing a jury to find in their favor at trial. According to Plaintiffs, this Settlement represents the sixth largest securities recovery of any kind in the Ninth Circuit (and the largest without a parallel government enforcement action), the largest recovery by private plaintiffs alleging only insider trading claims, and the largest recovery in a private action alleging violations under Rule 14e-3.

(b) Second, throughout the litigation the Court ruled on numerous dispositive issues of first impression or issues on which there was very little caselaw, and the SEC did not step in to provide guidance or a recommended interpretation of its own regulations. As a result, Plaintiffs faced enormous appellate risks, particularly given that appellate review would in many cases be de novo. Forexample, had Plaintiffs succeeded at trial, Defendants likely would have appealed the following issues, among others: (i) whether Rule 14e-3 affords a private right of action; (ii) whether Rule 14e-3 is constitutional as applied in a "warehousing scenario"; (iii) the standard for determining an "offering person"; (iv) the role of subjective intent in the standard for "substantial steps"; (v) whether Section 20A's "contemporaneity" rule permits Plaintiffs to sue when it was logically impossible that they traded with any defendant; (vi) whether there was a material dispute of fact on any liability element granted at summary judgment; and (vii) the proper standard for loss causation in Rule 14e-3 insider trading cases like this one.

(c) Third, the Summary Judgment Order still required Plaintiffs to convince a unanimous jury that: (i) Pershing traded on material nonpublic information "related to" a tender offer, and (ii) it was "reasonably foreseeable" to Valeant that its tip to Pershing would "result in a violation of this section." While certain evidence might have been subject to exclusion under the Rules of Evidence, Plaintiff was nonetheless concerned that Defendants would rebut these elements with evidence of subjective intent and state of mind.

(d) Fourth, although the Court intended to deny Defendants' Motion for Summary Judgment as to damages, Plaintiffs still faced substantial risk in proving damages at trial, because the damages issue turned on complex facts, would likely have involved a contentious battle of experts, and differed from the usualdamages scenario in that many Plaintiffs actually made money when they sold their stocks—just not as much as they would have if the alleged insider information had been public.

For the foregoing reasons, the Settlement is fair and reasonable. Accordingly, the Parties are directed to implement, perform and consummate the Settlement in accordance with...