# Roberts v. Bloom Energy Corporation

> District Court, N.D. California · October 31, 2023

URL: https://www.frixlaw.com/law-library/cases/10076946

## Case

- **Court:** District Court, N.D. California
- **Decided:** October 31, 2023
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

1
2
3
4 UNITED STATES DISTRICT COURT
5 NORTHERN DISTRICT OF CALIFORNIA
6
7 JAMES EVERETT HUNT, et al., Case No. 19-cv-02935-HSG

8 Plaintiffs, ORDER GRANTING MOTION FOR
PRELIMINARY APPROVAL
9 v.
Re: Dkt. No. 237
10 BLOOM ENERGY CORPORATION, et al.,
11 Defendants.

12
13 Pending before the Court is Plaintiffs’ motion for preliminary approval of class action
14 settlement. See Dkt. No. 237. The Court held a hearing on the motion on October 5, 2023. For
15 the reasons detailed below, the Court GRANTS the motion.
16 I. BACKGROUND
17 A. Factual Allegations
18 Lead Plaintiff James Everett Hunt and Plaintiffs Juan Rodriguez, Kurt Voutaz, Joel White,
19 Andrew Austin, and Ryan Fishman purchased shares of Defendant Bloom Energy Corporation’s
20 common stock either (1) when Bloom went public through an Initial Public Offering (“IPO”) on
21 July 25, 2018; or (2) on the public market between July 25, 2018, and March 31, 2020. See Dkt.
22 No. 237-10, Ex. C (“CSAC”) at ¶¶ 1–2, 8–14, 50–51.1 Plaintiffs brought this action against
23 Bloom and certain of its officers and directors, as well as its underwriters and auditors, regarding
24 alleged misrepresentations and omissions in Bloom’s IPO Registration Statement. See id. at ¶¶ 3,
25 52. Plaintiffs alleged that the Registration Statement misrepresented and failed to disclose, inter
26

27
1 As part of the settlement, the parties have agreed to file a corrected version of the second
1 alia, (1) that Bloom was already facing significant construction delays that were interfering with
2 its installations; and (2) issues regarding the efficiency of its Energy Server technology (i.e., the
3 rate at which fuel is converted into electricity). See id. at ¶¶ 3, 53–104, 137–417. Based on these
4 allegations, Plaintiffs asserted violations of the federal securities laws under Sections 11 and 15 of
5 the Securities Act of 1933; Sections 10(b) and 20(a) of the Securities Exchange Act of 1934; and
6 SEC Rule 10b-5. See id. at ¶¶ 105–136, 499–514.
7 B. Procedural History
8 Defendants brought three motions to dismiss the second amended complaint. In
9 September 2021, the Court granted in part and denied in part the motions. See Dkt. No. 157. As
10 relevant to the proposed settlement, the Court (1) dismissed the Section 10(b) claims in their
11 entirety; (2) dismissed all the claims against PricewaterhouseCoopers (“PwC”), Bloom’s
12 independent auditor; and (3) dismissed the Section 11 claims against all remaining Defendants as
13 to all but two challenged statements. See id. Plaintiffs chose not to amend, Dkt. No. 159 at 3, and
14 the only claims that remain are those under Section 11 regarding the alleged misrepresentations
15 about construction delays and the efficiency of Bloom’s Energy Servers. Id.
16 Plaintiffs subsequently moved for entry of judgment under Federal Rule of Civil Procedure
17 54(b) regarding the accounting-based claims against PwC and the other Defendants. Dkt. No.
18 160. The Court denied this motion. See Dkt. No. 167. Plaintiffs then requested that the Court
19 certify the motion to dismiss order relating to the Section 11 accounting claims for interlocutory
20 appeal under 28 U.S.C. § 1292(b). See Dkt. No. 170. The Court also denied this motion. Dkt.
21 No. 188. The parties—except PwC—therefore continued to engage in discovery, brief class
22 certification, and discuss the possibility of settlement. See Porritt Decl. at ¶¶ 4, 16–19.
