The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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SHANE LAVIN, Individually and on
Behalf of All Others Similarly Situated,
Plaintiff,
-against- REPORT AND
RECOMMENDATION
VIRGIN GALACTIC HOLDINGS, INC., 21-CV-3070 (NRM) (TAM)
MICHAEL A. COLGLAZIER, GEORGE
WHITESIDES, DOUG AHRENS, and JON
CAMPAGNA,
Defendants.
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TARYN A. MERKL, United States Magistrate Judge:
This is a putative class action brought against Virgin Galactic Holdings, Inc.
(“Virgin Galactic”), Michael A. Colglazier, George Whitesides, Richard Branson, and
Chamath Palihapitiya. See Fourth Am. Compl. (“FAC”), ECF 192, ¶¶ 1, 27–32
(collectively, “Defendants”). Plaintiffs Mark Kusnier, Robert Scheele (the “Lead
Plaintiffs”), Xinqiang Cui, Justin Carlough, Jennifer Ortiz, Richard O’Keefe-Jones,1
Vipul Gupta, Maria Josephine Rosales, Hesham Ibrahim, and Montgomery Brantley
(the “Named Plaintiffs”) purchased or otherwise acquired the common stock of Virgin
Galactic or Social Capital Hedosophia Holdings Corp. (“Social Capital”), at some point
between July 10, 2019, through August 4, 2022, inclusive (the “Class Period”). FAC, ECF
192, ¶¶ 1, 25–26. Plaintiffs allege that, ahead of the reverse merger that ultimately took
Virgin Galactic public, Defendants made false statements regarding the company’s
1 Plaintiff O’Keefe-Jones passed away during the pendency of this litigation, and his
surviving spouse, Raymond Ochs, was substituted in his place. See Suggestion of Death, ECF
142; Mot. to Substitute Party, ECF 163; Aug. 29, 2025 ECF Order.
readiness for commercial space travel, causing Plaintiffs to purchase the common stock
at an artificially inflated price, in violation of Sections 10(b), 20(a), and 20A of the
Securities Exchange Act of 1934. See FAC, ECF 192, passim.
Currently pending before the Court is Plaintiffs’ unopposed motion for
preliminary settlement approval. For the following reasons, the Court recommends
granting Plaintiffs’ motion.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
I. Factual Background
Defendant Virgin Galactic is an “aerospace company developing a system to take
customers to space.” FAC, ECF 192, ¶ 27. Defendant Branson was the controlling
shareholder of the firm throughout the Class Period. Id. ¶ 28. Defendant Palihapitiya
was the Chairman of the Board of Social Capital through February 2022; Social Capital
is a publicly traded holding company founded to take private companies public
through reverse mergers (a special purpose acquisition company, or “SPAC”), which
did reverse-merge with Virgin Galactic in October 2019, taking the latter company
public. Id. ¶¶ 29, 48–51. Defendant Colglazier has served as the CEO of Virgin Galactic
and a member of its Board of Directors since July 2020, and its President since February
2021. Id. ¶ 31. Defendant Whitesides was CEO of Virgin Galactic until July 20, 2020. Id.
¶ 30.
Plaintiffs allege that, in the lead up to the reverse merger, Defendants claimed
that they “had built and successfully tested a system that was ready to take passengers
to space . . . creating the misleading impression that Virgin Galactic was on the cusp of
commercial spaceflight,” when in reality, the firm was not “anywhere near ready for
regular commercial service.” Id. ¶¶ 2, 8. In the main, Plaintiffs’ claims center on two
unsuccessful test flights, Defendants’ allegedly false or misleading statements about
those flights, and the impact of those statements on Virgin Galactic’s stock price. First,
Defendants told investors that its prototype ship, Unity, “had flown to space twice,”
and the second flight was an “unqualified success”; however, on that second flight, in
February 2019, the ship “nearly disintegrated midflight” and was grounded at the time
of the reverse merger. Id. ¶¶ 58–59; see also id. ¶¶ 64–90. Second, on July 11, 2021, a test
flight carrying Defendant Branson as a passenger “had dangerously strayed from its
landing cone and FAA airspace,” yet Defendants made public statements describing the
event as “a landmark achievement,” a “successful mission,” and “absolutely and utterly
flawless.” Id. ¶¶ 228–39; see also id. ¶¶ 240–50 (discussing later investigation of this
incident). Plaintiffs further aver that Defendants Virgin Galactic and Branson
“collectively sold $800 million of shares after the July 2021 flight while in possession of
material nonpublic information,” i.e., that these missions had not gone exactly to plan.
Id. ¶ 252; see also id. ¶¶ 233–36. Plaintiffs contend that these public statements comprised
“a scheme to deceive the market” and “artificially inflated the price of Virgin Galactic’s
common stock,” claiming that public disclosure of Defendants’ prior alleged
misrepresentations precipitated a significant decline in the stock price. Id. ¶¶ 18, 206,
218, 220–74.
Lead and Named Plaintiffs allege that they each purchased or otherwise
acquired Virgin Galactic securities during the Class Period, would not have done so if
they had been aware that the stock price had been inflated by Defendants’ statements,
and suffered damages as a result of their purchases. Id. ¶¶ 25–26, 391, 402–03; see also id.
¶¶ 415–23.
II. Procedural History
Plaintiff Shane Lavin2 initiated this putative class action on May 28, 2021. See
generally Compl., ECF 1. Following the filing of an amended complaint, see ECF 36, the
Honorable Allyne R. Ross granted Defendants — at that time, Virgin Galactic, Branson,
Colglazier, Palihapitiya, Whitesides, and Michael Moses — leave to move to dismiss the
complaint. See Letter Mot. for Pre-Mot. Conf., ECF 43; Resp., ECF 44; Feb. 17, 2022 ECF
Order. Defendants filed their fully briefed motion to dismiss on April 4, 2022, which
Judge Ross granted in part and denied in part, with leave to amend the complaint. See
Mot. to Dismiss, ECF 51; see also Order, ECF 58. Following Judge Ross’s decision, the
following claims remained: (1) Plaintiffs’ Section 10(b) claims related to Defendants’
failure to disclose the February 2019 flight damage and the false claims related to the
July 2021 flight, against Defendants Branson and Virgin Galactic, and (2) Plaintiffs’
Section 20A claims, related to Branson’s August 2021 stock sales, against Defendant
Branson alone. See Order, ECF 58; see also Pls.’ Unopposed Mem. of L. in Supp. of
Preliminary Settlement Approval (“Mem.”), ECF 197, at 4.
On February 9, 2023, Plaintiffs filed a Second Amended Complaint, and later that
month, Defendants again moved to dismiss.3 Second Am. Compl. (“SAC”), ECF 68; see
2 Lavin’s role in this litigation ceased following the order appointing Lead Plaintiffs. See
generally Docket; see Order, ECF 22 (appointing Robert Scheele and Mark Kusnier as Lead
Plaintiffs); see also Jan. 5, 2026 Preliminary Fairness Hr’g Tr. (“Preliminary Fairness Hr’g Tr.”),
ECF 204, at 6:9–22.
