Mandalevy v. B of I Holding, Inc.

[7] 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA [10] 11 BAR MANDALEVY, individually, and Case No.: 3:17-CV-667-GPC-MSB on behalf of all others similarly situated, [12] ORDER: Plaintiff, [13] v. (1) PROVISIONALLY APPROVING [14] CERTIFICATION OF THE BOFI HOLDING, INC., GREGORY 15 PROPOSED SETTLEMENT CLASS; GARRAGBRANTS, ANDREW J. 16 MICHELETTI, ESHEL BAR-ADON and (2) CONDITIONALLY APPROVING PAUL GRINBERG, 17 THE PROPOSED NOTICE FORM Defendants. AND PROOF OF CLAIM FORM; [18] 19 (3) APPROVING LEAD PLAINTIFF’S PLAN OF [20] ALLOCATION; AND [21] (4) GRANTING PRELIMINARY [22] APPROVAL OF CLASS ACTION 23 SETTLEMENT [24] 25 [ECF No. 87] [26] / / [28] 1 Before the Court is Plaintiffs’ Unopposed Motion for Entry of Order Preliminarily 2 Approving Settlement and Establishing Notice Procedures. The Motion is unopposed. 3 See ECF No. 87 at 2. On April 15, 2022, the Court held a hearing on this matter. ECF No. 4 92. For the reasons set forth below, the Court Provisionally approves certification of the 5 proposed Settlement Class for the limited purposes of settlement; conditionally approves 6 the Proposed Notice Form, subject to the revisions consistent with the Court’s Order, and 7 the Proof of Claim Form; approves the Plan of Allocation detailed by Lead Plaintiff and 8 Lead Counsel in their moving papers; and GRANTS preliminary approval of Parties’ 9 settlement of this class action. 10 I. BACKGROUND 11 A. Procedural History 12 On April 3, 2017, Plaintiff Bar Mandalevy (“Plaintiff”) filed a putative class action 13 complaint against Defendants BofI Holding, Inc., Gregory Garrabrants, and Andrew J. 14 Micheletti. ECF No. 1. The Court thereafter appointed David Grigsby as Lead Plaintiff 15 (ECF No. 15) and Pomerantz LLP as Lead Counsel (ECF No. 17). On February 20, 2018, 16 Lead Plaintiff filed a Class Action Amended Complaint. ECF No. 27. On July 10, 2018, 17 Lead Plaintiff filed the Second Amended Complaint (“SAC”), which is the operative 18 complaint in this action. ECF No. 38. Among other changes, Plaintiffs added Eshel Bar19 Adon and Paul J. Grinberg as Defendants in this action in the SAC. See SAC. 20 Plaintiff’s SAC brings two causes of action against Defendants. First, Plaintiffs 21 allege all Defendants are liable for violations of Section 10(b) of the Exchange Act and 22 Rule 10b-5. SAC ¶¶ 160-70. And second, Plaintiffs allege the Individual Defendants 23 violated Section 20(a) of the Exchange Act. Id. ¶¶ 171-75. Plaintiff alleges that 24 Defendants made materially false and misleading statements regarding (1) the 25 Company’s conduct related to lending to criminals which might have exposed the 26 Company to liability under anti-money laundering statutes (SAC ¶¶ 6-7), and (2) 27 whether federal agencies, including the SEC, DOJ, and FDIC were investigating the 28 Company (id. ¶¶ 10-11). 1 On August 17, 2018, Defendants moved to dismiss Plaintiff’s SAC. ECF No. 42. 2 The Court granted Defendants’ Motion to Dismiss on December 7, 2018, finding that 3 Lead Plaintiff failed to plead loss causation. ECF No. 50. Plaintiff appealed the Court’s 4 order of dismissal, and the Ninth Circuit Court of Appeals reversed the Court’s order in 5 part. Grigsby v. BofI Holding, Inc., 979 F.3d 1198, 1208, 1209 (9th Cir. 2020). The Ninth 6 Circuit found that this Court’s conclusion that records obtained through FOIA did not 7 qualify as a corrective disclosure was reversible error. Id. at 1209 . However, the Ninth 8 Circuit agreed that the article in Seeking Alpha did not qualify as a corrective disclosure 9 because it contained only public information. Id. The Ninth Circuit also noted that the 10 district court addressed only loss causation, and needed to consider scienter on remand. [11] Id. 12 The Court then ordered limited briefing on the issue of scienter. ECF No. 64. On 13 February 3, 2021, Defendants again moved to dismiss the SAC. ECF No. 66. The motion 14 argued that the SAC failed to plead facts that supported Plaintiff’s allegation that BofI 15 acted with the requisite scienter when it released its March 31, 2017 press statement in 16 which it denied knowledge of government investigations. Id. The Court denied 17 Defendants’ motion to dismiss the Section 10(b) claims against BofI (“the Company”) 18 and individual Defendants Garrabrants, Micheletti, Bar-Adon, and denied the motion as 19 to the Section 20(a) claim in full. ECF No. 69; Mandalevy v. BofI Holding, Inc., No. 1720 CV-667 (GPC) (KSC), 2021 WL 794275 , at *8 (S.D. Cal. Mar. 2, 2021). In its denial, the 21 Court found “the SAC, viewed holistically, raise[d] a strong inference that BofI 22 intentionally made the misleading press release statement or acted with deliberate 23 recklessness as to its falsity.” Id. at *5. 24 On November 23, 2021, the Parties reached an agreement in principle to settle this 25 action, and filed a Joint Motion to Continue All Deadlines Due to Settlement with this 26 Court on November 24, 2021. ECF No. 84. The agreement was memorialized in a 27 memorandum of understanding (“MOU”), which was executed on December 8, 2021. 28 ECF No. 87-3, Szydlo Decl. Ex. 1 (“Stipulation and Agreement of Settlement”) at 5. 1 (“Settlement Stipulation at 5. The Stipulation attached to Plaintiff’s motion reflects the 2 final and binding agreement between the Parties. Id. 3 B. Negotiation and Settlement Terms 4 Plaintiff and Defendants engaged in “vigorous arm’s-length negotiations” in 5 coming to the terms memorialized in the Settlement Agreement. ECF No. 87-1, Pl.’s 6 Mot., at 19. Lead Plaintiff has agreed to settle and release the claims asserted “[b]ased 7 upon their investigation, prosecution, and the early neutral evaluation of the case.” ECF 8 No. 87-3 (“Settlement Agreement”) at 6. 9 The Settlement Agreement provides for a Settlement Amount of $900,000 “to be 10 made into an escrow account specified by Lead Plaintiff. Settlement Agreement at 17. 11 The Settlement Agreement provides that the total Settlement Amount will be used to pay: 12 (a) any Taxes; (b) any Notice and Administration Costs; (c) any Litigation Expenses 13 awarded by the Court; and (d) any attorneys’ fees awarded by the Court. Id. In the 14 Motion, Plaintiff’s counsel estimates a gross average recovery of $0.05 per damaged 15 share for each Settlement Class Member (less the deduction of Court-approved fees, 16 expenses, and costs of notice and claims administration). Pl.’s Mot., at 26. 17 Plaintiff seeks appointment of a Claims Administrator. Id. at 21. Settlement Class 18 Members may be ascertained through Defendants’ records. Id. After BofI provides “to 19 the Claims Administrator in electronic format . . . its reasonably available lists (consisting 20 of names and addresses) of the holders of BofI Securities during the Settlement Class 21 Period,” the Claims Administrator would mail the Notice and Proof of Claim Form to 22 those members of the Settlement Class as may be identified through reasonable effort. 23 Settlement Agreement at 22. Each Settlement Class Member will be required to submit a 24 Claim Form, to be reviewed by the Claims Administration. The proposed Proof of Claim 25 form is attached to Plaintiff’s motion as Exhibit A-2. See ECF No. 87-6. The Claim 26 Administrator “shall determine in accordance with [the Settlement Agreement] and the 27 Plan of Allocation the extent, if any, to which each Claim shall be allowed, subject to 28 review by the Court.” Id. at 24. Any Settlement Class Members who do not submit a 1 Claim Form “shall be forever barred from receiving any distribution from the Net 2 Settlement Fund.” Id. at 24. Further, “Claim Forms that do not meet the submission 3 requirements may be rejected,” but “[p]rior to rejecting a Claim in whole or in part, the 4 Claims Administrator shall communicate with the Claimant in writing, to give the 5 Claimant the chance to remedy any curable deficiencies in the Claim Form submitted.” 6 Id. 7 The Settlement Agreement provides that, following the Court’s entry of Judgment 8 in this Action and the effective date of the Settlement, any Settlement Class Member who 9 does not submit a valid Claim Form will not be entitled to receive any distribution from 10 the Net Settlement Fund, but will be otherwise bound by the terms of the Settlement 11 Agreement “and will be permanently barred and enjoined from bringing any action, 12 claim, or other proceeding of any kind against Settling Defendants or the Settling 13 Defendants’ Releasees with respect to the Released Plaintiff’s Claims.” Id. at 23. 14 Payment pursuant to the Class Distribution Order “shall be final and conclusive against 15 all Settlement Class Members.” Id. at 25. The Agreement also provides that “[n]o person 16 or entity shall have any claim against Lead Plaintiff, Lead Plaintiff’s Counsel, the Claims 17 Administrator or any other agent designated by Lead Plaintiff’s Counsel, or the 18 Defendants’ Releasees and/or their respective counsel, arising from distributions made 19 substantially in accordance with the [Settlement Agreement], the Plan of Allocation 20 approved by the Court, or any order of the Court.” Id. at 26. 