The opinion
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
SONTERRA CAPITAL MASTER FUND, :
LTD., RICHARD DENNIS, and :
FRONTPOINT EUROPEAN FUND, L.P., on :
behalf of themselves and all others similarly : 15-CV-3538 (VSB)
situated, :
: OPINION & ORDER
Plaintiffs, :
:
- against - :
:
BARCLAYS BANK PLC, COOPERATIEVE :
CENTRALE RAIFFEISEN- :
BOERENLEENBANK B.A., DEUTSCHE :
BANK AG, LLOYDS BANKING GROUP :
PLC, THE ROYAL BANK OF SCOTLAND :
PLC, UBS AG, JOHN DOE NOS. 1-50, and :
BARCLAYS CAPITAL, INC., :
:
Defendants. :
:
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Appearances:
Vincent Briganti
Geoffrey Horn
Lowey Dannenberg, P.C.
White Plains, New York
Christopher Lovell
Victor E. Stewart
Benjamin M. Jaccarino
Lovell Stewart Halebian Jacobson LLP
New York, New York
Counsel for Representative Plaintiffs and the Proposed Class
Elizabeth M. Sacksteder
Paul, Weiss, Rifkind, Wharton & Garrison LLP
New York, New York
Counsel for Deutsche Bank AG
VERNON S. BRODERICK, United States District Judge:
This action was filed on May 6, 2015, on behalf of all persons and entities that engaged
in Sterling LIBOR-based Derivative transactions. (Doc. 1.) Before me is the unopposed motion
filed by Plaintiffs Richard Dennis, Fund Liquidation Holdings LLC, and any subsequently
named plaintiffs (collectively, “Representative Plaintiffs”) for preliminary approval of the Class
Action Settlement with Defendant Deutsche Bank AG. (Doc. 260.) Because I find, under a
preliminary evaluation, that the settlement is fair, reasonable, and the result of good faith
negotiation, Representative Plaintiffs’ motion is GRANTED.
Background and Procedural History
I assume familiarity with the factual background and procedural history of the case as set
forth in my previous Opinion & Order, Sonterra Cap. Master Fund, Ltd. v. Barclays Bank PLC,
366 F. Supp. 3d 516, 518–519 (S.D.N.Y. 2018), and adopt the parties’ procedural history as set
out in Representative Plaintiffs’ Memorandum in Support of Motion for Preliminary Approval of
Class Action Settlement with Defendant Deutsche Bank AG. (Doc. 261.) Representative
Plaintiffs ask me to (1) grant preliminary approval of the settlement, (2) conditionally certify a
Settlement Class1 on the claims against Deutsche Bank, (3) grant preliminary approval of the
proposed Distribution Plan, (4) appoint Representative Plaintiffs as representatives of the
Settlement Class, (5) appoint Lowey Dannenberg, P.C. (“Lowey”) and Lovell Stewart Halebian
Jacobson LLP (“Lovell”) as Class Counsel, (6) appoint Citibank, N.A. (“Citibank”) as the
Escrow Agent for the Settlement, (7) appoint A.B. Data, Ltd. (“A.B. Data”) as the Settlement
Administrator, (8) approve the proposed forms of Class Notice and the proposed Class Notice
1 All capitalized terms are defined by the Stipulation and Agreement of Settlement as to Deutsche Bank dated March
31, 2022 (“Settlement Agreement”), unless otherwise defined.
plan, (9) set a schedule leading to the final evaluation of the Settlement, including the date, time,
and place of the Fairness Hearing, and (10) stay all proceedings in the Action related to Deutsche
Bank except those relating to Settlement approval.
Legal Standards
A. Preliminary Approval of the Settlement
It is within a district court’s discretion to approve proposed class action settlements. See
Kelen v. World Fin. Network Nat’l Bank, 302 F.R.D. 56, 68 (S.D.N.Y. 2014). “The compromise
of complex litigation is encouraged by the courts and favored by public policy.” Wal-Mart
Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 114 (2d Cir. 2005) (quoting 4 ALBA CONTE &
HERBERT B. NEWBERG, NEWBERG ON CLASS ACTIONS § 11:53, at 167 (4th ed. 2002)).
The parties and their counsel are in a unique position to assess the potential risks of litigation,
and thus district courts in exercising their discretion often give weight to the fact that the parties
have chosen to settle. See Yuzary v. HSBC Bank USA, N.A., No. 12 Civ. 3693 PGG, 2013 WL
1832181, at *1 (S.D.N.Y. Apr. 30, 2013).