3 Parts of the Second Amended Complaint and motion to dismiss briefing were filed
under seal. See Mot. for Leave to File Document Under Seal, ECF 61; Dec. 14, 2022 ECF Order
(denying ECF 61); Letter, ECF 65 (providing supplemental authority in support of sealing); Mot.
for Leave to File Document Under Seal, ECF 66; Jan. 31, 2023 ECF Order (granting ECF 66); Mot.
for Leave to File Document Under Seal, ECF 74 (seeking to file Defendants’ memorandum of
law in support of their motion to dismiss and exhibits under seal); Mot. for Leave to File
Document Under Seal, ECF 81 (seeking to file, inter alia, Defendants’ reply memorandum of law
under seal).
also Redacted SAC, ECF 69; Second Mot. to Dismiss, ECF 72. Judge Ross again granted
Defendants’ motion in part and denied it in part: She found that the claims related to
the July 2021 test flight survived the motion, but held that Plaintiffs did not have
standing to sue over the February 2019 false statements under an intervening Second
Circuit case, Menora Mivtachim Ins. Ltd. v. Frutarom Indus. Ltd., 54 F.4th 82 (2d Cir. 2022).
See Sealed Op. & Order, ECF 87; Redacted Op. & Order, ECF 90; see also Mem., ECF 197,
at 4–5. Accordingly, only claims by Plaintiffs O’Keefe-Jones, Ortiz, and Ibrahim against
Defendants Virgin Galactic, Branson, and Palihapitiya survived. Mem., ECF 197, at 4–5.
Plaintiffs moved for reconsideration of this order, which was denied. See Mot. for
Reconsideration, ECF 93; Order Denying Mot. for Reconsideration, ECF 98.
Following this second round of motion practice, an initial conference was held
before the undersigned Magistrate Judge, and discovery commenced. See Feb. 8, 2024
ECF Min. Entry & Order. Around this same time, the parties began to engage in
informal settlement and mediation discussions. Mem., ECF 197, at 8. As discovery
proceeded, Plaintiffs moved to add Brantley as a Named Plaintiff. See Mot. to Amend,
ECF 118; July 2, 2024 Order (granting Plaintiffs’ motion). The parties stipulated to the
filing of a Third Amended Complaint (“TAC”), which was filed on August 21, 2024. See
Stipulation, ECF 125; Mot. for Leave to File Document Under Seal, ECF 126; Aug. 21,
2024 ECF Order (approving stipulation); Sealed TAC, ECF 127; Redacted TAC, ECF 128.
Plaintiffs moved for class certification in October 2024. Mot. to Certify Class, ECF 131.
While the briefing on the class certification motion was ongoing throughout the
spring of 2025, Plaintiffs filed a suggestion of death as to Plaintiff O’Keefe-Jones and a
subsequent motion for substitution, which the undersigned Magistrate Judge granted
on August 29, 2025. Suggestion of Death, ECF 142; Mot. to Substitute Party, ECF 163;
Aug. 29, 2025 ECF Order. Simultaneously, Plaintiffs moved for leave to file the FAC,
which Judge Ross granted on June 12, 2025. Mot. to Amend, ECF 172; June 12, 2025 Op.,
ECF 186 (granting leave to amend); FAC, ECF 192. This version of the complaint sought
to revive the claims against Colglazier that had been dismissed from the Second
Amended Complaint. See FAC, ECF 192; see also Mem., ECF 197, at 6.
Amid all the other activity in this case, the parties’ settlement discussions
intensified, and on March 28, 2025, the parties participated in a full-day mediation
session. Mem., ECF 197, at 8. While a settlement was not reached in that session, the
parties subsequently accepted the mediator’s double-blind recommendation to resolve
the claims for $8.5 million. Id. On June 17, 2025, the parties — by this point, comprising
only Plaintiffs Brantley, Ortiz, Ibrahim, and Ochs on behalf of O’Keefe-Jones and
Defendants Virgin Galactic, Branson, and Palihapitiya — filed a letter advising the
Court that they had reached a settlement in principle. Joint Letter, ECF 189. Judge Ross
stayed the deadlines in the case, with two discrete exceptions, in order to allow the
parties to finalize the settlement. June 20, 2025 ECF Order. The stay was extended
following notice of the parties’ executed memorandum of understanding (“MOU”); the
undersigned Magistrate Judge directed the parties to file a motion for preliminary
settlement approval or a joint status report by October 21, 2025. July 22, 2025 ECF
Order; see also Letter, ECF 194 (apprising the Court of the MOU). Following a short
extension of the deadline to file, Plaintiffs filed the instant motion on November 4, 2025.
Mot. for Settlement Approval, ECF 196; see also Joint Status Report, ECF 195 (requesting
extension); Oct. 23, 2025 ECF Order (granting extension).
The Court held a preliminary fairness hearing on January 5, 2026. Jan. 5, 2026
ECF Min. Entry & Order; see Preliminary Fairness Hr’g Tr., ECF 204. Discussion was
held regarding the provisions of the proposed settlement allocating funds to payment
of incentive awards for Named and Lead Plaintiffs, as well as payment of the case
administration costs and expenses. The Court directed Plaintiffs to revise the
corresponding sections of the long form notice to clarify these allocations, and to more
clearly explain (1) that settlement class members may represent themselves pro se and
(2) how ERISA plan participants, beneficiaries, and administrators may submit claims.
See Jan. 5, 2026 ECF Min. Entry & Order.
On January 12, 2026, Plaintiffs submitted a revised proposed notice. Letter, ECF
203. On January 13, 2026, this case was reassigned to the Honorable Nina R. Morrison as
the presiding judge. Jan. 13, 2026 ECF Order Reassigning Case.
DISCUSSION
Plaintiffs request that the Court (1) preliminarily certify the settlement class for
the purposes of settlement; (2) preliminarily approve the notice plan and documents
Plaintiffs will use to communicate notice; (3) preliminarily approve the plan of
allocation; and (4) schedule a fairness hearing to consider final approval of the
settlement. Mem., ECF 197, at 1–2.
Under Federal Rule of Civil Procedure 23(e), “[t]he claims, issues, or defenses of
a certified class — or a class proposed to be certified for purposes of settlement — may
be settled, voluntarily dismissed, or compromised only with the court’s approval.” Fed.
R. Civ. P. 23(e). “At the preliminary approval stage, a court makes an initial evaluation
of fairness prior to notifying the class . . . .” Rosenfeld v. Lenich, No. 18-CV-6720 (NGG)
(PK), 2021 WL 508339, at *3 (E.D.N.Y. Feb. 11, 2021).