21 The Proposed Notice, attached to the Settlement Agreement as Exhibit A-1, 22 discloses material information to a Settlement Class Member’s decision whether to 23 accept, object to, or opt out of the Settlement, including: (1) the proposed Settlement 24 Class; (2) the terms and provisions of the Amended Stipulation, including the Settlement 25 Among; (3) the relief to the Settlement Class and releases to Defendants and Defendants’ 26 Releasees that the Settlement will provide; (4) the maximum award of attorney’s fees and 27 reimbursement of reasonable expenses to Lead Counsel; (5) the date, time and place (to 28 be decided by the Court) of the hearing on Final Approval of class action settlement; and 1 (6) the procedures and deadlines for opting out of the settlement or submitting comments 2 or objections. Id. at 26. 3 The Settlement Agreement releases: 4 [A]ny and all claims, demands, rights, causes of action, and liabilities, whether based in law or equity, arising under federal, state, local, statutory or common law [5] or any other law, rule or regulation including both known and Unknown Claims, 6 that arise out of or relate in any way to the institution, prosecution, or settlement of claims asserted in this Action against the Defendants, including under Rule 11 of [7] the Federal Rules of Civil Procedure or for any other fees or cost shifting. Released 8 Defendants’ Claims do not include any claims relating to the enforcement of the Settlement, any claims between or among the Defendants and Settling Defendants’ [9] Releasees, any claims between the Defendants and Settling Defendants’ Releasees 10 and their respective insurers, or any claims against any person or entity who or which submits a request for exclusion from the Settlement Class that is accepted by [11] the Court. [12] ECF No. 91-1, Exhibit A-1 (“Proposed Notice”), at 18-19.1 With respect to the released [13] claims, Settlement Class Members also waive rights under California Civil Code § 1542. [14] 15 II. DISCUSSION 16 A. Legal Standard 17 The Ninth Circuit has a strong judicial policy that favors settlements in class 18 actions. Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). However, 19 when the parties settle before class certification, the court must “peruse the proposed 20 compromise to ratify both the propriety of the certification and the fairness of the 21 settlement.” Staton v. Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003). To that end, a 22 reviewing court must engage in two, separate inquiries: (1) whether the proposed class 23 meets the certification requirements and (2) whether the proposed settlement is 24 “fundamentally fair, adequate, and reasonable.” Id. At the preliminary approval stage, the [26] 27 1 When Lead Plaintiff filed the motion for preliminary approval, the Proposed Notice Form was attached to the motion at ECF No. 87-5. Before the hearing on this matter, Plaintiff filed an Amended Notice [28] 1 reviewing court considers whether it is likely to approve of the proposal and certify the 2 class. Fed. R. Civ. P. 23(e)(1)(B). 3 B. Provisional Class Certification under Rule 23 4 Federal Rule of Civil Procedure (“Rule”) 23 establishes four prerequisites for class 5 certification: (1) numerosity; (2) commonality; (3) typicality; and (4) adequacy of 6 representation. Fed. R. Civ. P. 23(a). Under Rule 23(b)(3), common questions must 7 predominate over individual questions, Fed. R. Civ. P. 23(b)(3), and the class action 8 device must be “superior to other available methods for fairly and efficiently adjudicating 9 the controversy.” Id. The Court does not finally certify a class when granting preliminary 10 approval of a settlement for the purpose of directing notice to class members, but rather 11 determines whether “the court will likely be able to . . . certify the class for purposes of 12 judgment on the proposal.” Fed. R. Civ. P. 23(e)(1)(B) (emphasis added). 13 Plaintiff seeks conditional certification of a Class defined as “all persons or entities 14 who or which purchased or otherwise acquired BofI Securities during the Class Period set 15 forth in the Second Amended Complaint, and were allegedly damaged thereby.” Pl.’s 16 Mot. at 10. Plaintiff argues that the requirements of Rule 23(a) are met such that the 17 Class can be certified for the purposes of settlement. Id. at 9-13. 18 1. Numerosity 19 The numerosity requirement under Rule 23(a)(1) is met if “the class is so 20 numerous that joinder of all members is impracticable.” Fed. R. Civ. P. 23(a)(1). “As a 21 general matter, courts have found that numerosity is satisfied when class size exceeds 40 22 members, but not satisfied when membership dips below 21.” Slaven v. BP Am., Inc., 190 23 F.R.D. 649, 654 (C.D. Cal. 2000). Plaintiff notes that because this Action “involve[es] 24 nationally traded stocks,” Pl.’s Mot. at 10, this is a case where “the exact size of the 25 proposed class is unknown, but general knowledge and common sense indicate it is large, 26 the numerosity requirement is satisfied.” Vinh Nguyen v. Radient Pharm. Corp., 287 27 F.R.D. 56 , 569 (C.D. Cal 2012). Indeed, “[w]here several million shares of stock were 28 purchased during the class period, courts regularly find that class members are 1 sufficiently numerous to render joinder impracticable.” In re Silver Wheaton Corp. Sec. 2 Litig., No. 15 Civ. 5146 (CAS) (JEMx), 2017 WL 20139171 , at *6 (C.D. Cal. May 11, 3 2017). Joinder of this number of plaintiffs is clearly impractical, and courts have 4 certified classes with far fewer members. See Immigrant Assistance Project of Los 5 Angeles Cty. Fed'n of Lab. (AFL-CIO) v. I.N.S., 306 F.3d 842 , 869 (9th Cir. 2002) (citing 6 Jordan v. Cty. of Los Angeles, 669 F.2d 1311, 1319, n.10 (9th Cir. 1982)). The 7 numerosity requirement is therefore satisfied. 8 2. Commonality 9 Rule 23(a)(2) requires the existence of “questions of law or fact common to the 10 class.” Fed. R. Civ. P. 23(a)(2). Commonality is established if plaintiffs and class 11 members’ claims “depend upon a common contention . . . capable of class-wide 12 resolution—which means that determination of its truth or falsity will resolve an issue 13 that is central to the validity of each one of the claims in one stroke.” Wal-Mart Stores, 14 Inc. v. Dukes, 564 U.S. 338, 350 (2011). 15 Here, Settlement Class Members are those individuals who purchased or otherwise 16 acquired BofI securities during the relevant period of time. There are clear questions that 17 are common to all class members, including: (1) whether the federal securities laws were 18 violated by Defendants’ acts; (2) whether statements made by Defendants to the investing 19 public during the Settlement Class Period misrepresented material facts about the 20 business and operations of BofI; (3) whether Defendants caused BofI to issue false and 21 misleading statements during the Settlement Class Period; (4) whether Defendants acted 22 knowingly or recklessly in issuing false and misleading statements; (5) whether the prices 23 of BofI securities during the Settlement Class Period were artificially inflated because of 24 Defendants’ conduct; and (6) whether the members of the Class have sustained damages 25 and, if so, what is the proper measure of damages.” SAC ¶ 156. It is indisputable that the 26 proposed class meets Rule 23(a)(2)’s commonality requirement. See Jimenez v. Allstate 27 Ins. Co., 765 F.3d 1161, 1165 (9th Cir. 2014) (“[A] class meets Rule 23(a)(2)’s 28 commonality requirement when the common questions it has raised are apt to drive the 1 resolution of the litigation, no matter their number.”) (internal quotation marks and 2 citation omitted). The Court therefore finds that the proposed class meets the 3 commonality requirement. 4 3. Typicality 5 Rule 23(a)(3)’s typicality requirement will be satisfied when “the claims or 6 defenses of the representative parties are typical of the claims or defenses of the class.” 7 Fed. R. Civ. P. 23(a)(3). The named plaintiff must be a member of the class they seek to 8 represent and must “possess the same interest and suffer the same injury” as putative 9 class members. Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 156 (1982) (internal 10 quotations omitted). The representative claims are typical if they are “reasonably co11 extensive with those of absent class members,” though they “need not be substantially 12 identical.” Parsons v. Ryan, 754 F.3d 657, 685 (9th Cir. 2014) (quoting Hanlon v. 13 Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998)). Here, Lead Plaintiff David 14 Grigsby was appointed as Lead Plaintiff.2 ECF No. 15. As described in his motion not for 15 appointment as Lead Plaintiff, Mr. Grigsby alleged he lost more than $90,000 as a result 16 of the alleged fraud during the Class Period. ECF No. 3-1 at 5. Mr. Grigsby’s claims are 17 typical of the putative class because he “purchased shares of BofI securities in reliance 18 upon the materially false and misleading statements issued by [D]efendants and w[as] 19 injured thereby,” and “suffered a substantial loss” of more than $90,000. Id. at10. Thus, 20 Mr. Grigsby’s claims for damages were based upon the same allegations outlined in the 21 Second Amended Complaint. See SAC ¶ 156. 