In re Synchrony Fin. Sec. Litig.

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IN RE SYNCHRONY FINANCIAL SECURITIES LITIGATION

No. 3:18-cv-1818-VAB

United States District Court, D. Connecticut

August 4, 2023

RULING AND ORDER APPROVING CLASS ACTION SETTLEMENT APPROVING PLAN OF ALLOCATION, AND APPROVING APPLICATION FOR ATTORNEY'S FEES AND COSTS

VICTOR A. BOLDEN UNITED STATES DISTRICT JUDGE

This consolidated securities class action is pending in this Court entitled In re: Synchrony Financial Securities Litigation, No. 3:18-cv-1818 (the “Action”).^[1]

In a Ruling and Order dated February 3, 2023, the Court certified the Action to proceed as a class action on behalf of all persons or entities who purchased or otherwise acquired the common stock of Synchrony Financial (“Synchrony”) during the period from January 19, 2018, through July 12 2018, inclusive (the “Class Period”), and who were damaged (the “Class” or “Class Members”).^[2]

Lead Plaintiff Stichting Depositary APG Developed Markets Equity Pool (“Lead Plaintiff” or “APG”) and Plaintiff Stichting Depositary APG Fixed Income Credits Pool (collectively with Lead Plaintiff, “Plaintiffs”) on behalf of themselves and the Class; and Defendants Synchrony Financial (“Synchrony” or the “Company”), Margaret M. Keane (“Keane”), Brian D. Doubles (“Doubles”), and Thomas M. Quindlen (“Quindlen” and together with Synchrony, Keane, and Doubles, “Defendants”) have entered into a Stipulation and Agreement of Settlement dated April 3, 2023 (the “Stipulation”), that provides for a complete dismissal with prejudice of the claims asserted in the Action on the terms and conditions set forth in the Stipulation, subject to the approval of this Court (the “Settlement”).

The Parties seek approval of the Settlement and the Plan of Allocation.

Plaintiffs' Counsel^[3]seek approval of an award of attorneys' fees equal to thirteen percent of the Settlement Fund, payment of $566,401.13 in Litigation Expenses to Plaintiffs' Counsel, and $46,700 for costs incurred by Plaintiffs directly related to their representation of the Class.

On July 6, 2023, Marilyn Wheeler (“Ms. Wheeler”) filed the only objection to the Settlement.

Upon reviewing the Stipulation and all of the filings, and following proceedings held in connection with the Settlement, including a fairness hearing held on July 31, 2023, the Court GRANTS the motion for final approval of the settlement and plan of allocation and GRANTS the motion for attorney's fees and expenses. The Court FINDS, CONCLUDES, and ORDERS as follows.

I. BACKGROUND

On February 5, 2019, the Court appointed Stichting Depositary APG Developed Markets Equity Pool as the Lead Plaintiff and approved BLB&G as Lead Counsel for the proposed class. See Ruling and Order on Mots. to Appoint Lead Plaintiff and Lead Counsel, ECF No. 59 (“Order Appointing Lead Pl.”).

On June 24, 2022, Plaintiffs filed a motion to certify a class, a memorandum of law in support, and a declaration from Adam H. Wierzbowski with supporting documents including a study done by Dr. Steven Feinstein (“Dr. Feinstein”). See Pls.' Mot. for Class Certification and Appt. of Class Representative and Class Counsel, ECF No. 187; Mem. of Law in Supp. of Pls.' Mot. for Class Certification, ECF No. 188; Decl. of Adam H. Wierzbowski in Supp. of Pls.' Mot. for Class Certification, ECF No. 189.

On February 3, 2023, the Court issued a Ruling and Order granting the motion to certify the class and appointing Lead Plaintiff as Class Representative. Ruling and Order on Mot. to Certify Class, ECF No. 231 (“Ruling on Class Cert.”).

On April 7, 2023, Lead Plaintiff filed a motion for preliminary settlement approval. Mot. for Settlement, ECF No. 232.

On April 12, 2023, the Court granted the motion for preliminary settlement approval and: (a) found, under Rule 23(e)(1)(B), that it would likely be able to approve the Settlement as fair, reasonable, and adequate under Rule 23(e)(2); (b) ordered that notice of the proposed Settlement be provided to potential Class Members; (c) provided Class Members with the opportunity either to exclude themselves from the Class or to object to the proposed Settlement; and (d) scheduled a hearing regarding final approval of the Settlement. Order Granting Preliminary Settlement Approval, ECF No. 233 (“Preliminary Approval Order”).

On or about April 12 and 13, 2023, counsel for Defendants, under the Class Action Fairness Act, 28 U.S.C. § 1715 (“CAFA”), sent notices to the appropriate federal and state officials. Cert. of Serv., ECF No. 235.