Preliminary approval is guided by a “likelihood standard,” i.e., “whether the
parties have shown that the court will likely be able to grant final approval and certify
the class.” In re Payment Card Interchange Fee & Merchant Discount Antitrust Litig., 330
F.R.D. 11, 28 n.21 (E.D.N.Y. 2019) (hereinafter “Payment Card”); see also Fed. R. Civ. P.
23(e)(1)(B)(i)–(ii). “If the court determines that notice to class members is ‘justified by
the parties’ showing’” as to the likelihood of final approval and class certification, “it
‘must direct notice in a reasonable manner to all class members who [would] be bound
by the proposal.’” Rosenfeld, 2021 WL 508339, at *4 (quoting Fed. R. Civ. P. 23(e)(1)(B)).
The court must also appoint class counsel for purposes of settlement. Payment Card, 330
F.R.D. at 58.
The Court begins with an analysis of the likelihood of final settlement approval
and class certification, then assesses the proposed form and manner of notice, and
concludes with appointment of class counsel.
I. Likelihood of Final Settlement Approval
A. Legal Standards
In assessing the likelihood of final approval, courts “look[] to the factors
contained in the text of Rule 23(e)(2).” Payment Card, 330 F.R.D. at 28. Under Rule
23(e)(2), courts must consider whether:
(A) the class representatives and class counsel have adequately
represented the class;
(B) the proposal was negotiated at arm’s length;
(C) the relief provided for the class is adequate, taking into account:
(i) the costs, risks, and delay of trial and appeal;
(ii) the effectiveness of any proposed method of distributing relief to
the class, including the method of processing class-member claims;
(iii) the terms of any proposed award of attorney’s fees, including
timing of payment; and
(iv) any agreement required to be identified under Rule 23(e)(3); and
(D) the proposal treats class members equitably relative to each other.
Fed. R. Civ. P. 23(e)(2). “[P]aragraphs (A) and (B) are ‘procedural’ factors that address
‘the conduct of the litigation and of the negotiations leading up to the proposed
settlement,’ whereas . . . paragraphs (C) and (D) are ‘substantive’ factors that address
the ‘relief that the settlement is expected to provide to class members.’” Rosenfeld, 2021
WL 508339, at *3 (quoting Fed. R. Civ. P. 23 advisory committee’s note to 2018
amendment).
The substantive factors are supplemented by the nine Grinnell factors, which
“courts in this Circuit have traditionally considered” when “evaluating the fairness,
reasonableness, and adequacy of the proposed settlement.” Id. (citing City of Detroit v.
Grinnell Corp., 495 F.2d 448, 463 (2d Cir. 1974), abrogated on other grounds by Goldberger v.
Integrated Res., Inc., 209 F.3d 43 (2d Cir. 2000)); Payment Card, 330 F.R.D. at 29 (noting the
“significant overlap” between the Grinnell and substantive factors). The Grinnell factors
include:
(1) the expense, complexity, and likely duration of the litigation; (2) the
class’s reaction to the settlement; (3) the stage of the proceedings and
amount of discovery completed; (4) the risks of establishing damages;
(5) the risks of establishing liability; (6) the risks of maintaining the class
throughout the litigation; (7) defendants’ ability to withstand greater
judgment; (8) the range of reasonableness of the settlement amount
considering the best possible recovery; and (9) the range of reasonableness
of the settlement amount given the risks of litigation.
Rosenfeld, 2021 WL 508339, at *3 (citing Grinnell, 495 F.2d at 463).
B. Analysis
1. Procedural Factors
a. Adequate Representation
“In determining the adequacy of class representatives and counsel, courts
consider ‘whether (1) plaintiff[s’] interests are antagonistic to the interests of other
members of the class and (2) plaintiff[s’] attorneys are qualified, experienced[,] and able
to conduct the litigation.’” Rosenfeld, 2021 WL 508339, at *4 (quoting Cordes & Co. Fin.
Servs. v. A.G. Edwards & Sons, Inc., 502 F.3d 91, 99 (2d Cir. 2007)); see Payment Card, 330
F.R.D. at 30 n.25 (explaining that “Rule 23(a)(4) case law . . . guide[s]” the Rule
23(e)(2)(A) analysis). Class representatives “‘must be part of the class and possess the
same interest and suffer the same injury as the [other] class members.’” Wal-Mart Stores,
Inc. v. Dukes, 564 U.S. 338, 348–49 (2011) (quoting E. Tex. Motor Freight Sys., Inc. v.
Rodriguez, 431 U.S. 395, 403 (1977)); see also Payment Card, 330 F.R.D. at 31 (explaining
that the Due Process Clause requires adequate representation). As for class counsel, “[a]
court reviewing a proposed settlement must pay close attention to the negotiating
process, to ensure that . . . counsel have possessed the experience and ability, and have
engaged in the discovery[] necessary to effective representation of the class’s interests.”
D’Amato v. Deutsche Bank, 236 F.3d 78, 85 (2d Cir. 2001) (quotation marks omitted); see
also Fed. R. Civ. P. 23 advisory committee’s note to 2018 amendment (“For example, the
nature and amount of discovery in this or other cases . . . may indicate whether counsel
negotiating on behalf of the class had an adequate information base.”).
Here, the record illustrates that Plaintiffs’ interests are aligned with those of the
proposed class. Plaintiffs seek to represent “all those who purchased or otherwise
acquired the Company’s common stock during the Class Period, and who were
damaged thereby.” FAC, ECF 192, ¶ 390. The proposed class would exclude:
(a) persons and entities that suffered no compensable losses; and
(b)(i) Defendants; (ii) any person who served as an officer or director of
Virgin Galactic, Social Capital, and/or subsidiaries of either during the
Settlement Class Period, and their Immediate Family; (iii) persons or
entities who held shares of Vieco 10 Ltd. as of October 25, 2019, and all
subsidiaries thereof; (iv) any trust of which an Individual Defendant was
or is the settlor or which was or is for the benefit of an Individual
Defendant and/or member(s) of their immediate families; (v) Defendants’
liability insurance carriers; (vi) Virgin Group Holdings Limited and each
of its controlled subsidiaries and affiliates; (vii) the legal representatives,
heirs, successors, predecessors, and assigns of any person or entity
excluded under provisions (i) through (vi) hereof; and (viii) all entities
controlled by the persons and entities excluded under provisions
(i) through (vii) hereof. Also excluded from the Settlement Class are any
persons and entities who or which submit a request for exclusion from the
Settlement Class that is accepted by the Court.
Proposed Prelim. Approval Order, ECF 198-1, at ECF p. 47. Plaintiffs claim financial
harm stemming from Defendants’ alleged violations of federal securities law, which
other proposed class members must have suffered in order to join the class. FAC, ECF
192, ¶ 394. Absent any indication that Plaintiffs’ interests in this action “are antagonistic
to the interest[s] of other members of the class,” the record demonstrates that Plaintiffs
are well positioned to represent the proposed class. Cordes, 502 F.3d at 99 (quotation
marks omitted).