22 4. Adequacy 23 Under Rule 23(a)(4), representative parties must be able to “fairly and adequately 24 protect the interests of the class.” Fed. R. Civ. P. 23(a)(4). In analyzing whether Rule 25 23(a)(4) has been met, the Court must ask two questions: “(1) do the named plaintiffs and [27] 2 As of January 12, 2021, Mr. Grigsby is the only remaining Lead Plaintiff in this action. See ECF No. [28] 1 their counsel have any conflicts of interest with other class members and (2) will the 2 named plaintiffs and their counsel prosecute the action vigorously on behalf of the 3 class?” Evon v. Law Offices of Sidney Mickell, 688 F.3d 1015, 1031 (9th Cir. 2012) 4 (citation omitted). The adequacy of representation requirement is designed to deny 5 certification in instances of “actual fraud, overreaching, or collusion.” In re Bluetooth 6 Headset Prods. Liab. Litig., 654 F.3d 935, 948 (9th Cir. 2011) (emphasis in original). 7 It does not appear that Plaintiff has any interests that are in conflict with the 8 Settlement Class. Plaintiff’s counsel, attorneys Pomerantz LLP are experienced 9 securities litigators who have litigated numerous securities class actions on behalf of 10 stakeholders in district courts throughout the country. See ECF No. 87-9, Firm Resume 11 (Ex. 2) at 2-10. There is no indication that Plaintiff or his counsel will not continue to 12 prosecute this lawsuit vigorously. The Court therefore concludes the adequacy 13 requirement is met for the purposes of conditional certification. 14 5. Predominance 15 Finally, to certify a class under Rule 23(b)(3), the Court must find “that the 16 questions of law or fact common to class members predominate over any questions 17 affecting only individual members, and that a class action is superior to other available 18 methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). 19 Predominance tests “whether proposed classes are sufficiently cohesive to warrant 20 adjudication by representation.” Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036 , 1045 21 (2016) (quoting Amchem Products, Inc. v. Windsor, 521 U.S. 591, 623 (1997)). For 22 settlement purposes, a class settlement is superior to other available methods for a fair 23 resolution of the controversy because the class mechanism will reduce litigation costs and 24 promote greater efficiency. In a class action settlement, the Court need not address 25 whether the case, if tried, would present issues of manageability under Rule 23(b)(3)(D). 26 Amchem, 521 U.S. at 620 . 27 Here, Defendants’ liability depends on whether Defendants violated securities 28 laws, and whether they acted with the requisite scienter and whether Defendants’’ 1 conduct caused damages to Lead Plaintiff and the Settlement Class. These questions 2 predominate over any individualized inquires that may exist as to any individual class 3 members in this litigation. Plaintiffs contend that such questions predominate over any 4 individualized inquiries that may exist in this litigation. Pl.’s Mot. at 13. “The common 5 questions of whether misrepresentations were made and whether Defendants had the 6 requisite scienter predominate over any individual questions of reliance and damages.” In 7 re Cooper Cos. Inc. Sec. Litig., 254 F.R.D. 628, 641 (C.D. Cal. 2009). Damages may 8 differ among each member of the Settlement Class, but liability can be determined on a 9 classwide basis. See id. at 640 “Defendants’ alleged misrepresentations during the 10 Settlement Class Period affected all investors alike and proof of falsity, materiality, 11 scienter, and loss causation relies on common, class-wide proof.” Pl.’s Mot. at 13 (citing 12 Schleicher v. Wendt, 618 F.3d 679, 682, 685, 687 (7th Cir. 2010)). And such proof goes 13 to alleged misrepresentations that “affect[ed] [all] investors alike,” Schleicher, 618 F.3d 14 at 682 . The proposed class satisfies predominance for the conditional purpose of 15 settlement approval. 16 C. Preliminary Approval of Class Action Settlement 17 Federal Rule of Civil Procedure 23(e) requires judicial approval for any proposed 18 class action settlement. Before approving a proposed class action settlement, a court must 19 find that the settlement is “fair, reasonable, and adequate.” Fed. R. Civ. P. 23(e). Such an 20 evaluation is made in the context of the “strong judicial policy that favors settlements, 21 particularly where complex class action litigation is concerned.” In Re Syncor ERISA 22 Litig., 516 F.3d 1095, 1101 (9th Cir. 2008). At the preliminary approval stage, the 23 question is whether approval under the “fair, reasonable, and adequate” standard is likely. 24 Fed. R. Civ. P. 23(e)(1)(B). Any fairness determination requires the Court to “focus[ ] 25 primarily upon whether the particular aspects of the decree that directly lend themselves 26 to pursuit of self-interest by class counsel and certain members of the class—namely 27 attorney’s fees and the distribution of any relief, particularly monetary relief, among class 28 members—strictly comport with substantive and procedural standards designed to protect 1 the interests of class members.” Staton, 327 F.3d at 960 . Courts evaluate the “settlement 2 as a whole, rather than assessing its individual components.” Lane v. Facebook, Inc., 696 3 F.3d 811 , 818 (9th Cir. 2012). 4 Rule 23(e) was amended in 2018 to create uniformity amongst the circuits and to 5 focus the inquiry on whether a proposed class action is “fair reasonable, and adequate.” 6 Fed. R. Civ. P. 23(e), advisory committee notes (2018 amendment). As amended, Rule 7 23(e) provides that a court may approve a proposed class action settlement after 8 considering whether: 9 (A) the class representatives and class counsel have adequately represented the class; [10] (B) the proposal was negotiated at arm’s length; 11 (C) the relief provided for the class is adequate, taking into account: (i) the costs, risks, and delay of trial and appeal; [12] (ii) the effectiveness of any proposed method of distributing relief to the 13 class, including the method of processing class-member claims; (iii) the terms of any proposed award of attorney’s fees, including timing of [14] payment; and 15 (iv) any agreement required to be identified under Rule 23(e)(3); and (D) the proposal treats class members equitably relative to each other. [16] Fed. R. Civ. P. 23(e)(2). The first and second factors are viewed as “procedural” in [17] nature, and the third and fourth factors are viewed as “substantive” in nature. Fed. R. Civ. 18 P. 23 (e)(2), advisory committee notes (2018 amendment). [19] For the reasons that follow, the Court finds that the Settlement Agreement reached [20] by the Parties is likely fair, reasonable, and adequate, and GRANTS preliminary approval [21] of the class action settlement. [22] 1. Adequacy of Representation [23] Rule 23(e)(2)(A) requires the Court to consider whether “the class representatives [24] and class counsel have adequately represented the class.” Fed. R. Civ. P. 23(e)(2)(A). [25] This analysis is “redundant of the requirements of Rule 23(a)(4) and Rule 23(g), [26] respectively.” 4 William B. Rubenstein, Newberg on Class Actions § 13:48 (5th ed. [28] 1 2020); In re GSE Bonds Antitrust Litig., 414 F. Supp. 3d 686 , 701 (S.D.N.Y. 2019) 2 (noting similarity of inquiry under Rule 23(a)(4) and Rule 23(e)(2)(A)). 3 The Court found above that Plaintiff and his counsel adequately represent the class 4 for the purposes of conditional class certification. For the same reasons, the Court finds 5 that the adequacy of representation requirement under Rule 23(e)(2)(A) is likely met. 6 2. Arm’s Length Negotiation 7 Rule 23(e)(2)(B) requires the Court to consider whether “the proposal was 8 negotiated at arm’s length.” Fed. R. Civ. P. 23(e)(2)(B). This Action was commenced in 9 2017, and the Parties have conducted extensive discovery. Plaintiff’s counsel asserts the 10 Settlement Agreement “was achieved only after intense arm’s-length negotiations, 11 including months of correspondence and discussions.” Nat’l Rural Telecomms. Coop. v. 12 DIRECTV, Inc., 221 F.R.D. 523, 528 (C.D. Cal. 2004) (“A settlement following 13 sufficient discovery and genuine arms-length negotiation is presumed fair.”). Given the 14 length of this litigation, the Court finds it appropriate for “[g]reat weight [to be] accorded 15 to the recommendation of counsel, who are most closely acquainted with the facts of the 16 underlying litigation, id. at 528 . Here, “Lead Counsel recommends that the Court approve 17 the Settlement, which represents a great outcome for the Settlement Class Members.” 18 Pl.’s Mot. at 20. The Court concludes, for the purpose of preliminary approval, that this 19 factor is likely satisfied. 