23 C. Settlement Agreement
24 In December 2022, the remaining parties2 participated in mediation with Phillips ADR
25 mediator Michelle Yoshida. See Dkt. No. 237 at 1, 4–5. Ms. Yoshida made a mediator’s proposal
26
2 The proposed settlement does not involve PwC since the claims against it have already been
27
dismissed in their entirety. Plaintiffs have reserved the right to pursue the accounting claims
1 that the parties accepted. Dkt. No. 237-1 (“Porritt Decl.”) at ¶ 20. The parties ultimately entered
2 into a stipulation and agreement of settlement, fully executed in June 2023. See Dkt. No. 273-3,
3 Ex. 1 (“SA”). The key terms are as follows:
4 Class Definition: The Settlement Class is defined as “all Persons and entities that
5 purchased or otherwise acquired Bloom Energy Corporation’s publicly traded common stock
6 either (i) pursuant and/or traceable to the Registration Statement for Bloom’s IPO or (ii) on the
7 open market between July 25, 2018, and March 31, 2020, and were damaged thereby.” SA at
8 § 1.51.
9 Settlement Benefits: Defendant will make a $3,000,000 non-reversionary payment. SA
10 §§ 1.50, 1.53, 2.1–2.3. The settlement fund includes notice and administration expenses, taxes
11 and tax expenses, Court-approved attorneys’ fees and costs, any award to Plaintiffs as allowed
12 under the Private Securities Litigation Reform Act of 1995 (“PSLRA”), and any other Court-
13 approved fees or expenses. Id. §§ 1.5, 1.29, 2.2, 7.2–7.3. Payments to class members will be
14 distributed per the allocation plan on a pro rata basis. Id. §§ 6.1–6.2. Each class member must
15 submit a proof of claim and release form to the Claims Administrator to be eligible for payment.
16 Id. §§ 1.6, 1.40; see also Dkt. No. 237-6, Ex. A-2 (Claim Form). Payments will be calculated
17 based on the “recognized loss” for each share, using a method that accounts for that portion of the
18 losses on Class Period purchases of Bloom shares that can be fairly attributed to the alleged
19 misconduct in the CSAC. SA § 1.42, 4.1; see also Dkt. No. 237-5, Ex. A-1 at 13–18 (Plan of
20 Allocation).
21 Cy Pres Distribution: Defendants will not have a reversionary interest in the settlement
22 fund if there is a balance remaining after distribution. SA § 4.15. Instead, additional distributions
23 will be made to authorized claimants. Id. Any remaining balance six months after such re-
24 distribution will be donated to the Bay Area Financial Education Foundation. See Dkt. No. 242.
25 Release: All Settlement Class Members will release Defendants and their subsidiaries
26 from:

27 any and all claims, rights, demands, obligations, damages, actions or
have been or could have been asserted in this Action, or any other
1 action arising under the federal securities laws, that (a) arise out of,
are based upon, or relate in any way to any of the allegations, acts,
2 transactions, facts, events, matters, occurrences, representations or
omissions involved, set forth, alleged or referred to in this Action,
3 or which could have been alleged in this Action, or (b) arise out of,
are based upon, or relate in any way to the purchase, acquisition, sale,
4 disposition, or holding of any Bloom securities acquired pursuant
and/or traceable to Bloom’s July 24, 2018 IPO Registration Statement
5 or on the open market between July 25, 2018 and March 31, 2020,
provided, however, that the following are expressly excluded from
6 the definition of Released Claims: all claims that have been or may
in the future be brought against PwC. In addition, “Released Claims”
7 does not include any claims to enforce any of the terms of this
Stipulation.
8
9 SA § 1.44.
10 Attorneys’ Fees and Costs: Class Counsel will file an application for attorneys’ fees not to
11 exceed 33% of the Settlement Fund, or $990,000. SA at §§ 1.20, 7.2
12 Opt-Out Procedure: Any class member who wishes to opt out of the Settlement must
13 submit a timely request for exclusion. SA §§ 8.1–8.2. The timing for opt outs and objections to
14 the Settlement will be set at least 45 days after the filing of the motion for attorneys’ fees in a
15 separate scheduling order. Id.; see also Section VI below. Defendants retain the right to withdraw
16 if the number of opt-outs reaches an agreed-upon threshold. Id. § 1.32. The threshold is set out in
17 a confidential supplemental agreement. Id.