The Court similarly finds that Plaintiffs are adequately represented by their
attorneys (herein referred to as “Lead Counsel”). The Court notes that Lead Counsel
have on several occasions been appointed class counsel for the purpose of settlement.4
See In re Tenaris S.A. Sec. Litig., No. 18-CV-7059 (KAM) (SJB), 2024 WL 1719632, at *6
(E.D.N.Y. Apr. 22, 2024) (finding that co-Lead Counsel Glancy Prongay & Murray LLP
has “substantial experience litigating class action lawsuits under federal securities
laws”); Chitturi v. Kingold Jewelry, Inc., No. 20-CV-2886 (LDH) (SJB), 2020 WL 8225336,
at *1 (E.D.N.Y. Dec. 22, 2020) (appointing The Rosen Law Firm, P.A. as class counsel); In
re PPDAI Grp. Inc. Sec. Litig., No. 18-CV-6716 (TAM), 2022 WL 198491, at *7 (E.D.N.Y.
Jan. 21, 2022) (same); In re Akazoo S.A. Sec. Litig., No. 20-CV-1900 (BMC), 2021 WL
4 The Court observes that, following Plaintiffs’ submission of their motion, the Glancy
firm changed its name from Glancy Prongay & Murray LLP to Glancy Prongay Wolke & Rotter
LLP. See Michaela Ligman, “Glancy Prongay & Murray LLP Announces Name Change To
Glancy Prongay Wolke & Rotter LLP,” GLANCY PRONGAY WOLKE & ROTTER (Jan. 28, 2026),
https://www.glancylaw.com/news-faqs/glancy-prongay-murray-llp-announces-name-
change-to-glancy-prongay-wolke-rotter-llp/ (last visited Feb. 6, 2026); cf. Wells Fargo Bank, N.A.
v. Wrights Mill Holdings, LLC, 127 F. Supp. 3d 156, 167 (S.D.N.Y. 2015) (observing that a court
may take judicial notice of information on a party’s website where the “website’s authenticity is
not in dispute” (quotation marks omitted)).
8945767, at *2 (E.D.N.Y. Apr. 28, 2021) (appointing The Rosen Law Firm, P.A. and
Glancy Prongay & Murray LLP as class counsel).
Both the pleadings and motion papers demonstrate a thorough investigation by
Lead Counsel into the underlying facts and applicable law. See generally FAC, ECF 192;
Mem., ECF 197. Lead Counsel also attended a full-day mediation to work towards a
settlement. Mem., ECF 197, at 8. Plaintiffs additionally represent that the parties
engaged in significant discovery in this case prior to agreeing to the settlement, a fact
that supports the conclusion that Lead Counsel has adequately represented the interests
of the proposed class. Id. at 7. Indeed, Plaintiffs state that the parties reviewed over
100,000 pages of documents, took or defended 14 depositions (including those of two
Individual Defendants, four Plaintiffs, and one expert), and propounded multiple sets
of requests for production of documents and interrogatories, as well as one set of
requests for admissions. Id. at 1, 7. In light of Lead Counsel’s experience and efforts in
this case to investigate and substantiate the alleged violations, the Court finds that
Plaintiffs are being represented by “qualified, experienced” legal counsel. Cordes, 502
F.3d at 99 (quotation marks omitted).
b. Arm’s Length Negotiation
“A class settlement reached through arm’s-length negotiations between
experienced, capable counsel knowledgeable in complex class litigation is entitled to a
presumption of fairness.” Rosenfeld, 2021 WL 508339, at *5 (quotation marks omitted).
Likewise, “a court-appointed mediator’s involvement in pre-certification settlement
negotiations helps to ensure that the proceedings were free of collusion and undue
pressure.” D’Amato, 236 F.3d at 85.
As to the parties’ selected mediator, Jed D. Melnick, several courts in this circuit
have held that Mr. Melnick’s involvement has supported a finding that class-action
settlement agreements were fair. See In re 3D Sys. Sec. Litig., No. 21-CV-1920 (NGG)
(TAM), 2023 WL 5018625, at *5 (E.D.N.Y. June 5, 2023), report and recommendation adopted
as modified, 2023 WL 4621716 (E.D.N.Y. July 19, 2023); Gordon v. Vanda Pharms. Inc., No.
19-CV-1108 (FB) (LB), 2022 WL 4296092, at *4 (E.D.N.Y. Sept. 15, 2022); Fulton County
Emps.’ Ret. Sys. ex rel. Goldman Sachs Grp. Inc. v. Blankfein, No. 19-CV-1562 (VSB), 2022
WL 4292894, at *3 (S.D.N.Y. Sept. 16, 2022). Additionally, as noted above, Plaintiffs
represent that the mediation was one full day session and that settlement was only
reached following the issuance of a mediator’s proposal. Mem., ECF 197, at 8; see
Preliminary Fairness Hr’g Tr., ECF 204, at 11:5–12:20. At the preliminary fairness
hearing, the parties represented that Mr. Melnick also facilitated follow-up discussions
that occurred between the March 28, 2025 mediation session and June 17, 2025, when
the parties reported to the Court that they had achieved a settlement in principle.
Preliminary Fairness Hr’g Tr., ECF 204, at 12:21–13:16; see Joint Status Report, ECF 189.
The record in this case amply establishes that the negotiation was at arm’s length; there
is no “‘evidence or indicia suggesting that the negotiations were collusive.’” Gordon,
2022 WL 4296092, at *4 (quoting Simerlein v. Toyota Motor Corp., No. 17-CV-1091 (VAB),
2019 WL 1435055, at *13 (D. Conn. Jan. 14, 2019)). The Court therefore finds that the
parties’ proposed settlement was the result of arm’s length negotiations.
2. Substantive Factors
a. Adequate Relief
i. Costs, Risks, and Delay of Trial and Appeal
The first factor in assessing whether the proposed settlement provides adequate
relief for the putative class is an evaluation of the “costs, risks, and delay of trial and
appeal.” Fed. R. Civ. P. 23(e)(2)(C)(i). This factor “‘subsumes several Grinnell factors,’
including the complexity, expense and likely duration of litigation, the risks of
establishing liability, the risks of establishing damages, and the risks of maintaining the
class through trial” (factors 1, 4, 5, and 6). Rosenfeld, 2021 WL 508339, at *5 (quoting
Payment Card, 330 F.R.D. at 36). Put simply, courts must assess whether the proposed
settlement “‘results in substantial and tangible present recovery, without the attendant
risk and delay of trial.’” Id. (quoting Payment Card, 330 F.R.D. at 36).