20 3. Adequacy of Relief Provided to the Class 21 Rule 23(e)(2)(C) requires that the Court consider whether “the relief provided for 22 the class is adequate, taking into account: (i) the costs, risks, and delay of trial and 23 appeal; (ii) the effectiveness of any proposed method of distributing relief to the class, 24 including the method of processing class-member claims; (iii) the terms of any proposed 25 award of attorney’s fees, including timing of payment; and (iv) any agreement required to 26 be identified under Rule 23(e)(3).” Fed. R. Civ. P. 23(e)(2)(C). The amount offered in 27 the proposed settlement agreement is generally considered to be the most important 28 consideration of any class settlement. See Bayat v. Bank of the West, No. C-13-2376 1 EMC, 2015 WL 1744342 , at *4 (N.D. Cal. Apr. 15, 2015) (citing In re HP Inkjet Printer 2 Litig., 716 F.3d 1173, 1178–79 (9th Cir. 2013)). 3 The Parties have agreed to settle this case for an amount of $900,000. Settlement 4 Agreement at 17. Any deductions for attorney’s fees, and costs of notice are to be 5 deducted from the Settlement Amount, only by the Court’s approval upon motion by 6 Lead Plaintiff. As a percentage of estimated damages, the Settlement Amount is well 7 above the median percentage of the recovery level for investor losses in securities class 8 action settlements. See In re Omnivision, 559 F. Supp. 2d at 1042 (approving 6% 9 recovery of maximum damages) (citing In re Heritage Bond Litig., No. 02-ML-1475 10 (DT), 2005 WL 1594403 , at *8–9 (C.D. Cal. June 10, 2005) (average recovery between 11 2% to 3% of maximum damages)) 12 a. Costs, risks, and delay of trial and appeal 13 “To evaluate adequacy, courts primarily consider plaintiffs’ expected recovery 14 balanced against the value of the settlement offer.” In re Tableware Antitrust Litig., 484 15 F. Supp. 2d 1078, 1080 (N.D. Cal. 2007). While a settlement need not compensate class 16 members for the maximum value of their claims, there is no fixed percentage of the 17 potential recovery that renders a settlement amount reasonable. See In re Baan Co. Sec. 18 Litig., 284 F. Supp. 2d 62, 65 (D.D.C. 2003) (citing In re Newbridge Networks Sec. Litig., [19] 1998 WL 765724 , at *2 (D.D.C. Oct. 23, 1998)). The Court therefore must examine 20 whether the Settlement Agreement will likely adequately compensate the class given the 21 costs, risks, and delay of trial and appeal based on the facts of this case. 22 Here, the Settlement Amount is $900,000. Settlement Agreement at 17. In the Motion, 23 Plaintiff’s counsel estimates a gross average recovery of $0.05 per damaged share for 24 each Settlement Class Member (less the deduction of Court-approved fees, expenses, and 25 costs of notice and claims administration). Pl.’s Mot. at 26. Further “[u]nder the 26 Settlement, Defendants will pay $900,000, which represents almost 4.5 times of the 27 approximately $200,000 in estimated aggregate damages under a conservative damages [28] 1 analysis, and almost 21% of the approximately $4,300,000 under an aggressive (but more 2 challenging to prove) damages analysis.” Id. at 20. 3 And “[w]hile Lead Plaintiff and Lead Counsel believe that the Second Amended 4 Complaint is strong, success before the Court is in no way assured.” Pl.’s Mot. at 18. 5 Courts must “consider the varies of litigation and compare the significance of immediate 6 recovery by way of the compromise to the mere possibility of relief in the future, after 7 protracted and expensive litigation. Nat’l Rural Telecomms. Coop. v. DIRECTV, Inc., 221 8 F.R.D. 528, 526 (C.D. Cal. 2004). Based on the risks of litigation, Plaintiff contends that 9 the settlement provides adequate relief to the proposed class, especially considering the 10 fact that Lead Plaintiff “would still need to engage in lengthy fact discovery and clear the 11 substantial hurdle of seeking class certification. Also ever-present is the risk that Lead 12 Plaintiff’s claims may be defeated at summary judgment or trial, or on appeal.” Motion at 13 18. Based on those potential risks, Plaintiff contends that the settlement amount provides 14 adequate relief to the class. Indeed, “Lead Plaintiff estimates that the Settlement returns 15 4.5 times the among of estimated damages (using the low end of damages models) or 16 almost 21% (using the high end of damages models),” which is a greater recovery than 17 similar class actions. Pl.’s Mot. at 7; see e.g. In re Omnivision Techs., Inc., 559 F. Supp. 18 2d 1036, 1042 (N.D. Cal. 2008) (approving a settlement that provided class with 6% 19 recovery of maximum damages exposure). 20 This case presents complex issue that would need to be litigated, and it is not clear 21 from this stage in the litigation which side would prevail. For example, as Lead Plaintiff 22 states, there would still be class certification, summary judgment, trial and appeal to 23 contend with. Pl.’s Mot. at 21. And each side would need to bear its own costs through 24 each stage. Id. More specifically, legal and factual determinations on issues like scienter 25 and loss causation would certainly place each side at risk of rulings and findings that go 26 in the other Party’s favor. As such, “the Settlement Amount presents a substantial benefit 27 to the Settlement Class.” Id. Thus, the Settlement would provide substantial recovery. 28 Lead Plaintiff asserts that this agreement, reached through extensive negotiation, “reflects 1 concessions by both Defendants and Lead Plaintiff that are reasonable and fair, and that 2 the Settlement is in the best interest of the Settlement Class,” taking into account the 3 complexities of prosecuting this case. Id. 4 Accordingly, although the settlement amount is only a portion of Defendant’s 5 maximum potential exposure according to Plaintiff’s calculations, the relief appropriately 6 accounts for the not insubstantial risk that Plaintiff and the class would recover nothing 7 on some or all claims. Cf. Mejia v. Walgreen Co., No. 2:19-CV-00218 WBS AC, 2021 8 WL 1122390 , at *4–5 (E.D. Cal. Mar. 24, 2021) (finding that existence of potential 9 defenses weighs in favor of finding reasonable the proposed settlement amount of 10 approximately 22.37% of maximum possible recovery). Additionally, proceeding to trial 11 and through any resulting appeal would bring further costs and delay. The Court 12 therefore concludes that the costs and risks of proceeding with litigation likely renders 13 the agreed-upon settlement amount, at 21% of Defendant’s maximum potential liability, 14 adequate relief for the class as a whole. See Viceral v. Mistras Grp., Inc., No. 15-CV15 02198, 2016 WL 5907869 , at *3, 7 (N.D. Cal. Oct. 11, 2016) (approving a California 16 wage and hour settlement where the class received 11.6% of the estimated total liability, 17 or approximately $29 per work week); Leverage v. Traeger Pellet Grills, LLC, No. 1618 CV-00784, 2017 WL 2797811 , at *7 (N.D. Cal. June 28, 2017) (approving a California 19 wage and hour settlement where the class received 18% of the estimated total liability). 20 b. Effectiveness of proposed method of distributing relief 21 Plaintiff’s plan for distributing relief to and allocating the Settlement Amount 22 among Settlement Class Members is detailed in the Proposed Notice, attached to 23 Plaintiff’s Motion as Exhibit A-1. ECF No. 91-1, Proposed Notice. As detailed above, 24 Settlement Class Members will be ascertained through Defendants’ records. Pl.’s Mot. at 25 21. After BofI provides “to the Claims Administrator in electronic format . . . its 26 reasonably available lists (consisting of names and addresses) of the holders of BofI 27 Securities during the Settlement Class Period,” the Claims Administrator would mail the 28 Notice and Proof of Claim Form to those members of the Settlement Class as may be 1 identified through reasonable effort. Id. at 22. Each Settlement Class Member will be 2 required to submit a Claim Form, to be reviewed by the Claims Administration. The 3 proposed Claim form is attached to Plaintiff’s motion as Exhibit A-2. See ECF No. 87-6. 4 The Claim Administrator “shall determine in accordance with [the Settlement 5 Agreement] and the Plan of Allocation the extent, if any, to which each Claim shall be 6 allowed, subject to review by the Court.” Pl.’s Mot. at 24. Any Settlement Class 7 Members who do not submit a Claim Form “shall be forever barred from receiving any 8 distribution from the Net Settlement Fund.” Id. at 24. Further, “Claim Forms that do not 9 meet the submission requirements may be rejected,” but “[p]rior to rejecting a Claim in 10 whole or in part, the Claims Administrator shall communicate with the Claimant in 11 writing, to give the Claimant the chance to remedy any curable deficiencies in the Claim 12 Form submitted.” Id. Each class member’s allocation of the Net Settlement Fund 13 Distribution Amount will be distributed by check, and the Claims Administrator will 14 make efforts to ensure Authorized Claimants cash their distribution checks. Id. at 29. 