18 II. PROVISIONAL CLASS CERTIFICATION
19 The plaintiff bears the burden of showing by a preponderance of the evidence that class
20 certification is appropriate under Federal Rule of Civil Procedure 23. Wal-Mart Stores, Inc. v.
21 Dukes, 564 U.S. 338, 350–51 (2011). Class certification is a two-step process. First, a plaintiff
22 must establish that each of the four requirements of Rule 23(a) is met: numerosity, commonality,
23 typicality, and adequacy of representation. Id. at 349. Second, it must establish that at least one of
24 the bases for certification under Rule 23(b) is met. Where, as here, a plaintiff seeks to certify a
25 class under Rule 23(b)(3), it must show that “questions of law or fact common to class members
26 predominate over any questions affecting only individual members, and that a class action is
27 superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed.
1 “The criteria for class certification are applied differently in litigation classes and
2 settlement classes.” In re Hyundai & Kia Fuel Econ. Litig., 926 F.3d 539, 556 (9th Cir. 2019)
3 (“Hyundai II”). When deciding whether to certify a litigation class, a district court must consider
4 manageability at trial. Id. However, this concern is not present in certifying a settlement class.
5 Id. at 556–57. In deciding whether to certify a settlement class, a district court “must give
6 heightened attention to the definition of the class or subclasses.” Id. at 557.
7 A. Rule 23(a) Certification
8 The Court finds that all the requirements of Rule 23(a) are met:
9 • Numerosity. Plaintiffs estimate that there were 20.7 million shares of Bloom
10 common stock sold during Bloom’s IPO, and 71.1 million damaged shares in the
11 Settlement Class. See Dkt. No. 237 at 19; see also CSAC at ¶¶ 2, 51. They
12 anticipate mailing notice to approximately 100,000 potential class members. See
13 Dkt. No. 237-16 at ¶ 22. Although the exact number of class members is unknown
14 at this time, joinder of the tens of thousands of estimated class members would be
15 impracticable.
16 • Commonality. Common questions of law and fact include whether (1) statements
17 in the Registration Statement misrepresented material facts about Bloom; (2) the
18 price of Bloom common stock was artificially inflated during the Class Period; and
19 (3) members of the Class have sustained damages and the proper measure of such
20 damages. See Dkt. No. 237 at 19.
21 • Typicality. Plaintiffs’ claims are both factually and legally similar to those of the
22 putative class because they allege that, like the other class members, they purchased
23 Bloom common stock at prices that were inflated because Defendants made false
24 and materially misleading statements in the Registration Statement during the Class
25 Period. See id. at 20.
26 • Adequacy of Representation. The Court is unaware of any actual conflicts of
27 interest in this matter and no evidence in the record suggests that either Plaintiffs or
1 appointed class counsel in numerous federal and state class actions. See Porritt
2 Decl. at ¶¶ 39–40; Dkt. No. 183-8, Ex. 7. The Court finds that proposed class
3 counsel and Plaintiffs have prosecuted this action vigorously on behalf of the class
4 to date, and will continue to do so.
5 B. Rule 23(b)(3) Certification
6 The Court also finds that the predominance and superiority requirements of Rule 23(b)(3)
7 are met:
8 • Predominance. The Court concludes that for purposes of settlement, common
9 questions predominate here because the same operative facts apply to each
10 proposed class member: each class member purchased and/or acquired Bloom
11 common stock during the Class Period and suffered losses in their shares’ value as
12 a result of prices that first were artificially inflated based on Defendants’ alleged
13 misrepresentations and omissions, then dropped once the truth about the existence
14 and scale of construction delays affecting Bloom’s business and the efficiency of
15 its Energy Server technology was later revealed. Although the class members will
16 need to rely upon individual evidence to some extent to calculate their individual
17 damages, the “mere fact that there might be differences in damage calculations is
18 not sufficient to defeat class certification.” Hyundai II, 926 F.3d at 560 (quotations
19 omitted).
20 • Superiority. A class action enables the most efficient use of Court and attorney
21 resources and reduces costs to the class members by allocating costs among them.
22 Further, this forum is appropriate, and there are no obvious difficulties in managing
23 this class action.