On May 5, 2023, the Court-approved Claims Administrator, Epiq, began mailing copies of the Notice Packet to potential Class Members. See Ex. 2 to Mot. to Approve Settlement ¶¶ 34, ECF No. 240-2 (“Villanova Decl.”). Beginning on May 5, 2023, copies of the Notice, Claim Form, Stipulation, Preliminary Approval Order, and Complaint were made available on the settlement website maintained by Epiq. See id. ¶ 12. On May 22, 2023, Epiq caused the Summary Notice to be published in The Wall Street Journal and Investor's Business Daily. See id. ¶ 8. As of June 23, 2023, Epiq had disseminated 156,117 copies of the Notice Packet to potential Class Members and nominees. See id. ¶ 7.

On June 26, 2023, Lead Plaintiff filed a motion for final approval of the Settlement and Plan of Allocation. Mot. for Final Approval of Class Action Settlement & Plan of Allocation, ECF No. 236; Mem. in Supp. of Mot. for Final Approval, ECF No. 237 (“Mot. to Approve Settlement”).

On June 26, 2023, Class Counsel filed a motion for attorney fees and litigation expenses. Mot. for Attorney Fees & Litig. Expenses, ECF No. 238; Mem. in Supp. of Mot. for Attorney Fees & Litig. Expenses, ECF No. 239 (“Mot. for Att'y's Fees”).

On July 6, 2023, Ms. Wheeler filed the only objection to the proposed Settlement. Ex. 2 to Reply, ECF No. 241-2 (“Wheeler Obj.”).

On July 24, 2023, Lead Plaintiffs filed a reply in support of their motion for final approval of the Settlement and motion for attorney fees and litigation expenses. Reply to Resp. to Mot. for Att'y's Fees & Litig. Expenses & Mot. for Final Approval, ECF No. 241 (“Reply”).

On July 31, 2023, the Court conducted a hearing (the “Settlement Hearing”) to consider, among other things, (a) whether the terms and conditions of the Settlement are fair, reasonable, and adequate to the Class, and should therefore be approved; and (b) whether a judgment should be entered dismissing the Action with prejudice as against the Defendants.

This Ruling and Order incorporates and makes a part hereof: (a) the Stipulation filed with the Court on April 7, 2023; and (b) the Notice and the Summary Notice, both of which were filed with the Court on June 26, 2023.

II. STANDARD OF REVIEW

A. Settlement Approval

Federal Rule of Civil Procedure 23(e) requires that “[t]he claims, issues, or defenses of a certified class or a class proposed to be certified for purposes of settlement may be settled, voluntarily dismissed, or compromised only with the court's approval.” Fed.R.Civ.P. 23(e); see D'Amato v. Deutsche Bank, 236 F.3d 78, 85 (2d Cir. 2001) (“Under Federal Rule of Civil Procedure 23, a class action cannot be settled without the approval of the District Court.”) (citing Fed.R.Civ.P. 23(e)).

Courts may approve class action settlements “only after a hearing and only on finding that [the proposed settlement] is fair, reasonable, and adequate.” Fed.R.Civ.P. 23(e)(2). To determine whether the proposed settlement is fair, reasonable, and adequate, Federal Rule of Civil Procedure 23(e) provides that courts should consider whether:

(A) the class representatives and class counsel have adequately represented the class; (B) the proposal was negotiated at arm's length; (C) the relief provided for the class is adequate, taking into account: (i) the costs, risks, and delay of trial and appeal; (ii) the effectiveness of any proposed method of distributing relief to the class, including the method of processing class-member claims; (iii) the terms of any proposed award of attorney's fees, including timing of payment; and (iv) any agreement required to be identified under Rule 23(e)(3); and (D) the proposal treats class members equitably relative to each other.

Id. In deciding whether the compromise is fair, reasonable, and adequate, the court must consider both “the substantive terms of the settlement” and whether “the negotiating process by which the settlement was reached” shows that “the compromise [is] the result of arm's-length negotiations.” Weinberger v. Kendrick, 698 F.2d 61, 74 (2d Cir. 1982).

B. Attorney's fees

With respect to attorneys' fee awards, courts in the Second Circuit use one of two different methods to analyze their reasonableness. Goldberger v. Integrated Res., 209 F.3d 43, 50 (2d Cir. 2000) (“In sum, we hold that both the lodestar and the percentage of the fund methods are available to district judges in calculating attorneys' fees in common fund cases.”); see also McDaniel v. County. of Schenectady, 595 F.3d 411, 417 (2d Cir. 2010) (“[I]t remains the law in this Circuit that courts may award attorneys' fees in common fund cases under either the ‘lodestar' method or the ‘percentage of the fund' method.”) (internal quotation marks omitted).

The Second Circuit has also recognized the use of the lodestar “as a baseline even if the percentage method is eventually chosen” and “encourage[d] the practice of requiring documentation of hours as a ‘cross check' on the reasonableness of the requested percentage.” Goldberger, 209 F.3d at 50 (quoting In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 820 (3d Cir. 1995)); see also In re Colgate-Palmolive Co. ERISA Litig. 36 F.Supp.3d 344, 353 (S.D.N.Y. 2014) (“The lodestar cross-check works best as a sanity check to ensure that an...