15 Thus, the method of distributing relief is simple and effective. See Walters v. Target 16 Corp., No. 3:16-CV-1678-L-MDD, 2019 WL 6696192 , at *6–7 (S.D. Cal. Dec. 6, 2019); 17 Valenzuela v. Walt Disney Parks & Resorts U.S., Inc., No. SACV171988JVSDFMX, [18] 2019 WL 8647819 , at *8 (C.D. Cal. Nov. 4, 2019). 19 4. Equitable Treatment of Class Members 20 Rule 23(e)(2)(D) requires the Court to consider whether the Settlement Agreement 21 “treats class members equitably relative to each other.” Fed. R. Civ. P. 23(e)(2)(D). In 22 doing so, the Court determines whether the settlement “improperly grant[s] preferential 23 treatment to class representatives or segments of the class.” In re Tableware Antitrust 24 Litig., 484 F. Supp. 2d 1078, 1079 (N.D. Cal. 2007). “Matters of concern could include 25 whether the apportionment of relief among class members takes appropriate account of 26 differences among their claims, and whether the scope of the release may affect class 27 members in different ways that bear on the apportionment of relief.” Fed. R. Civ. P. 28 23(e)(2)(D), advisory committee notes (2018 amendment); see also 4 William B. 1 Rubenstein, Newberg on Class Actions § 13:56 (5th ed. 2020) (“Put simply, the court’s 2 goal is to ensure that similarly situated class members are treated similarly and that 3 dissimilarly situated class members are not arbitrarily treated as if they were similarly 4 situated.”). 5 a. Equity among class members 6 In the Proposed Notice, Lead Plaintiff and Lead Counsel state: “assuming that all 7 Settlement Class Members elect to participate in the Settlement, the estimated average 8 recovery (before the deduction of any Court-approved fees, expenses and costs as 9 described herein) per eligible share is $0.05. Proposed Notice at 5. Here, the Claims 10 Administrator will determine each Authorized Claimant’s share of the Net Settlement 11 Fund based upon the “Recognized Loss” formula. Proposed Notice at 22. The 12 Recognized Loss will be calculated for each share of the BofI common stock purchased 13 or otherwise acquired during the Settlement Class Period, March 14, 2016 and October 14 24, 2017. Id. Plaintiff’s Recognized Loss formula is detailed in the Proposed Notice, for 15 each time period during which a share of BofI stock was purchased or otherwise 16 acquired, and when it was sold. Id. at 24-26. For example, the Recognized Loss of a share 17 that was purchased during the period of March 14, 2015 through October 24, 2017 has a 18 Recognized Loss per share calculated as: “the amount of per-share price inflation on the 19 date of purchase . . . minus the amount of per-share price inflation on the date of sale,” id. 20 at 24, based on the calculations which appear in Table 1 of the Proposed Notice, id. at 23. 21 A Claimant’s “Recognized Claim” under the Plan of Allocation is the sum of 22 Recognized Losses for all shares of BofI securities during the Settlement Class Period. 23 Id. at 26-27. The Net Settlement Fund will be distributed to Authorized Claimants on a 24 pro rata basis based on the relative size of Recognized Claims. Proposed Notice at 27. A 25 “Distribution Amount” will be calculated for each Authorized Claimant, which is equal 26 to the Recognized Claim divided by the total Recognized Claims of all Authorized 27 Claimants, multiplied by the total amount in the Net Settlement Fund. Id. And if any 28 Authorized Claimant’s Distribution Amount calculates to less than $10.00, it will not be 1 included in the calculation and no distribution will be made to that Authorized Claimant. 2 Id. Each class member’s Distribution Amount will be distributed by check, and the 3 Claims Administrator will make efforts to ensure Authorized Claimants cash their 4 distribution checks. Id. at 29. Any funds that remain after six months will be redistributed 5 to Authorized Claimants who cashed their checks and would receive at least $10.00 in re6 distribution, if Lead Counsel and the Claims Administrator determine it would be cost7 effective to engage in such re-distribution. Id. Additional re-distribution could follow. Id. 8 The Settlement Agreement specifically states that “[t]he Plan of Allocation 9 proposed in the Notice is not a necessary term of the Settlement or of this Stipulation and 10 it is not a condition of the Settlement or this Stipulation that any particular plan be 11 approved by the Court. Lead Plaintiff and Lead Counsel may not cancel or terminate the 12 Settlement (or this Stipulation) based on this Court’s or any appellate court’s ruling with 13 respect to the Plan of Allocation or any other plan of allocation in this Action,” and 14 Defendants agreed to “not object in any way to the Plan of Allocation or any other plan 15 of allocation in this Action.” Settlement Agreement at 22. 16 b. Equity between unnamed members and class representative 17 The Court also considers whether any proposed service payment or incentive 18 award for a named or lead plaintiff is equitable. Additional payments to class 19 representatives or named plaintiffs, often referred to as incentive awards, generally do not 20 render a settlement inequitable because such payments reflect that these plaintiffs have 21 contributed efforts to benefit the class while bearing the risk of nonrecovery and 22 retaliation. See Staton, 327 F.3d at 977 . However, courts have refused to countenance 23 settlements that provide for excessively high incentive awards or that give only de 24 minimis relief to the rest of the class. See id. at 948, 978 (finding settlement inequitable 25 where class representatives and other “active participants” were to receive up to $50,000 26 in incentive awards each and collectively receive more than half of the total monetary 27 award despite representing less than 2% of the class). [28] 1 Here, Lead Plaintiff and Lead Counsel have not made the Court aware of any 2 proposed service payment or incentive award for Lead Plaintiff. Since no award is 3 contemplated, the Court finds that the Settlement Agreement likely provides equitable 4 relief to all class members based on the loss they incurred as a result of Defendants’ 5 alleged actions. 6 5. Attorney Fees and Administrator Fees 7 a. Terms of proposed award of attorney’s fees 8 “While attorneys’ fees and costs may be awarded in a certified class action where 9 so authorized by law or the parties’ agreement, Fed. R. Civ. P. 23(h), courts have an 10 independent obligation to ensure that the award, like the settlement itself, is reasonable, 11 even if the parties have already agreed to an amount.” Bluetooth, 654 F.3d at 941 . 12 Courts are wary of “clear sailing agreements,” in which the defendant agrees not to 13 oppose a fee motion as long as it does not exceed a set amount, because of the concern 14 that counsel may have “bargained away something of value to the class” in exchange. 15 See id. at 947–48 (quoting Weinberger v. Great N. Nekoosa Corp., 925 F.2d 518, 525 (1st 16 Cir. 1991)). 17 The Proposed Notice to Settlement Class Members informs class members that 18 Lead Plaintiff’s Counsel has been prosecuting the Action on a contingent basis since 19 2017, and have not received any payment of fees for their representation thus far. 20 Proposed Notice at 5. Lead Counsel “will apply to the Court for an award of attorneys’ 21 fees for all Lead Plaintiff’s Counsel in an amount not to exceed 25% of the Settlement 22 Fund plus interest,” as well as reimbursement for litigation costs, not to exceed $120,000. 23 Id. at 5-6. The estimated average cost per affected share of BofI common stock, if the 24 Court approves Lead Counsel’s fee and expense application, is $0.02 per eligible share. 25 Proposed Notice at 6. 26 The Court need not determine at the preliminary approval stage whether it will 27 ultimately approve an award in the range of the 25% set out by Lead Plaintiff. It is 28 sufficient for the Court to conclude that this is not a situation in which the attorney’s fee 1 estimate in the Settlement Agreement is so out of proportion with the relief provided to 2 the class that it “calls into question the fairness of the proposed settlement.” Pokorny v. 3 Quixtar Inc., No. 07-0201 SC, 2011 WL 2912864 , at *1 (N.D. Cal. July 20, 2011). In any 4 event, the Settlement Agreement is not conditioned on any particular award of attorney’s 5 fees. 6 For the purposes of preliminary approval, the Settlement Agreement’s Attorneys’ 7 Fees and Expenses provision (ECF No. 91-1, Proposed Notice, at 5) does not present a 8 barrier to finding the Settlement Agreement fair, adequate and reasonable. 