24 C. Class Representative and Class Counsel
25 Because the Court finds that Plaintiffs meet the commonality, typicality, and adequacy
26 requirements of Rule 23(a), the Court appoints them as class representatives. When a court
27 certifies a class, it must also appoint class counsel. Fed. R. Civ. P. 23(c)(1)(B). Counsel have
1 detailing their expertise in representing plaintiffs in class action suits, especially securities class
2 actions. See Porritt Decl. at ¶¶ 39–40; Dkt. No. 183-8, Ex. 7. Accordingly, the Court appoints
3 Levi & Korsinsky LLP as Class Counsel. See Fed. R. Civ. P. 23(g)(1)(A) (listing factors courts
4 must consider when appointing class counsel).
5 III. PRELIMINARY SETTLEMENT APPROVAL
6 Finding that provisional class certification is appropriate, the Court considers whether it
7 should preliminarily approve the parties’ class action settlement.
8 A. Legal Standard
9 Federal Rule of Civil Procedure 23(e) provides that “[t]he claims, issues, or defenses of a
10 certified class—or a class proposed to be certified for purposes of settlement—may be settled . . .
11 only with the court’s approval.” Fed. R. Civ. P. 23(e). “The purpose of Rule 23(e) is to protect
12 the unnamed members of the class from unjust or unfair settlements affecting their rights.” In re
13 Syncor ERISA Litig., 516 F.3d 1095, 1100 (9th Cir. 2008). Accordingly, before a district court
14 approves a class action settlement, it must conclude that the settlement is “fundamentally fair,
15 adequate and reasonable.” In re Heritage Bond Litig., 546 F.3d 667, 674–75 (9th Cir. 2008).
16 Where the parties reach a class action settlement prior to class certification, district courts
17 apply “a higher standard of fairness and a more probing inquiry than may normally be required
18 under Rule 23(e).” Dennis v. Kellogg Co., 697 F.3d 858, 864 (9th Cir. 2012) (quotations omitted).
19 Such settlement agreements “‘must withstand an even higher level of scrutiny for evidence of
20 collusion or other conflicts of interest than is ordinarily required under Rule 23(e) before securing
21 the court’s approval as fair.’” Roes, 1-2 v. SFBSC Mgmt., LLC, 944 F.3d 1035, 1048–49 (9th Cir.
22 2019) (quoting In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 946 (9th Cir. 2011)). A
23 more “exacting review is warranted to ensure that class representatives and their counsel do not
24 secure a disproportionate benefit at the expense of the unnamed plaintiffs who class counsel had a
25 duty to represent.” Id. (quotations omitted).
26 Courts may preliminarily approve a settlement and notice plan to the class if the proposed
27 settlement: (1) appears to be the product of serious, informed, non-collusive negotiations; (2) does
1 (3) falls within the range of possible approval; and (4) has no obvious deficiencies. In re Lenovo
2 Adware Litig., No. 15-MD-02624-HSG, 2018 WL 6099948, at *7 (N.D. Cal. Nov. 21, 2018)
3 (citation omitted). Courts lack the authority, however, to “delete, modify or substitute certain
4 provisions. The settlement must stand or fall in its entirety.” Hanlon, 150 F.3d at 1026.
5 B. Analysis
6 i. Evidence of Conflicts and Signs of Collusion
7 The first factor the Court considers is whether there is evidence of collusion or other
8 conflicts of interest. See Roes, 944 F.3d at 1049. The Ninth Circuit has directed district courts to
9 look for “subtle signs of collusion,” which include whether counsel will receive a disproportionate
10 distribution of the settlement, whether the parties negotiate a “‘clear sailing’ arrangement (i.e., an
11 arrangement where defendant will not object to a certain fee request by class counsel),” and
12 whether the parties agree to a reverter that returns unclaimed funds to the defendant. Id.