Plaintiffs have submitted the parties’ proposed settlement agreement, which
indicates that the settlement amount is $8.5 million. See Stipulation and Agreement of
Settlement, ECF 198-1, at 7–8. Plaintiffs represent that without approval of the
settlement agreement, litigation would resume, exposing Plaintiffs to “substantial risks”
at trial. Mem., ECF 197, at 17–18. For one, as Plaintiffs put it, “this case is about literal
rocket science,” with Defendants standing to benefit from the inherent complexity in
presenting the evidence because a jury is likely to “presume they are authorities.” Id. at
17. For another, given that only one allegedly false statement remains live following the
second motion to dismiss, an adverse jury finding on that statement would preclude
Plaintiffs from any recovery at all. Id. at 17–18. Plaintiffs also represent that proving loss
causation and damages at trial would involve considerable risk and expense, given the
likelihood of a “battle of the experts” at trial, and the probability that Defendants would
engage in post-verdict motion practice and appeal likewise imperils Plaintiffs’ chance of
recovery. Id. at 18 (quotation marks omitted). Defendants confirmed this position at the
Fairness Hearing. See Preliminary Fairness Hr’g Tr., ECF 204, at 23:18–24:3.
The parties have shown that the costs, risks, and likely duration of continuing to
litigate this matter are significant and that a settlement would result in a tangible
present recovery. This factor therefore weighs in favor of preliminary approval of the
parties’ proposed settlement.
ii. Effectiveness of Proposed Method of Distributing Relief
The Court next evaluates the parties’ “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). “An allocation formula need only have a reasonable, rational basis” and
“need not be perfect.” Payment Card, 330 F.R.D. at 40 (quotation marks omitted). As to
claims processing, the proposed method should “‘deter or defeat unjustified claims’
without imposing an undue demand on class members.” Rosenfeld, 2021 WL 508339, at
*6 (quoting Fed. R. Civ. P. 23 advisory committee’s note to 2018 amendment).
The parties’ proposed order preliminarily approving settlement and providing
for notice states that “Settlement Class Members who wish to participate in the
Settlement and to be eligible to receive a distribution from the Net Settlement Fund
must complete and submit a Claim Form” within 120 days of the Notice Date, if the
Court does not choose another date. Prelim. Approval Order, ECF 198-1, at ECF pp. 52–
53. The claim forms must be completed timely, “accompanied by adequate supporting
documentation for the transactions and holdings reported therein,” contain a
certification of the executor’s authority to act in a representative capacity on behalf of a
settlement class member, if necessary, and be signed under penalty of perjury. Id. at
ECF p. 53. The parties’ stipulation sets out the process for obtaining a distribution of the
Net Settlement Fund. Each claim will be reviewed by the Claims Administrator to
determine whether the claim is allowable, and, if so, what the claimant’s pro rata share
should be; if a claim is rejected, the Claims Administrator will timely “communicate
with the Claimant in writing, to give the Claimant the chance to remedy any curable
deficiencies in the Claim Form submitted.” Id. at ECF pp. 28–31. Claimants whose
claims are rejected will have 20 days to contest such a rejection, providing any
supporting documentation, and request Court review of the rejection. Id. at ECF p. 31.
On notice to Defendants’ counsel, Lead Counsel will move for a Class Distribution
Order, approving the Claims Administrator’s determinations, approving payment of
administrative fees, and directing distribution of funds to authorized claimants, if the
effective date has occurred. Id.; see also id. at ECF p. 33 (explaining criteria for
determining effective date). “This allocation plan appears to be rational and fair, as it
treats class members equitably while taking into account variations in the magnitude of
their injuries.” Rosenfeld, 2021 WL 508339, at *6. Likewise, it appears that the claims
processing method imposes a minimal burden on claimants and will adequately filter
out unjustified claims to settlement funds. The Court therefore finds that the proposed
methods of processing claims and distributing relief are rational and fair.
iii. Proposed Award of Attorneys’ Fees
The third factor in the evaluation of whether the settlement provides adequate
relief is an assessment of “the terms of any proposed award of attorney’s fees, including
timing of payment.” Fed. R. Civ. P. 23(e)(2)(C)(iii). “Courts may award attorneys’ fees in
common fund cases under either the ‘lodestar’ method or the ‘percentage of the fund’
method.” Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 121 (2d Cir. 2005),
(hereinafter “Visa U.S.A.”) (citing Goldberger, 209 F.3d at 50).
Here, Lead Counsel intends to “apply to the Court for an award of attorneys’
fees for all Plaintiffs’ Counsel in an amount not to exceed 33 1/3% of the Settlement
Fund,” as well as “reimbursement of Litigation Expenses in an amount not to exceed
$1.55 million.” Revised Proposed Short Form Notice, ECF 203, at ECF p. 4; see Proposed
Long Form Notice, ECF 198-1, at ECF p. 63; see also Mem., ECF 197, at 22. “Courts in this
Circuit routinely find that requests for attorney’s fees totaling one-third of the
settlement fund are well within the range of reasonableness” — particularly “in cases
with funds of less than $10 million.” Rosenfeld, 2021 WL 508339, at *6 (quotation marks
omitted). Assuming that Lead Counsel’s request for litigation expenses is documented
and substantiated, the Court finds that the requested award for attorneys’ fees will
likely be found to be reasonable.5
iv. Other Agreements
The fourth factor requires courts to consider “any agreement required to be
identified under Rule 23(e)(3),” i.e., “any agreement made in connection with the
proposal.” Fed. R. Civ. P. 23(e)(2)(C)(iv), (e)(3). Rule 23(e)(3) is aimed at revealing
“undertakings that, although seemingly separate, may have influenced the terms of the
settlement by trading away possible advantages for the class in return for advantages
for others,” namely, the representative plaintiffs or their attorneys. Fed. R. Civ. P. 23
advisory committee’s note to 2003 amendment; see also J. Alex Grimsley, Annotated
Manual for Complex Litigation § 21.631 (4th ed. 2025) (“Requiring the parties to file the
complete agreement might elicit comments from class members and facilitate judicial
review.”).
Here, the parties represent that they have entered a confidential side agreement
that “establishes certain conditions under which Defendants may terminate the
Settlement if Settlement Class Members who collectively purchased more than a certain
percentage of Virgin Galactic Securities traded during the Settlement Class Period
request exclusion (or ‘opt out’) from the Settlement.” Mem., ECF 197, at 22; see also
5 The Court notes that Lead Counsel’s requested award is, of course, subject to
modification at final settlement approval. See Rosenfeld v. Lenich, No. 18-CV-6720 (NGG) (PK),
2021 WL 508339, at *7 (E.D.N.Y. Feb. 11, 2021). Lead Counsel should be prepared to submit
contemporaneous time records to facilitate a cross-check against the lodestar. See In re PPDAI
Grp. Inc. Sec. Litig., No. 18-CV-6716 (TAM), 2022 WL 198491, at *14–17 (E.D.N.Y. Jan. 21, 2022);
see also Marion S. Mishkin L. Off. v. Lopalo, 767 F.3d 144, 148–49 (2d Cir. 2014) (discussing the
“strict rule” that any request for attorneys’ fees must be “accompanied by contemporaneous
time records” (quotation marks omitted)).