Federal Rule of Civil Procedure 23(e) requires judicial approval of any class action
settlement. Review of a proposed settlement generally involves preliminary approval followed
by a fairness hearing. Silver v. 31 Great Jones Rest., No. 11 CV 7442 KMW DCF, 2013 WL
208918, at *1 (S.D.N.Y. Jan. 4, 2013). “[C]ourts often grant preliminary settlement approval
without requiring a hearing or a court appearance.” Lizondro-Garcia v. Kefi LLC, 300 F.R.D.
169, 179 (S.D.N.Y. 2014). However, “[e]ven at the preliminary approval stage, the Court’s role
in reviewing the proposed settlement ‘is demanding because the adversariness of litigation is
often lost after the agreement to settle.’” In re GSE Bonds Antitrust Litig., 414 F. Supp. 3d 686,
692 (S.D.N.Y. 2019) (quoting Zink v. First Niagara Bank, N.A., 155 F.Supp.3d 297, 308
(W.D.N.Y. 2016)). Under the new, more exacting standards of the 2018 amendments to Rule 23,
a district court must consider whether the court “will likely be able to: (i) approve the proposal
under Rule 23(e)(2); and (ii) certify the class for purposes of judgment on the proposal.” In re
Payment Card Interchange Fee & Merch. Disc. Antitrust Litig., 330 F.R.D. 11, 28 (E.D.N.Y.
2019) (quoting Fed. R. Civ. P. 23(e)(1)(B)(i–ii)); In re GSE Bonds Antitrust Litig., 414 F. Supp.
3d at 692 (same). Courts conducting this analysis “must make a preliminary evaluation as to
whether the settlement is fair, reasonable and adequate.” In re Currency Conversion Fee
Antitrust Litig., No. 01 MDL 1409, M-21-95, 2006 WL 3247396, at *5 (S.D.N.Y. Nov. 8, 2006)
(internal quotation marks omitted). In making this determination, courts consider the (1)
adequacy of representation, (2) existence of arm’s-length negotiations, (3) adequacy of relief,
and (4) equitableness of treatment of class members. Fed. R. Civ. P. 23(e)(2). In addition to
these four factors, courts in the Second Circuit also consider whether the settlement is fair,
reasonable, and adequate under the nine factors2 established in City of Detroit v. Grinnell Corp.,
495 F.2d 448, 463 (2d Cir. 1974),3 which overlap with Rule 23(e)(2)(C)–(D).
B. Conditional Settlement Class Certification and Appointment of Class
Counsel
Conditional settlement class certification and the appointment of class counsel have
several practical purposes “including avoiding the costs of litigating class status while facilitating
a global settlement, ensuring notification of all class members of the terms of the proposed
2 The Grinnell factors are: (1) the complexity, expense and likely duration of the litigation; (2) the reaction of the
class to the settlement; (3) the stage of the proceedings and the amount of discovery completed; (4) the risks of
establishing liability; (5) the risks of establishing damages; (6) the risks of maintaining the class action through the
trial; (7) the ability of the defendants to withstand a greater judgment; (8) the range of reasonableness of the
settlement fund in light of the best possible recovery; and (9) the range of reasonableness of the settlement fund to a
possible recovery in light of all the attendant risks of litigation. See Grinnell, 495 F.2d at 463.
3 The Advisory Committee Notes to the 2018 amendments indicate that the four new Rule 23 factors were intended
to supplement rather than displace these “Grinnell” factors. See 2018 Advisory Notes to Fed. R. Civ. P. 23, Subdiv.
(e)(2) (“2018 Advisory Note”).
settlement agreement, and setting the date and time of the final approval hearing.” Almonte v.
Marina Ice Cream Corp., No. 1:16-CV-00660 (GBD), 2016 WL 7217258, at *2 (S.D.N.Y. Dec.
8, 2016). The proposed settlement class must meet the requirements of Federal Rule of Civil
Procedure 23(a) and (b)(3). Under Rule 23(a), class certification is appropriate if “(1) the class is
so numerous that joinder of all members is impracticable; (2) there are questions of law or fact
common to the class; (3) the claims ... of the representative parties are typical of the claims ... of
the class; and (4) the representative parties will fairly and adequately protect the interests of the
class.” Fed. R. Civ. P. 23(a)(1)-(4). “The party seeking class certification bears the burden of
establishing each of these elements by a ‘preponderance of the evidence.’” Lizondro-Garcia,
300 F.R.D. at 174 (quoting Teamsters Local 445 Freight Div. Pension Fund v. Bombardier Inc.,
546 F.3d 196, 202 (2d Cir. 2008)). Once each of these four threshold requirements are met,
“class certification is appropriate if the action also satisfies one of the three alternative criteria set
forth in Rule 23(b).” Lizondro-Garcia, 300 F.R.D. at 174. To certify a class under Rule
23(b)(3), as the parties seek to do here, a court must also find “that the questions of law or fact
common to class members predominate over any questions affecting only individual members,
and that a class action is superior to other available methods for fairly and efficiently
adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3).