13 a. Clear Sailing Provision
14 Here, the Settlement Agreement contains a clear sailing arrangement, which states that
15 Defendants will not oppose Plaintiffs’ motion for attorneys’ fees and costs. See SA § 7.4 The
16 Ninth Circuit has noted that clear sailing arrangements are “important warning signs of collusion,”
17 because “‘[t]he very existence of a clear sailing provision increases the likelihood that class
18 counsel will have bargained away something of value to the class.’” Roes, 944 F.3d at 1051
19 (quoting In re Bluetooth, 654 F.3d at 948). Accordingly, when confronted with a clear sailing
20 provision, the district court has a heightened duty to “scrutinize closely the relationship between
21 attorneys’ fees and benefit to the class, being careful to avoid awarding ‘unreasonably high’ fees
22 simply because they are uncontested.” Id. (quotations omitted). The Ninth Circuit has recently
23 emphasized that “[t]he touchstone for determining the reasonableness of attorneys’ fees in a class
24 action is the benefit to the class.” Lowery v. Rhapsody Int’l, Inc., 69 F.4th 994, 997 (9th Cir.
25 2023).
26 When deciding to award attorney’s fees and costs, the Court has discretion in a common
27 fund case to choose either (1) the lodestar method or (2) the percentage-of-the-fund. Vizcaino v.
1 twenty-five percent of a common fund is the benchmark for attorneys’ fees award. See, e.g., In re
2 Bluetooth Headset, 654 F.3d at 942 (“[C]ourts typically calculate 25% of the fund as the
3 ‘benchmark’ for a reasonable fee award, providing adequate explanation in the record of any
4 ‘special circumstances’ justifying a departure.”). Even if the Court were to award the requested
5 33% of the fund (or $990,000) in attorneys’ fees, however, the majority of the monetary settlement
6 will still be distributed to class members. See Lowery, 69 F.4th at 997 (“Except in extraordinary
7 cases, a fee award should not exceed the value that the litigation provided to the class.”). But in
8 any event, the Court is cognizant of its obligations to review class fee awards with particular rigor,
9 and at the final approval stage will carefully scrutinize the circumstances and determine what
10 attorneys’ fee awards is appropriate in this case. At this stage, the Court does not find that the
11 clear sailing provision weighs against preliminary approval.3
12 b. Cy Pres Distribution
13 The Court must also evaluate whether the parties’ proposed cy pres recipient is
14 appropriate. A cy pres award must qualify as “the next best distribution” to giving the funds to
15 class members. Dennis, 697 F.3d at 865. “Not just any worthy recipient can qualify as an
16 appropriate cy pres beneficiary,” and there must be a “driving nexus between the plaintiff class
17 and the cy pres beneficiaries.” Id. (quotation omitted). That is to say, a cy pres award must be
18 “guided by (1) the objectives of the underlying statute(s) and (2) the interests of the silent class
19 members, and must not benefit a group too remote from the plaintiff class.” Id. (quotation
20 omitted). A cy pres distribution is not appropriate if there is “no reasonable certainty that any
21 class member would benefit from it.” Id. (quotation omitted).
22 Here, the parties have selected the Bay Area Financial Education Foundation as its cy pres
23 recipient. See Dkt. No. 242. The Bay Area Financial Education Foundation is a nonprofit
24 organization devoted to providing financial education for Title I schools, low to moderate income
25 communities, at-risk youth, and organizations that support BIPOC students. Id. at 2. For
26

27
3 To the extent Plaintiffs’ counsel suggests that it is entitled to attorneys’ fees in the amount of
1 example, its curriculum includes the “basics of investing,” which provides “an understanding of
2 the value of investing early and regularly, different investment strategies and the costs and benefits
3 of each, compound interest, stocks and bonds, risk vs. return, asset allocation, passive vs. active
4 investing and target date funds.” Id.
5 The Court preliminarily finds that the Bay Area Financial Education Foundation shares the
6 interests of the class members in educating and protecting the investing public. Accordingly, the
7 Court preliminarily finds that there is a sufficient nexus between the cy pres recipient and the
8 Settlement Class.
9 ii. Preferential Treatment
10 The Court next considers whether the settlement agreement provides preferential treatment
11 to any class member. The Ninth Circuit has instructed that district courts must be “particularly
12 vigilant” for signs that counsel have allowed the “self-interests” of “certain class members to
13 infect negotiations.” In re Bluetooth, 654 F.3d at 947. For that reason, courts in this district have
14 consistently stated that preliminary approval of a class action settlement is inappropriate where the
15 proposed agreement “improperly grant[s] preferential treatment to class representatives.” Lenovo,
16 2018 WL 6099948, at *8 (quotations omitted).