9 b. Claim Administration Fees 10 As detailed above, the Proposed Notice Form provides information material to a 11 class member’s decision whether or not to accept, object to, or opt out of the Settlement 12 Agreement between the Parties. However, from the Court’s review, the Proposed Notice 13 Form does not include any information about any proposed payment to the Claims 14 Administrator. By contrast, the Proposed Order submitted by Lead Plaintiff and Lead 15 Counsel includes a provision that states: “The Escrow Agent may, at any time after entry 16 of this Order and without further approval from Settlement Defendants or the Court, 17 disburse at the direction of Lead Counsel up to $200,000.00 for all reasonable costs 18 incurred in identifying Class Members and notifying them of Settlement and 19 administering the Settlement. ECF No. 87-4 (“Proposed Order”) at 13. The Parties have 20 agreed to settle this case for $900,000, and the disbursement to class members will 21 depend on the deduction of fees and costs. This provision for Claim Administration 22 fees—which does not appear in the Proposed Notice Form—could reduce the settlement 23 among by up to approximately 22%, and is therefore significant. 24 Given these circumstances, the Court directs that the Proposed Notice Form must 25 inform class members of the potential maximum amount of administrator fees. Further, at 26 this time, the Court is not prepared to approve the proposed language granting Lead 27 Counsel with the discretion to authorize disbursement, without further approval from the 28 Court, of up to $200,000.00 for reasonable costs incurred in identifying Class Members 1 and notifying them of Settlement and administering the Settlement. This Court will make 2 the determination regarding the reasonableness of such fees at the final approval hearing. 3 c. Agreements made in connection with the proposal 4 Rule 23(e)(3) requires that the Parties “must file a statement identifying any 5 agreement made in connection with the [settlement] proposal.” Fed. R. Civ. P. 23(e)(3). 6 Plaintiff has not identified any such agreement and the Court is not aware of any other 7 agreements. See generally Pl.’s Mot. 8 III. CONCLUSION 9 For the reasons discussed in this Order, the Court: 10 1. Provisionally approves certification of the proposed Settlement Class for the 11 purposes of settlement pursuant to Federal Rule of Civil Procedure 23(a) and 12 (b)(3); 13 2. Conditionally approves of the Proposed Notice Form (as it appears in ECF No. 14 91-1, Exhibit A-1) subject to revisions consistent with the Court’s Order. Lead 15 Plaintiff is instructed to re-submit a Proposed Notice Form that clarifies the 16 deductions for all fees and costs. 17 3. Approves of the Proof of Claim Form (as it appears in ECF No. 87-6, Exhibit 18 A-2); 19 4. Approves of the Plan of Allocation detailed by Lead Plaintiff and Lead Counsel 20 in their moving papers; 21 5. GRANTS preliminary approval of Parties’ Settlement Agreement (as it appears 22 in ECF No. 87-3, Exhibit 1) to resolve this Action, subject to further 23 consideration at the Final Approval Hearing. 24 6. The Court will hold a settlement hearing on Friday, September 23, 2022 at 25 1:30 p.m. in Courtroom 2D. The hearing will take place at: United States 26 District Court for the Southern District of California, Edward J. Schwartz 27 United States Courthouse, 221 West Broadway, San Diego, CA 92101. The 28 hearing will be held for the Court to determine: (a) whether the proposed 1 Settlement on the terms and conditions provided for in the Settlement 2 Agreement is fair, reasonable and adequate to the Settlement Class, and should 3 be approved by the Court; (b) whether a Judgment should be entered dismissing 4 the Action with prejudice against Defendants; (c) whether the proposed Plan of 5 Allocation for the Proceeds of the Settlement is fair and reasonable and should 6 be approved; (d) whether the motion by Lead Counsel for an award of 7 attorneys’ fees and reimbursement of Litigation Expenses, which may include 8 an application for reimbursement of the reasonable costs and expenses by Lead 9 Plaintiff, and/or an application for Administrator fees, should be approved; and 10 (e) consider any other matters that may properly be brought before the Court in 11 connection with the Settlement. The Notice of (I) Pendency of Class Action and 12 Proposed Settlement3; (II) Settlement Fairness Hearing; and (III) Motion for an 13 Award of Attorneys’ Fees and Reimbursement of Litigation Fees and 14 Reimbursement of Litigation Expenses, including notice of the incentive award 15 for Lead Plaintiff and Claim Administration fees shall be given to the 16 Settlement Class Members; 17 7. Lead Counsel is hereby authorized to retain Strategic Claims Services (the 18 “Claims Administrator”) to supervise and administer the notice procedure in 19 connection with the proposed Settlement as well as the processing of Claims. 20 Notice shall be given by Lead Counsel as follows: 21 a. within seven (7) calendar days of entry of this Order, BofI shall provide 22 or cause to be provided to the Claims Administrator in electronic format, 23 such as an Excel spreadsheet, (at no cost to the Settlement Fund, Lead 24 Counsel or the Claims Administrator) its reasonably available lists [28] 1 (consisting of names and addresses) of the holders of BofI common stock 2 shares during the Settlement Class Period; 3 b. (b) not later than twenty (20) business days after the date of entry of this 4 Order (the “Notice Date”), the Claims Administrator shall cause a copy 5 of the Notice and the Proof of Claim Form (“Claim Form”), substantially 6 in the forms attached hereto as Exhibits 1 and 2, respectively (the “Notice 7 Packet”), to be mailed by first-class mail to potential Settlement Class 8 Members at the addresses set forth in the records provided by BofI or in 9 the records which BofI caused to be provided, or who otherwise may be 10 identified through further reasonable effort; 11 c. contemporaneously with the mailing of the Notice Packet, the Claims 12 Administrator shall cause copies of the Notice and the Claim Form to be 13 posted on a website to be developed for the Settlement, from which 14 copies of the Notice and Claim Form can be downloaded; 15 d. not later than ten (10) business days after the Notice Date, the Claims 16 Administrator shall cause the Summary Notice, substantially in the form 17 attached hereto as Exhibit 3, to be published once in GlobeNewswire; 18 and 19 e. not later than seven (7) calendar days prior to the Settlement Hearing, 20 Lead Counsel shall serve on the Settling Defendants’ Counsel and file 21 with the Court proof, by affidavit or declaration, of such mailing and 22 publication. 23 8. Approval of Form and Content of Notice: The Court (a) approves, as to form 24 and content, the Notice4, the Claim Form, and the Summary Notice, and (b) 25 finds that the mailing and distribution of the Notice and Claim Form and the [27] 4 Conditional upon Lead Plaintiff’s revisions to comply with this Order, specifically the inclusion of all [28] 1 publication of the Summary Notice in the manner and form set forth in 2 paragraph 7 of this Order (i) is the best notice practicable under the 3 circumstances; (ii) constitutes notice that is reasonably calculated, under the 4 circumstances, to apprise Settlement Class Members of the pendency of the 5 Action, of the effect of the proposed Settlement (including the Releases to be 6 provided thereunder), of Lead Counsel’s motion for an award of attorneys’ 7 fees and reimbursement of Litigation Expenses including any application for 8 reimbursement of the reasonable costs and expenses incurred by Lead Plaintiff 9 directly related to his representation of the Settlement Class, and including any 10 application for the costs and expenses incurred by the Claims Administrator, of 11 their right to object to the Settlement, the Plan of Allocation and/or Lead 12 Counsel’s motion for attorneys’ fees and reimbursement of Litigation 13 Expenses (including any reimbursement to Lead Plaintiff), of their right to 14 exclude themselves from the Settlement Class, and of their right to appear at 15 the Settlement Hearing; (iii) constitutes due, adequate and sufficient notice to 16 all persons and entities entitled to receive notice of the proposed Settlement; 17 and (iv) satisfies the requirements of Rule 23 of the Federal Rules of Civil 18 Procedure, the United States Constitution (including the Due Process Clause), 19 the Private Securities Litigation Reform Act of 1995, 15 U.S.C. § 78u-4, as 20 amended, and all other applicable law and rules. The date and time of the 21 Settlement Hearing shall be included in the Notice and Summary Notice before 22 they are mailed and published, respectively. 