Discussion
A. Preliminary Approval of the Class Settlement
After reviewing Representative Plaintiffs’ submissions, including the Memorandum of
Law in support of their motion, (Doc. 261, “Mem.”), the Joint Declaration of Vincent Briganti
and Christopher Lovell in Support of Representative Plaintiffs’ Motion for Preliminary Approval
of Class Action Settlement, (Doc. 262, “Joint Decl.”), the stipulation of settlement, (Doc. 262-1,
“Settlement”), and all other attached exhibits, (see Doc. 262-2–9), I find that the settlement terms
merit preliminary approval.
1. Adequacy of Representation
“Determination of adequacy typically entails inquiry as to whether: (1) plaintiff’s
interests are antagonistic to the interest of other members of the class and (2) plaintiff’s attorneys
are qualified, experienced and able to conduct the litigation.” Cordes & Co. Fin. Servs. v. A.G.
Edwards & Sons, Inc., 502 F.3d 91, 99 (2d Cir. 2007) (internal quotation marks omitted). Here,
Representative Plaintiffs’ interests are aligned with those of the class as they transacted in
Sterling LIBOR-based Derivatives during the Class Period.4 (Mem. 6.) Representative
Plaintiffs’ Counsel have demonstrated that they are qualified, experienced, and able to conduct
the litigation, as evidenced by their extensive antitrust and Commodity Exchange Act (“CEA”)
class action experience and efforts negotiating this Settlement. (Mem. 6.) Therefore, Rule
23(e)(2)(A)’s adequacy of representation prong weighs in favor of approval.
2. Existence of Arm’s-Length Negotiations
“If the Court finds that the Settlement is the product of arm’s length negotiations
conducted by experienced counsel knowledgeable in complex class litigation, the Settlement will
enjoy a presumption of fairness.” In re Austrian & German Bank Holocaust Litig., 80 F. Supp.
2d 164, 173–74 (S.D.N.Y. 2000). The Settlement appears to be the result of extensive and good-
faith negotiations between Representative Plaintiffs and Deutsche Bank, all of whom have a
strong understanding of the risks of litigation and benefits of the Settlement. (Mem. 7–8.)
The Settlement was based on an in-depth investigation into the strengths and weakness of
4 Under the Settlement, the Class Period as defined by the Settlement is from January 1, 2005 through at least
December 31, 2010. (See Doc. 262-5.)
the case conducted by Representative Plaintiffs’ Counsel, Lowey Dannenberg, P.C. and Lovell
Stewart Halebian Jacobson LLP, which are firms with extensive antitrust and CEA class action
experience on behalf of some of the nation’s largest pension funds and institutional investors.
(Id. 6–7; see also Joint Decl. ¶¶ 32–35.) Representative Plaintiffs’ Counsel’s efforts included:
(i) conducting a pre-filing investigation of relevant facts; (ii) drafting the complaints; (iii)
opposing Defendants’ motion to dismiss; (iv) appealing the dismissal of the Action; (v) and
negotiating the proposed Settlement; and (vi) developing the proposed Distribution Plan. (Mem.
7; Joint Decl. ¶¶ 36–37.) Defendant’s counsel—Paul, Weiss, Rifkind, Wharton & Garrison
LLP—is a preeminent international law firm with extensive experience in antitrust litigation and
class actions. (Mem. 7.) The parties began negotiations in September 2021 to discuss a potential
settlement amount, cooperation, release, and settlement termination rights. (Id. 3.) After more
than three months of negotiations, the parties signed a term sheet on January 3, 2022, and after
continued negotiations, executed the Settlement on March 31, 2022. (Id.) I find that all of the
above suggests that the settlement is the result of good faith and arm’s-length negotiations.
Therefore, in light of my findings with regard to Class Counsel and the good faith and arm’s-
length negotiations, a presumption of fairness attaches to the Settlement.
3. Adequacy of Relief
In assessing the adequacy of a settlement under Rule 23(e)(2)(C)(i), “courts may need to
forecast the likely range of possible classwide recoveries and the likelihood of success in
obtaining such results.” In re Payment Card, 330 F.R.D. at 36 (quoting Fed. R. Civ. P. 23
advisory committee’s note to 2018 amendment). This inquiry overlaps with the Grinnell factors
of “complexity, expense, and likely duration of the litigation” along with “the risks of
establishing liability,” “the risks of establishing damages” and “the risks of maintaining a class
through the trial.” See Grinnell, 495 F.2d at 463.