17 Although the settlement agreement authorizes Plaintiffs to seek an “award” for their role in
18 this lawsuit, as well as any reasonable costs and expenses related to the representation of Class
19 Members, the Court will ultimately determine whether they are entitled to such an award and the
20 reasonableness of the amount requested. See SA §§ 1.7, 1.20, 7.3.
21 The PSLRA generally prohibits incentive or service awards to class representatives.
22 Rodriguez v. W. Publ’g Corp., 563 F.3d 948, 960, n.4 (9th Cir. 2009) (citing 15 U.S.C. § 78u-
23 4(a)(2)(A)(vi)). Plaintiffs are not precluded, however, from seeking an award of “reasonable costs
24 and expenses (including lost wages) directly relating to the representation of the class.” Id. § 78u-
25 4(4). Plaintiffs will need to provide “meaningful evidence demonstrating that the requested
26 amounts represent actual costs and expenses incurred directly as a result of the litigation.” See In
27 re Twitter Inc. Sec. Litig., No. 16-CV-05314-JST, 2022 WL 17248110, at *2 (N.D. Cal. Nov. 21,
1 and evaluate the reasonableness of any award request. Because Plaintiffs’ intent to seek
2 reasonable costs and expenses is not per se unreasonable, the Court finds that this factor weighs in
3 favor of preliminary approval.
4 Further, the settlement agreement does not single out any segment of the class for
5 favorable treatment. Each authorized claimant will receive a pro rata distribution of the
6 Settlement Fund in proportion to their potential damages based on the allocation plan. See Porritt
7 Decl. at ¶¶ 35–36.
8 iii. Settlement within Range of Possible Approval
9 The Court also generally considers whether the settlement is within the range of possible
10 approval. To evaluate whether the settlement amount is adequate, “courts primarily consider
11 plaintiffs’ expected recovery balanced against the value of the settlement offer.” Lenovo, 2018
12 WL 6099948, at *8. This requires the Court to evaluate the strength of Plaintiffs’ case.
13 First, the Court notes that the $3 million settlement amount was the mediator’s
14 recommendation. See Porritt Decl. at ¶ 20. Plaintiffs and counsel, with the aid of damages
15 experts, estimated the maximum recovery at trial to be approximately $57.8 million for the two
16 surviving corrective disclosures. See Dkt. No. 237 at 10–13. Counsel further explains that it
17 would have been difficult to obtain this amount at trial given Defendants’ “substantial defenses.”
18 Id. at 10. For example, Defendants would have argued that at the time of the IPO they could not
19 have foreseen that construction delays would have caused Bloom to miss its third-quarter
20 guidance. Id. Defendants also would have offered lay and expert testimony attesting to the
21 efficiency of the Energy Servers. Id. Additionally, Defendants would have attempted to establish
22 that damages for any of the alleged misstatements were minimal because Bloom’s stock rose the
23 day after Bloom’s missed guidance was leaked to the market and only fell $.88 after information
24 about the efficiency of the Energy Servers was disclosed. Id. at 11.
25 The Settlement Agreement provides for approximately 5.2% of the maximum estimated
26 recovery for the remaining claims. Id. at 12. Even considering the possible estimated recovery for
27 all claims initially alleged against Defendants, Counsel estimates that the Settlement Agreement
1 is not outside the range of a reasonable recovery, particularly given the risks that Plaintiffs would
2 face if they continued to litigate this action through trial.4 See, e.g., In re Lyft, Inc. Sec. Litig., No.
3 19-CV-02690-HSG, 2022 WL 17740302, at *6 (N.D. Cal. Dec. 16, 2022).
4 Further, the scope of the proposed release does not push this settlement outside the range
5 of possible approval for purposes of preliminary settlement. The release, although broad, is
6 consistent with Ninth Circuit law and the identical factual predicate rule, and further underscores
7 the adequacy of the settlement. See Hesse v. Sprint Corp., 598 F.3d 581, 590 (9th Cir. 2010) (“A
8 settlement agreement may preclude a party from bringing a related claim in the future even though
9 the claim was not presented and might not have been presentable in the class action, but only
10 where the released claim is based on the identical factual predicate as that underlying the claims in
11 the settled class action.”) (quotation omitted).