Preliminary Fairness Hr’g Tr., ECF 204, at 34:6–10. Courts in this circuit have found that
such an agreement is “standard in securities class action settlements and has no
negative impact on the fairness of the Settlement.” Christine Asia Co. v. Yun Ma, No. 15-
MD-2631 (CM) (SDA), 2019 WL 5257534, at *15 (S.D.N.Y. Oct. 16, 2019); see Trostorff v.
Mynaric AG, No. 24-CV-7602 (KAM) (CLP), 2025 WL 2696442, at *3 (E.D.N.Y. Sept. 22,
2025). At the preliminary fairness hearing, the Court conducted an in camera review of
the side agreement here; it is consistent with the parties’ representations as set forth
above and does not impact the fairness of the settlement. See Preliminary Fairness Hr’g
Tr., ECF 204, at 34:20–35:18.
b. Equitable Treatment
The proposed settlement must “treat[] class members equitably relative to each
other.” Fed. R. Civ. P. 23(e)(2)(D). In making this assessment, “the court may weigh
‘whether the apportionment of relief among class members takes appropriate account of
differences among their claims, and whether the scope of the release may affect class
members in different ways that bear on the apportionment of relief.’” Rosenfeld, 2021
WL 508339, at *7 (quoting Fed. R. Civ. P. 23 advisory committee’s note to 2018
amendment). As explained above, the Settlement Agreement provides for pro rata
disbursement to Class Members according to their documented losses. “In this way, the
agreement appropriately and fairly accounts for . . . point[s] of differentiation among
class members’ claims.” Id. The Court further notes that the proposed settlement
agreement contemplates an incentive award to Plaintiffs not to exceed $55,000 in the
aggregate ($10,000 each to four Plaintiffs, and $7,500 each to two Plaintiffs), to be paid
out of the $1.55 million set aside for litigation expenses. See Revised Proposed Long
Form Notice, ECF 203, at ECF pp. 7, 19.
Plaintiffs explain that the Plan allocates a larger portion of the Net Settlement
Fund to “actionable claims” (those relating to the July 2021 flight, 88.2%) than
“dismissed claims” (all others, 11.8%). Mem., ECF 197, at 23 (capitalization modified).
Plaintiffs posit that this “distinction is reasonable because the Dismissed Claims faced
an arduous and risky path to recovery,” in light of intervening changes in case law since
the case was first brought. Id. at 23–24. Courts in this circuit have found that such
allocations are reasonable. See In re WorldCom, Inc. Sec. Litig., 388 F. Supp. 2d 319, 343
(S.D.N.Y. 2005) (“Settlement proceeds may be allocated according to the strengths and
weaknesses of the various claims possessed by Class Members.” (citing In re Holocaust
Victim Assets Litig., 413 F.3d 183, 186 (2d Cir. 2001)). Here, the Court finds that this plan
of allocation treats class members equitably relative to each other and to their claims,
particularly in light of the challenges to recovery on the dismissed claims if the case
were to proceed with further litigation.
c. Stage of Proceedings and Amount of Discovery Completed (Grinnell
Factor 3)6
“This [Grinnell] factor requires the Court to consider whether the parties have
adequate information about their claims.” Charron v. Pinnacle Grp. N.Y. LLC, 874 F.
Supp. 2d 179, 198 (S.D.N.Y. 2012). “To approve a proposed settlement,” however, “the
Court need not find that the parties have engaged in extensive discovery.” In re Austrian
& German Bank Holocaust Litig., 80 F. Supp. 2d 164, 176 (S.D.N.Y. 2000). The Court need
only ensure that the parties have sufficiently investigated the facts such that the
settlement is fair and reasonable. See id.
6 The second Grinnell factor, “the class’s reaction to the settlement,” cannot be assessed at
this time. Rosenfeld, 2021 WL 508339, at *3; see id. at *4 n.2 (declining to assess this factor at the
preliminary approval stage).
Plaintiffs submit that this factor supports preliminary approval because “the case
has been heavily litigated on the pleadings, the Parties have engaged in substantial
discovery, class certification was fully briefed, and the Parties engaged in a long, hard-
fought mediation process.” Mem., ECF 197, at 20. The procedural history here
demonstrates just that. See generally Docket. Accordingly, the Court finds that Plaintiffs
were adequately informed about their claims and risks prior to reaching a proposed
settlement.
d. Defendants’ Ability to Withstand a Greater Judgment (Grinnell Factor 7)
“Under the Grinnell analysis, the court also considers Defendants’ ability to
withstand a greater judgment than that provided for in the proposed settlement.”
Rosenfeld, 2021 WL 508339, at *7. The Court notes, however, that a defendant’s “ability
to withstand a greater judgment, standing alone, does not suggest that the settlement is
unfair.” Pinnacle Grp., 874 F. Supp. 2d at 201 (quotation marks omitted). Indeed, courts
consider this factor “much less important” than the others, especially where “the other
Grinnell factors weigh heavily in favor of settlement approval.” In re MetLife
Demutualization Litig., 689 F. Supp. 2d 297, 339 (E.D.N.Y. 2010) (quotation marks
omitted). Here, the parties “view this factor as immaterial.” Mem., ECF 197, at 20. At the
preliminary fairness hearing, Defendants reiterated this position and noted that while
“Virgin Galactic does not have any financial concerns” and therefore “could have
withstood a greater judgment,” given the existence of insurance coverage for the claims
at issue, Defendants “didn’t see it as an important issue one way or the other.”
Preliminary Fairness Hr’g Tr., ECF 204, at 37:5–14. Plaintiff did not dispute this
assessment. Id. at 37:17–20.
Accordingly, although the proposed $8.5 million settlement may be less than
Defendants’ theoretical capacity to pay, the Court finds that this factor is not likely to
preclude settlement approval because the settlement provides reasonable value based
on investors’ actual claims.
e. Range of Reasonableness of Settlement Fund (Grinnell Factors 8 and 9)
The Court next considers “the range of reasonableness of the settlement fund in
light of [both] the best possible recovery” and “the attendant risks of litigation.” Charron
v. Wiener, 731 F.3d 241, 247 (2d Cir. 2013); see Payment Card, 330 F.R.D. at 47–48 (noting
that these “two Grinnell factors . . . are often combined for the purposes of analysis”). To
calculate the best possible recovery, courts “assume complete victory on both liability
and damages as to all class members on every claim asserted against each defendant in
the [a]ction.” Payment Card, 330 F.R.D. at 48 (quotation marks omitted). The risks of
litigation include “the uncertainties of law and fact in any particular case and the
concomitant risks and costs necessarily inherent in taking any litigation to completion.”