Representative Plaintiffs faced significant litigation risks, in large part due to the
complexity of the alleged manipulation that occurred between and among at least six institutions
over a six-year period. (See Mem. 10.) Inherent in the complexity of the allegations is the
inevitability of lengthy and costly discovery and motion practice if the case continued through
litigation. (See Mem. 11–12) (outlining each sides’ anticipated discovery motions, Daubert
motions, class certification motions, and pre-trial motions). Accordingly, these factors weigh in
favor of preliminary approval.
Under Rule 23(e)(2)(c)(ii), a court must evaluate the “effectiveness of any proposed
method of distributing relief to the class, including the method of processing class-member
claims.” Fed. R. Civ. P. 23(e)(2)(c)(ii). The proposed Distribution Plan, which was created with
the assistance of experts to efficiently distribute funds and encourage participation, is similar to
other plans approved in this District. (See Doc. 261 at 15.) Therefore, I find that the Distribution
Plan is fair, reasonable, and adequate.
In assessing the adequacy of the relief, Rule 23 also requires the court to examine the
proposed attorneys’ fees. Fed. R. Civ. P. 23(e)(2)(c)(iii). The requested attorneys’ fees, which
are limited to no more than one-third of the Settlement Amount, or $1.67 million, (Doc. 261 at
17), net of Representative Plaintiffs’ Counsel’s litigation expenses not to exceed $600,000, (id. at
18), appear reasonable at this point. “Courts in this District have approved fees as high as 33.5%
from comparable class settlement funds, finding that they are ‘well within the applicable range of
reasonable percentage fund awards.’” In re GSE Bonds Antitrust Litig., 414 F. Supp. 3d at 695
(quoting In re DDAPV Direct Purchaser Antitrust Litigation, No. 05-2237, 2011 WL 12627961
(S.D.N.Y. Nov. 28, 2011) (awarding 33.5% from a class settlement find of $20.25 million)); see
also In re Oxycontin Antitrust Litig., No. 04-md-1603-SHS, ECF No. 360 (S.D.N.Y. Jan. 25,
2011) (awarding 33.5% from a class settlement fund of $16 million). However, before
attorneys’ fees can be finally approved, additional materials will need to be submitted and
examined, such as attorneys’ affidavits and billing records. In light of these factors, I
preliminarily find that the proposed Settlement provides adequate relief to the Class.
4. Equitableness of Treatment of Class Members
Rule 23(e)(2)(d) finally requires the Court to consider whether “the proposal treats class
members equitably relative to each other.” Fed. R. Civ. P 23(e)(2)(D). I find that the pro rata
distribution of the Settlement Fund among Authorized Claimants and the release for all Class
Members of claims against Deutsche Bank for claims based on the same factual predicate of this
action are sufficient to show that the Settlement Class is treated equitably. See In re Payment
Card, 330 F.R.D. at 47 (finding that “pro rata distribution scheme is sufficiently equitable”).
5. Remaining Grinnell Factors
The Grinnell factors not expressly assessed under Rule 23(e)(2)(C)(i) include “[] the
reaction of the class to the settlement; [] the stage of the proceedings and the amount of
discovery completed; . . . [] the ability of the defendants to withstand a greater judgment; [] the
range of reasonableness of the settlement fund in light of the best possible recovery; and [] the
range of reasonableness of the settlement fund to a possible recovery in light of all the attendant
risks of litigation.” Grinnell, 495 F.2d at 463.
I find that all five outstanding Grinnell factors favor preliminary approval of the
Settlement. First, the Representative Plaintiffs favor the Settlement, and their approval is
probative of the Class’s reaction at this time since notice has not yet been issued. Second, I find
that Representative Plaintiffs “have obtained a sufficient understanding of the case to gauge the
strengths and weaknesses of their claims and the adequacy of the settlement.” In re AOL Time
Warner, Inc., No. 02 CIV. 5575 (SWK), 2006 WL 903236, at *10 (S.D.N.Y. Apr. 6, 2006).