12 In sum, the Court finds that this settlement is well within the range of possible approval.
13 iv. Fairness of Supplemental Agreement
14 The Court must also review the fairness of the parties’ confidential supplemental
15 agreement. See SA § 1.32. The existence of a termination option triggered by the number of class
16 members who opt out of the Settlement does not by itself render the Settlement unfair. See, e.g.,
17 Hefler v. Wells Fargo & Co., No. 16-CV-05479-JST, 2018 WL 6619983, at *7 (N.D. Cal. Dec.
18 18, 2018). Here, the parties filed the supplemental agreement provisionally under seal. See Dkt.
19 No. 244-3, Ex. 3. Having reviewed the supplemental agreement, the Court concludes that the
20 termination provision does not preclude preliminary approval.
21 v. Obvious Deficiencies
22 The Court also considers whether there are obvious deficiencies in the settlement
23 agreement. The Court finds no obvious deficiencies, and therefore finds that this factor weighs in
24 favor of preliminary approval.
25 * * *
26

27
4 See Laarni T. Bulan & Laura E. Simmons, Securities Class Action Settlements: 2021 Review
1 Having weighed the relevant factors, the Court preliminarily finds that the settlement
2 agreement is fair, reasonable, and adequate, and GRANTS preliminary approval. The Court
3 DIRECTS the parties to include both a joint proposed order and a joint proposed judgment when
4 submitting their motion for final approval.
5 IV. PROPOSED PLAN OF ALLOCATION
6 The Court also must preliminarily approve the Plan of Allocation. Such a distribution plan
7 is governed by the same legal standards that apply to the approval of a settlement: the plan must
8 be fair, reasonable, and adequate. See, e.g., In re Citric Acid Antitrust Litig., 145 F. Supp. 2d
9 1152, 1154 (N.D. Cal. 2001). “A settlement in a securities class action case can be reasonable if it
10 fairly treats class members by awarding a pro rata share to every Authorized Claimant, but also
11 sensibly makes interclass distinctions based upon, inter alia, the relative strengths and weaknesses
12 of class members’ individual claims and the timing of purchases of the securities at issue.” Vinh
13 Nguyen v. Radient Pharms. Corp., No. 11-cv-00406, 2014 WL 1802293, at *5 (C.D. Cal. May 6,
14 2014) (quotation omitted).
15 The Plan of Allocation here uses a “recognized loss” value that tailors the recovery of each
16 class member to the timing of any sales or purchases of Bloom common stock relative to periods
17 of alleged artificial inflation and corrective disclosures, as well as the number of shares at issue in
18 each Class Member’s claim. See SA § 1.42, 4.1; see also Dkt. No. 237-5, Ex. A-1 at 13–18 (Plan
19 of Allocation). The Settlement Fund will thus be distributed on a pro rata basis according to each
20 Class Member’s recognized loss. The Court preliminarily approves the allocation plan.
21 V. PROPOSED CLASS NOTICE PLAN
22 For Rule 23(b)(3) class actions, “the court must direct to the class members the best notice
23 that is practicable under the circumstances, including individual notice to all members who can be
24 identified through reasonable effort.” Fed. R. Civ. P. 23(c)(2)(B). The notice may be sent by
25 “United States mail, electronic means, or other appropriate means.” Id. Individual notice must be
26 sent to all class members “whose names and addresses may be ascertained through reasonable
27 effort.” Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 173 (1974). The notice must clearly and
(i) the nature of the action;
1 (ii) the definition of the class certified;
(iii) the class claims, issues, or defenses;
2 (iv) that a class member may enter an appearance through an attorney if
the member so desires;
3 (v) that the court will exclude from the class any member who requests
exclusion;
4 (vi) the time and manner for requesting exclusion; and
(vii) the binding effect of a class judgment on members[.]
5

6
Fed. R. Civ. P. 23(c)(2)(B). In addition, the PSLRA requires that notice include (1) “[t]he amount
7
of the settlement . . . determined in the aggregate and on an average per share basis,” (2) “the
8
average amount of [the] potential damages per share,” (3) a statement of any fees or costs that
9
counsel intends to seek from the settlement fund, (4) class counsel’s contact information, and (5)
10
“[a] brief statement explaining the reasons why the parties are proposing the settlement.” 15
11
U.S.C. § 78u-4(a)(7).