Visa U.S.A., 396 F.3d at 119 (quotation marks omitted).
Plaintiffs represent that their total maximum damages associated with the
actionable claims “would be approximately $302.2 million.” Mem., ECF 197, at 20–21;
see Preliminary Fairness Hr’g Tr., ECF 204, at 38:24–39:9. The settlement therefore
represents a recovery of 2.81% of that “best case scenario,” a percentage in line with the
median recovery in comparable securities class action settlements. Id. at 21; see also
Horne Decl., Ex. 2, ECF 198-2, at 26 (fig. 23). If Plaintiffs were able to resurrect their
Dismissed Claims — on appeal, after trial — their estimate for the total maximum
recovery could be as high as $1.436 billion, making the $8.5 million settlement amount
0.59% of the maximum recovery — less than the 1.3% median recovery in class action
cases of comparable value. Mem., ECF 197, at 21 n.8; see also Horne Decl., Ex. 2, ECF
198-2, at 26 (fig. 23). At the preliminary fairness hearing, Plaintiffs conceded that, as to
the Dismissed Claims, “there was a very remote likelihood that [P]laintiffs would ever
see recovery on those claims for a variety of reasons.” Preliminary Fairness Hr’g Tr.,
ECF 204, at 39:10–16; see id. at 39:16–40:12 (discussing intervening changes in law in the
Second and Ninth Circuits that would likely preclude revival of the Dismissed Claims).
It is well established that although “a proposed settlement may only amount to a
fraction of the potential recovery,” that does not “mean that the proposed settlement is
grossly inadequate and should be disapproved.” Grinnell, 495 F.2d at 455. “[T]here is no
reason, at least in theory, why a satisfactory settlement could not amount to a
hundredth or even a thousandth part of a single percent of the potential recovery.” Id.
at 455 n.2. This is because the “best possible recovery” may not be “a realistic” one.
Cagan v. Anchor Sav. Bank FSB, No. 88-CV-3024 (CPS), 1990 WL 73423, at *13 (E.D.N.Y.
May 22, 1990). Accordingly, it remains important to evaluate the settlement amount “in
light of the strengths and weaknesses of plaintiffs’ case.” Rodriguez v. CPI Aerostructures,
Inc., No. 20-CV-0982 (ENV) (CLP), 2023 WL 2184496, at *16 (E.D.N.Y. Feb. 16, 2023)
(quotation marks omitted).
Given the myriad risks of litigation described above, the Court finds that the
parties’ settlement amount falls within a reasonable range.
* * * * *
On balance, the Court concludes that both the procedural and substantive factors
set forth in Rule 23 and Grinnell indicate that the parties’ proposed settlement is fair and
reasonable.
II. Likelihood of Class Certification
A. Legal Standards
“In order to conclude that giving notice to the putative class is justified, the court
must also determine that it will likely be able to certify the class for purposes of
judgment on the proposal” under Rule 23(a) and (b). Rosenfeld, 2021 WL 508339, at *8. It
is the burden of the party seeking class certification to “affirmatively demonstrate”
compliance with these rules. In re Am. Int’l Grp., Inc. Sec. Litig., 689 F.3d 229, 237 (2d Cir.
2012) (quotation marks omitted).
Rule 23(a) sets forth the familiar “four prerequisites for class certification”:
(1) numerosity, (2) commonality, (3) typicality, and (4) adequacy of representation.
Rosenfeld, 2021 WL 508339, at *8; see Fed. R. Civ. P. 23(a). “In addition to the explicit
requirements of Rule 23(a), the class must satisfy the implied requirement of
ascertainability.” Payment Card, 330 F.R.D. at 50 (citing In re Petrobras Sec., 862 F.3d 250,
266 (2d Cir. 2017)).
Rule 23(b) “lays out three alternative ‘types’ of class actions that may be
maintained.” Rosenfeld, 2021 WL 508339, at *9. As relevant here, Plaintiffs seek
certification under Rule 23(b)(3), which “requires both that (1) ‘questions of law or fact
common to class members predominate over any questions affecting only individual
members,’ and that (2) ‘a class action is superior to other available methods for fairly
and efficiently adjudicating the controversy.’” Payment Card, 330 F.R.D. at 50 (quoting
Fed. R. Civ. P. 23(b)(3)); see Mem., ECF 197, at 8–9, 13–14.
B. Analysis
1. Rule 23(a) Requirements
a. Numerosity
“The numerosity requirement mandates that the class be ‘so numerous that
joinder of all members is impracticable.’” In re Sadia, S.A. Sec. Litig., 269 F.R.D. 298, 304
(S.D.N.Y. 2010) (quoting Fed. R. Civ. P. 23(a)(1)). The “inquiry is not strictly
mathematical but must take into account the context of the particular case.” Penn. Pub.
Sch. Emps.’ Ret. Sys. v. Morgan Stanley & Co., 772 F.3d 111, 120 (2d Cir. 2014); see also id.
(listing factors to consider). As a general rule, when a class consists of 40 or more
members, numerosity is presumed. Consol. Rail Corp. v. Town of Hyde Park, 47 F.3d 473,
483 (2d Cir. 1995).
Here, Plaintiffs assert that “there are thousands of potential Settlement Class
Members as Virgin Galactic’s common stock traded on the New York Stock Exchange
during the three-year Settlement Class Period.” Mem., ECF 197, at 10. Defendants
concur. At the preliminary fairness hearing, defense counsel represented that the initial
list of potential class members, which includes only registered stockholders, contains at
least 800 names, and that the notice will be sent to investment firms that manage funds
on behalf of others, who will then provide notice to their beneficial holders. Preliminary
Fairness Hr’g Tr., ECF 204, at 41:15–25. The Second Circuit recognizes that numerosity
may be found where the proposed class is “obviously numerous.” Marisol A. v. Giuliani,
126 F.3d 372, 376 (2d Cir. 1997). Based on the nature of the claims in this case, Plaintiffs
have established a high likelihood that the numerosity requirement will be satisfied at
the time of final settlement approval.
b. Commonality
“Commonality requires a showing that common issues of fact or law affect all
class members.” In re Sadia, 269 F.R.D. at 304 (citing Fed. R. Civ. P. 23(a)(2)). It “requires
the plaintiff to demonstrate that the class members ‘have suffered the same injury,’” not
“merely that they have all suffered a violation of the same provision of law.” Dukes, 564
U.S. at 349–50 (quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 157 (1982)). “In other
words, the relevant inquiry is whether a classwide proceeding is capable of
‘generat[ing] common answers apt to drive the resolution of the litigation.’” Jacob v.
Duane Reade, Inc., 602 F. App’x 3, 6 (2d Cir. 2015) (alteration in original) (quoting Dukes,
564 U.S. at 350 (internal quotation marks omitted)).
Plaintiffs assert that securities fraud cases “easily satisfy this standard where
plaintiffs allege that ‘putative class members have been injured by similar material
misrepresentations and omissions.’” Mem., ECF 197, at 10 (quoting In re Pfizer Inc. Sec.