Third, despite the fact that Deutsche Bank could potentially withstand a greater judgment than
the proposed Settlement Amount, this fact “does not, standing alone, indicate that the settlement
is unreasonable or inadequate.” In re Global Crossing Sec. and ERISA Litig., 225 F.R.D. 436,
460 (S.D.N.Y. 2004) (internal quotation marks omitted). Finally, in considering the Settlement
in light of the best possible recovery and the risks of litigation, I find that the Settlement provides
adequate recovery for the Class, not only through its monetary value, but also through the
cooperation of Deutsche Bank in identifying potential Class Members and further validating the
Distribution Plan if necessary, and the value of serving as an “ice-breaker” settlement to
potentially facilitate future settlements. See In re GSE Bonds, 414 F. Supp. 3d at 697
(“[Deutsche Bank] has offered cooperation which has added significant value to its settlement
agreement. . . . DB also added ‘significant value’ by being a settlement ‘ice-breaker,’ or first
party to settle, potentially helping to spur other parties to settlement.”) (citation omitted).
B. Conditional Certification of Class
As required under Rule 23(a), Representative Plaintiffs have demonstrated that the class
is sufficiently numerous, that there are common issues across the class, that the Representative
Plaintiffs’ claims are typical of the class, and that the Representative Plaintiffs and their
attorneys would be effective Class Representatives and Class Counsel, respectively. I also find
that, as required by Rule 23(b)(3), the common issues identified by Plaintiffs predominate over
any individual issues in the case such that class action is superior in this context to other modes
of litigating this dispute. Because the class certification request is made in the context of
settlement only, I need not address the issue of manageability. See Soler v. Fresh Direct, LLC,
No. 20 CIV. 3431 (AT), 2023 WL 2492977, at *6 (S.D.N.Y. Mar. 14, 2023). Accordingly,
pursuant to Rule 23(e), I certify this Class for the purposes of settlement, notice and award
distribution only.
C. Approval of Notice to the Class, Settlement Administrator, and Escrow
Agent
Rule 23(c)(2)(B) requires that:
[T]he court must direct to class members the best notice that is
practicable under the circumstances, including individual notice to
all members who can be identified through reasonable effort. . . .
The notice must clearly and concisely state in plain, easily
understood language: (i) the nature of the action; (ii) the definition
of the class certified; (iii) the class claims, issues, or defenses; (iv)
that a class member may enter an appearance through an attorney if
the member so desires; (v) that the court will exclude from the class
any member who requests exclusion; (vi) the time and manner for
requesting exclusion; and (vii) the binding effect of a class judgment
on members under Rule 23(c)(3).
Fed. R. Civ. P. 23(c)(2)(B). I have reviewed the proposed plan for providing notice to the Class,
which involves (1) sending Post Card Notice by First-Class Mail to potential Class Members,
(Doc. 262-3), (2) making the Long-Form Notice, (Doc. 262-4), and the Proof of Claim Form,
(Doc. 262-6), available on the Settlement Website5 for Class Members to review and download,
and (3) publishing the Short-Form Notice, (Doc. 262-5), in various periodicals, industry
publications, and through a digital campaign, (Mem. 24). After review, I conclude that the form
and manner of the proposed notice constitutes the best notice practicable under the circumstances
and meets the requirements of due process. The plan also satisfies all of the seven elements of
Rule 23(c)(2)(B) identified above. Additionally, I adopt Representative Plaintiffs’
recommendation that A.B. Data be appointed as Settlement Administrator. Representative
5 The “Settlement Website” provided is www.sterlingliborsettlement.com.
Plaintiffs’ request to designate Citibank as Escrow Agent to maintain the Settlement Fund is
granted based on Citibank’s previous experience in other settlements in this District.
D. Proposed Schedule of Events
I adopt Representative Plaintiffs’ proposed schedule in full. However, the parties shall
inform me within two weeks of the published date of this Opinion & Order whether they would
like to schedule a Fairness Hearing prior to the two hundred and twenty-five (225) calendar days
after entry of the Preliminary Approval Order as originally requested.
IV. Conclusion
For the foregoing reasons, Representative Plaintiffs’ unopposed motion for preliminary
approval of the settlement is GRANTED. Accordingly, the parties are hereby
ORDERED to re-submit a text-editable word document of the proposed order setting
forth the settlement procedure and schedule. (Doc. 263.) I will approve the proposed procedure
in a separate order to be filed in tandem with this Opinion & Order.
IT IS FURTHER ORDERED that the parties inform me within two weeks of the
published date of this Opinion & Order whether they would like to schedule a Fairness Hearing
prior to the two hundred and twenty-five (225) calendar days after entry of the Preliminary
Approval Order as originally requested.
The Clerk of Court is respectfully directed to close the open motions on the docket.
SO ORDERED.
Dated: June 1, 2023
New York, New York f . 4
Vernon S. Broderick
United States District Judge
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