23 9. Nominee Procedures: Brokers and other nominees who purchased or otherwise 24 acquired BofI common stock shares during the Settlement Class Period for the 25 benefit of another person or entity shall: (a) within seven (7) calendar days of 26 receipt of the letter, request from the Claims Administrator sufficient copies of 27 the Notice Packet to forward to all such beneficial owners/purchasers and 28 within seven (7) calendar days of receipt of those Notice Packets forward them 1 to all such beneficial owners/purchasers; (b) within seven (7) calendar days of 2 receipt of the letter, request from the Claims Administrator the link to the 3 location hosting the electronic Notice Packet and, within seven (7) calendar 4 days of receipt, email the link to beneficial owners/purchasers for whom valid 5 email addresses are available; or (c) within seven (7) calendar days of receipt 6 of the letter, send a list of the names, addresses, and/or email addresses of all 7 such beneficial owners/purchasers to the Claims Administrator in which event 8 the Claims Administrator shall promptly mail the Notice Packet to such 9 beneficial owners/purchasers. Where the Claims Administrator receives a valid 10 email address, they shall email the link to the location of the electronic Notice 11 Packet to beneficial owners/purchasers. Upon full compliance with this Order, 12 such nominees may seek reimbursement of their reasonable expenses actually 13 incurred in complying with this Order, in an amount not to exceed $0.05 plus 14 postage at the current pre-sort rate used by the Claims Administrator per 15 Notice Packet; or $0.05 per Notice Packet transmitted by email; or $0.05 per 16 name, mailing address, and email address (to the extent available) provided to 17 the Claims Administrator, by providing the Claims Administrator with proper 18 documentation supporting the expenses for which reimbursement is sought. 19 Such properly documented expenses incurred by nominees in compliance with 20 the terms of this Order shall be paid from the Settlement Fund, with any 21 disputes as to the reasonableness or documentation of expenses incurred 22 subject to review by the Court. 23 10. Participation in the Settlement: Settlement Class Members who wish to 24 participate in the Settlement and be eligible to receive a distribution from the 25 Net Settlement Fund must complete and submit a Claim Form in accordance 26 with the instructions contained therein. Unless the Court orders otherwise, all 27 Claim Forms must be postmarked or electronically submitted no later than one 28 hundred twenty (120) calendar days after the Notice Date. Notwithstanding 1 the foregoing, Lead Counsel may, at its discretion, accept for processing late 2 Claims provided such acceptance does not delay the distribution of the Net 3 Settlement Fund to the Settlement Class. By submitting a Claim, a person or 4 entity shall be deemed to have submitted to the jurisdiction of the Court with 5 respect to his, her or its Claim and the subject matter of the Settlement. 6 11. Each Claim Form submitted must satisfy the following conditions: (a) it must 7 be properly completed, signed and submitted in a timely manner in 8 accordance with the provisions of the preceding paragraph; (b) it must be 9 accompanied by adequate supporting documentation for the transactions and 10 holdings reported therein, in the form of broker confirmation slips, broker 11 account statements, an authorized statement from the broker containing the 12 transactional and holding information found in a broker confirmation slip or 13 account statement, or such other documentation as is deemed adequate by 14 Lead Counsel or the Claims Administrator; (c) if the person executing the 15 Claim Form is acting in a representative capacity, a certification of his, her or 16 its current authority to act on behalf of the Settlement Class Member must be 17 included in the Claim Form to the satisfaction of Lead Counsel or the Claims 18 Administrator; and (d) the Claim Form must be complete and contain no 19 material deletions or modifications of any of the printed matter contained 20 therein and must be signed under penalty of perjury. 21 12. Any Settlement Class Member that does not timely and validly submit a 22 Claim Form or whose Claim is not otherwise approved by the Court: (a) shall 23 be deemed to have waived his, her or its right to share in the Net Settlement 24 Fund; (b) shall be forever barred from participating in any distributions 25 therefrom; (c) shall be bound by the provisions of the Stipulation and the 26 Settlement and all proceedings, determinations, orders and judgments in the 27 Action relating thereto, including, without limitation, the Judgment and the 28 Releases provided for therein, whether favorable or unfavorable to the 1 Settlement Class; and (d) will be barred from commencing, maintaining or 2 prosecuting any of the Released Lead Plaintiff’s Claims against each and all 3 of the Settling Defendants’ Releasees, as more fully described in the 4 Stipulation and Notice. Notwithstanding the foregoing, late Claim Forms may 5 be accepted for processing as set forth in paragraph 10 above 6 13. Exclusion From the Settlement Class - Any member of the Settlement Class 7 who wishes to exclude himself, herself or itself from the Settlement Class 8 must request exclusion in writing within the time and in the manner set forth 9 in the Notice, which shall provide that: (a) any such request for exclusion 10 from the Settlement Class must be mailed or delivered such that it is received 11 no later than twenty-one (21) calendar days prior to the Settlement Hearing, to 12 the following recipients: (i) Mandalevy v. BofI Holding, Inc., EXCLUSIONS, 13 c/o Strategic Claims Services, 600 N. Jackson St., Ste. 205, P.O. Box 230, 14 Media, PA 19063, toll free number: (866) 274- 4004, Fax: (610) 565-7985, 15 email: info@strategicclaims.net, and (ii) both Lead Counsel and Settling 16 Defendants’ Counsel, at the addresses set forth in paragraph 17 below; and (b) 17 each request for exclusion must (i) state the name, address, and telephone 18 number of the person or entity requesting exclusion, and in the case of 19 entities, the name and telephone number of the appropriate contact person; (ii) 20 state that such person or entity “requests exclusion from the Settlement Class 21 in Mandalevy v. BofI Holding, Inc., 3:17-cv-00667-GPC-KSC”; (iii) state the 22 number of BofI common stock shares that the person or entity requesting 23 exclusion purchased/acquired and/or sold during the Settlement Class Period, 24 as well as the dates and prices of each such purchase/acquisition and sale; and 25 (iv) be signed by the person or entity requesting exclusion or an authorized 26 representative. A request for exclusion shall not be effective unless it provides 27 all the required information and is received within the time stated above or is 28 otherwise accepted by the Court. 1 14. Any person or entity who or which timely and validly requests exclusion in 2 compliance with the terms stated in this Order and is excluded from the 3 Settlement Class shall not be a Settlement Class Member, shall not be bound 4 by the terms of the Settlement or any orders or judgments in the Action, and 5 shall not receive any payment out of the Net Settlement Fund. 6 15. Any Settlement Class Member who or which does not timely and validly 7 request exclusion from the Settlement Class in the manner stated in this Order: 8 (a) shall be deemed to have waived his, her or its right to be excluded from the 9 Settlement Class; (b) shall be forever barred from requesting exclusion from 10 the Settlement Class in this or any other proceeding; (c) shall be bound by the 11 provisions of the Stipulation and Settlement and all proceedings, 12 determinations, orders and judgments in the Action, including, but not limited 13 to, the Judgment and the Releases provided for therein, whether favorable or 14 unfavorable to the Settlement Class; and (d) will be barred from commencing, 15 maintaining or prosecuting any of the Released Lead Plaintiff’s Claims 16 against any of the Settling Defendants’ Releasees, as more fully described in 17 the Stipulation and Notice. 18 16. Appearance and Objections at Settlement Hearing - Any Settlement Class 19 Member who does not request exclusion from the Settlement Class may enter 20 an appearance in the Action, at his, her or its own expense, individually or 21 through counsel of his, her or its own choice, by filing with the Clerk of Court 22 and delivering a notice of appearance to both Lead Counsel and Settling 23 Defendants’ Counsel, at the addresses set forth in paragraph 17 below, such 24 that it is received no later than twenty-one (21) calendar days prior to the 25 Settlement Hearing, or as the Court may otherwise direct. Any Settlement 26 Class Member who does not enter an appearance will be represented by Lead 27 Counsel. [28] 1 17. Any Settlement Class Member who does not request exclusion from the 2 Settlement Class may file a written objection to the proposed Settlement, the 3 proposed Plan of Allocation, and/or Lead Counsel’s motion for an award of 4 attorneys’ fees and reimbursement of Litigation Expenses (including 5 reimbursement of the reasonable costs and expenses to Lead Plaintiff) and 6 appear and show cause, if he, she or it has any cause, why the proposed 7 Settlement, the proposed Plan of Allocation and/or Lead Counsel’s motion for 8 attorneys’ fees and reimbursement of Litigation Expenses (including 9 reimbursement to Lead Plaintiff) should not be approved; provided, however, 10 that no Settlement Class Member shall be heard or entitled to contest the 11 approval of the terms