12
The parties have agreed that a third-party settlement administrator, Epiq Class Action and
13
Claims Solutions, Inc., will send class notice via first-class mail to those Class Members who may
14
be identified through reasonable efforts. Direct mail notification will be provided to all Class
15
Members identified by Bloom, as well as to thousands of financial institutions, including
16
brokerage firms, banks, and other third-party nominees, that regularly monitor proposed securities
17
class action settlements. See Dkt. No. 237-16 (“Webb Decl.”) at ¶¶ 11–13. All persons and
18
entities identified as potential Class Members will be sent the Settlement Notice Postcard, which
19
directs the recipient to a settlement website to find additional information regarding the Settlement
20
Agreement and process. Id. Epiq will also publish the notice on the DTC Legal Notice System
21
(“LENS”). Id. at ¶ 15. LENS allows participating banks and brokers to review the Settlement
22
Notice Package and directly contact Epiq to obtain copies of the Settlement Notice Postcard for
23
their clients who may be Class Members. Id. at ¶¶ 15–16. The Court finds that the proposed
24
notice process is “reasonably calculated, under all the circumstances, to apprise all class members
25
of the proposed settlement.” Roes, 944 F.3d at 1045 (quotation omitted).
26
The Court has also carefully reviewed the proposed notice, as revised, and is satisfied that
27
it meets the requirements of the PSLRA and the Federal Rule of Civil Procedure 23(c)(2)(B). See
1 Dkt. No. 237-5, Ex. A-1 (Notice); Dkt. No. 237-7, Ex. A-3 (Summary Notice); Dkt. No. 237-8,
2 Ex. A-4 (Postcard Notice). The notice clearly describes the nature of the case, the settlement, and
3 the available options, including how to opt out of or object to the Settlement Agreement. Id. The
4 notice also informs class members that Class Counsel will file a motion with the Court for
5 attorneys’ fees and costs.
6 To enable class members to review the motion for attorneys’ fees and any request for an
7 award to Plaintiffs, Class Counsel shall include language in the notice, including the Postcard
8 Notice: (1) indicating the deadline for filing the attorneys’ fees motion and request for an award
9 to Plaintiffs; (2) specifically stating the deadline for any Class Member to object to these motions;
10 and (3) informing class members how to access the motion and supporting materials. See In re
11 Mercury Interactive Corp. Sec. Litig., 618 F.3d 988, 993–94 (9th Cir. 2010) (holding that under
12 Rule 23(h), class members must be given a full and fair opportunity to examine and object to
13 attorneys’ fees motion).
14 The Court therefore finds that with these changes, the content of the proposed notice
15 provides sufficient information about the case and thus conforms with due process requirements.
16 See Hyundai II, 926 F.3d at 567 (“Notice is satisfactory if it generally describes the terms of the
17 settlement in sufficient detail to alert those with adverse viewpoints to investigate and to come
18 forward and be heard.” (quotation omitted)).
19 VI. CONCLUSION
20 The Court GRANTS the motion for preliminary approval. Dkt. No. 237. The parties are
21 DIRECTED to meet and confer and stipulate to a schedule of dates for each event listed below,
22 which shall also be submitted to the Court within seven days of the date of this Order:
23 //
24 //
25 //
26 //
27 //
1
5
Deadline for Settlement Administrator to mail
3 notice to all putative Class Members
Filing deadline for attorneys’ fees andcosts motion | = ti‘s;sSsCSY
4 Filing deadline for incentive payment motion PO
Deadline for Class Members to opt-out or object to
5 settlement and/or application for attorneys’ fees and
6 costs and incentive payment, at least 45 days after
the filing of the motion for attorneys’ fees and
7 incentive payments
Filing deadline for final approval motion PO
8 Final fairness hearing and hearing on motions PO
9
10 || The parties are further DIRECTED to implement the proposed class notice plan with the edits
11 || identified above.
qa 12 IT IS SO ORDERED.

13 |] Dated: 10/31/2023

Absyarel Nhl
HAYWOOD S. GILLIAM, JR.
United States District Judge
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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10076946. Public record. Not legal advice.