and conditions of the proposed Settlement, the proposed 12 Plan of Allocation and/or the motion for attorneys’ fees and reimbursement of 13 Litigation Expenses unless that person or entity has filed a written objection 14 with the Court and served copies of such objection on Lead Counsel and 15 Settling Defendants’ Counsel at the addresses set forth below such that they 16 are received no later than twenty-one (21) calendar days prior to the 17 Settlement Hearing. [18] Clerk’s Office Lead Counsel Settling Defendants’ Counsel [19] United States District Court for Pomerantz LLP Sheppard, Mullin, Richter & Hampton, LLP 20 the Southern District of Jeremy A. Lieberman, Esq. John P. Stigi III California 600 Third Avenue 1901 Avenue of the Stars 21 20th Floor Suite 1600 Clerk of Court New York, NY 10016 Los Angeles, CA 90067 22 United States District Court Southern District of California 23 333 West Broadway, Suite 420 San Diego, CA 92101 [24] 25 18. Any objections, filings and other submissions by the objecting Settlement 26 Class Member: (a) must state the name, address, and telephone number of the 27 person or entity objecting and must be signed by the objector; (b) must 28 contain a statement of the Settlement Class Member’s objection or objections, 1 and the specific reasons for each objection, including any legal and 2 evidentiary support the Settlement Class Member wishes to bring to the 3 Court’s attention; (c) state the number of times the Settlement Class Member 4 and/or his, her, or its counsel has filed an objection to a class action settlement 5 in the last five years, the nature of each such objection in each case, the 6 jurisdiction in each case, and the name of the issuer of the security or seller of 7 the product or service at issue in each case; and (d) must include documents 8 sufficient to prove membership in the Settlement Class, including the number 9 of BofI common stock shares during the Settlement Class Period, as well as 10 the dates and prices of each such purchase/acquisition and sale. Objectors who 11 enter an appearance and desire to present evidence at the Settlement Hearing 12 in support of their objection must include in their written objection or notice 13 of appearance the identity of any witnesses they may call to testify and any 14 exhibits they intend to introduce into evidence at the hearing. 15 19. Any Settlement Class Member who or which does not make his, her or its 16 objection in the manner provided herein shall be deemed to have waived his, 17 her or its right to object to any aspect of the proposed Settlement, the 18 proposed Plan of Allocation, and Lead Counsel’s motion for an award of 19 attorneys’ fees and reimbursement of Litigation Expenses (including 20 reimbursement to Lead Plaintiff) and shall be forever barred and foreclosed 21 from objecting to the fairness, reasonableness or adequacy of the Settlement, 22 the Plan of Allocation or the requested attorneys’ fees and Litigation Expenses 23 (including reimbursement to Lead Plaintiff), or from otherwise being heard 24 concerning the Settlement, the Plan of Allocation or the requested attorneys’ 25 fees and Litigation Expenses in this or any other proceeding. 26 20. Stay and Temporary Injunction: Until otherwise ordered by the Court, the 27 Court stays all proceedings in the Action other than proceedings necessary to 28 carry out or enforce the terms and conditions of the Stipulation. Pending final 1 determination of whether the Settlement should be approved, the Court bars 2 and enjoins Lead Plaintiff, and all other members of the Settlement Class, 3 from commencing or prosecuting any and all of the Released Lead Plaintiff’s 4 Claims against each and all of the Settling Defendants’ Releasees. 5 21. Settlement Administration Fees and Expenses: Upon requesting and receiving 6 permission from the Court, the Escrow Agent may disburse all reasonable 7 costs (up to $200,000) incurred in identifying Settlement Class Members and 8 notifying them of the Settlement and administering the Settlement. 9 22. Settlement Fund: The contents of the Settlement Fund held by The Huntington 10 National Bank (which the Court approves as the Escrow Agent), shall be 11 deemed and considered to be in custodia legis of the Court, and shall remain 12 subject to the jurisdiction of the Court, until such time as they shall be 13 distributed pursuant to the Stipulation and/or further order(s) of the Court. 14 23. Taxes: Lead Counsel is authorized and directed to prepare any tax returns and 15 any other tax reporting form for or in respect to the Settlement Fund, to pay 16 from the Settlement Fund any Taxes owed with respect to the Settlement 17 Fund, and to otherwise perform all obligations with respect to Taxes and any 18 reporting or filings in respect thereof without further order of the Court in a 19 manner consistent with the provisions of the Stipulation. 20 24. Termination of Settlement: If the Settlement is terminated as provided in the 21 Stipulation, the Settlement is not approved, or the Effective Date of the 22 Settlement otherwise fails to occur, this Order shall be vacated, rendered null 23 and void and be of no further force and effect, except as otherwise provided 24 by the Stipulation, and this Order shall be without prejudice to the rights of 25 Lead Plaintiff, the other Settlement Class Members and Defendants, and the 26 Parties shall revert to their respective positions in the Action as of December 27 8, 2021 (the date of the Memorandum of Understanding), as provided in the 28 Stipulation. 1 25. Use of this Order: Neither this Order, the Memorandum of Understanding, the 2 Stipulation (whether or not consummated), including the exhibits thereto and 3 the Plan of Allocation contained therein (or any other plan of allocation that 4 may be approved by the Court), the negotiations leading to the execution of 5 the Memorandum of Understanding and the Stipulation, nor any proceedings 6 taken pursuant to or in connection with the Memorandum of Understanding, 7 the Stipulation and/or approval of the Settlement (including any arguments 8 proffered in connection therewith): (a) shall be offered against any of the 9 Settling Defendants’ Releasees as evidence of, or construed as, or deemed to 10 be evidence of any presumption, concession, or admission by any of the 11 Settling Defendants’ Releasees with respect to the truth of any fact alleged by 12 Lead Plaintiff or the validity of any claim that was or could have been asserted 13 or the deficiency of any defense that has been or could have been asserted in 14 this Action or in any other litigation, or of any liability, negligence, fault, or 15 other wrongdoing of any kind of any of the Settling Defendants’ Releasees or 16 in any way referred to for any other reason as against any of the Settling 17 Defendants’ Releasees, in any civil, criminal or administrative action or 18 proceeding, other than such proceedings as may be necessary to effectuate the 19 provisions of the Stipulation; (b) shall be offered against any of the Lead 20 Plaintiff’s Releasees, as evidence of, or construed as, or deemed to be 21 evidence of any presumption, concession or admission by any of the Lead 22 Plaintiff’s Releasees that any of their claims are without merit, that any of the 23 Settling Defendants’ Releasees had meritorious defenses, or that damages 24 recoverable under the Amended Complaint would not have exceeded the 25 Settlement Amount or with respect to any liability, negligence, fault or 26 wrongdoing of any kind, or in any way referred to for any other reason as 27 against any of the Lead Plaintiff’s Releasees, in any civil, criminal or 28 administrative action or proceeding, other than such proceedings as may be 1 necessary to effectuate the provisions of the Stipulation; or (c) shall be 2 construed against any of the Releasees as an admission, concession, or 3 presumption that the consideration to be given under the Settlement represents 4 the amount which could be or would have been recovered after trial; provided, 5 however, that if the Stipulation is approved by the Court, the Parties and the 6 Releasees and their respective counsel may refer to it to effectuate the 7 protections from liability granted thereunder or otherwise to enforce the terms 8 of the Settlement. 9 26. Supporting Papers: Lead Counsel shall file and serve the opening papers in 10 support of the proposed Settlement, the Plan of Allocation, and Lead 11 Counsel’s motion for an award of attorneys’ fees and reimbursement of 12 Litigation Expenses (including rer1mbursement to Lead Plaintiff and payment 13 of Claims Administrator fees) on or before July 29, 2022; Reply papers, if 14 any, shall be filed no later than fourteen (14) calendar days prior to the 15 Settlement Hearing. 16 27. The Court retains jurisdiction to consider all further applications arising out of 17 or connected with the proposed Settlement. 18 IT IS SO ORDERED. 19 || Dated: May 17, 2022 72 20 Hon. athe Ca 21 United States District Judge [28] a4