Litig., 282 F.R.D. 38, 44 (S.D.N.Y. 2012) (internal quotation marks omitted)). As Plaintiffs
argue, this case involves common questions of law and fact regarding violations of
federal securities laws, based on Defendants’ “common course of conduct,” which was
“directed at the entire Settlement Class.” Mem., ECF 197, at 13. All class members’
claims depend on the same core questions — whether Defendants made materially false
and misleading statements with the requisite state of mind. See In re Vivendi Universal,
S.A., 242 F.R.D. 76, 84 (S.D.N.Y. 2007) (collecting cases finding similar claims satisfy the
commonality requirement), aff'd sub nom. In re Vivendi, S.A. Sec. Litig., 838 F.3d 223 (2d
Cir. 2016). At the preliminary fairness hearing, Plaintiffs explained that in discovery,
they obtained information regarding how investors received notice of Defendants’
allegedly false and misleading statements, which goes to whether they were “injured in
the same way” or whether “damages would be calculated in a manner that was
common.” Preliminary Fairness Hr’g Tr., ECF 204, at 45:10–46:7 (noting that “a lot of the
alleged misrepresentations were disseminated in a similar fashion,” e.g., via televised
interviews that other investors may have seen).
Given the nature of the allegations in this case, the Court concludes that the
pleadings establish that the class members suffered a common injury that can be
addressed by a class-wide proceeding. As a result, commonality is present.
c. Typicality
“[T]he typicality requirement[] is satisfied by a showing that ‘each class
member’s claim arises from the same course of events and each class member makes
similar legal arguments to prove the defendant’s liability.’” In re Deutsche Bank AG Sec.
Litig., 328 F.R.D. 71, 80 (S.D.N.Y. 2018) (quoting In re Flag Telecom Holdings, Ltd. Sec.
Litig., 574 F.3d 29, 35 (2d Cir. 2009) (internal quotation marks omitted)). It “is usually
met” where “the same unlawful conduct was directed at or affected both the named
plaintiff and the class sought to be represented.” Robidoux v. Celani, 987 F.2d 931, 936–37
(2d Cir. 1993). In this case, where all class members purchased Virgin Galactic common
stock at allegedly artificially inflated prices, “Plaintiffs and the proposed class would
therefore present similar legal arguments in prosecuting their cases.” Elkind v. Revlon
Consumer Prods. Corp., No. 14-CV-2484 (JS) (AKT), 2017 WL 9480894, at *10 (E.D.N.Y.
Mar. 9, 2017), report and recommendation adopted, 2017 WL 1169552 (E.D.N.Y. Mar. 29,
2017). The Court finds that Plaintiffs have demonstrated the typicality requirement in
this case.
d. Adequacy of Representation
To satisfy the adequacy requirement, “[p]laintiffs must meet two standards —
that ‘class counsel . . . be qualified, experienced[,] and generally able to conduct the
litigation,’ and that ‘the class members . . . not have interests that are antagonistic to one
another.’” Balestra v. ATBCOIN LLC, No. 17-CV-10001 (VSB), 2022 WL 950953, at *4
(S.D.N.Y. Mar. 29, 2022) (quoting In re Drexel Burnham Lambert Grp., Inc., 960 F.2d 285,
291 (2d Cir. 1992) (internal quotation marks omitted)). Based on the Court’s
determinations supra regarding the parallel requirements under Rule 23(e)(2), the Court
finds that the proposed class is adequately represented by Plaintiffs and Lead Counsel,
and that the adequacy requirement will likely be found at the time of final settlement
approval and judgment.
e. Ascertainability
“[A] class is ascertainable if it is defined using objective criteria that establish a
membership with definite boundaries.” In re Petrobras Sec., 862 F.3d at 257. In securities
litigation, a class that includes “persons who acquired specific securities during a
specific time period” meets this standard. Id. at 257, 269. Here, the class is clearly
defined by those exact criteria: It includes “all persons and entities who or which
purchased or otherwise acquired the publicly traded shares of Virgin Galactic and/or
Social Capital common stock between July 10, 2019, through August 4, 2022,” and
excludes a similarly definite class of individuals and entities. Mem., ECF 197, at 9 n.4;
Proposed Prelim. Approval Order, ECF 198-1, at ECF pp. 47–48. Accordingly, the Court
concludes that the class is reasonably ascertainable here.
2. Rule 23(b)(3) Requirements
“Rule 23(b)(3) imposes two additional burdens on plaintiffs attempting to
proceed by class action, namely, predominance and superiority.” Sykes v. Mel S. Harris
& Assocs. LLC, 780 F.3d 70, 81 (2d Cir. 2015); see Fed. R. Civ. P. 23(b)(3) (requiring “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”). These inquiries are
ordinarily guided by four factors:
(A) the class members’ interests in individually controlling the
prosecution or defense of separate actions;
(B) the extent and nature of any litigation concerning the
controversy already begun by or against class members;
(C) the desirability or undesirability of concentrating the litigation
of the claims in the particular forum; and
(D) the likely difficulties in managing a class action.
Fed. R. Civ. P. 23(b)(3). However, in the settlement context, “‘[s]ome inquiries essential
to litigation [of] class certification,’ including the issue of ‘manageability — how the
case will or can be tried, and whether there are questions of fact or law that are capable
of common proof,’” are no longer relevant. Rosenfeld, 2021 WL 508339, at *10 (quoting In
re Am. Int’l Grp., 689 F.3d at 239 (internal quotation marks omitted)). The other factors,
however, “demand undiluted, even heightened, attention.” In re Am. Int’l Grp., 689 F.3d
at 239 (quotation marks omitted).
a. Predominance
“The Rule 23(b)(3) predominance inquiry tests whether proposed classes are
sufficiently cohesive to warrant adjudication by representation.” Amchem Prods., Inc. v.
Windsor, 521 U.S. 591, 623 (1997). Again, because the prospect of settlement obviates the
manageability concerns ordinarily assessed as part of this inquiry, the focus is instead
whether “‘the legal or factual questions that qualify each class member’s case as a
genuine controversy can be achieved through generalized proof, and if these particular
issues are more substantial than the issues subject only to individualized proof.’”
Payment Card, 330 F.R.D. at 55 (quoting Roach v. T.L. Cannon Corp., 778 F.3d 401, 405 (2d
Cir. 2015) (internal quotation marks omitted)); see also Rosenfeld, 2021 WL 508339, at *10.
The Supreme Court has observed that “[p]redominance is a test readily met in
certain cases alleging consumer or securities fraud.” Amchem Prods., Inc., 521 U.S. at 625.
Here, class members’ claims, i.e., that Defendants’ allegedly misleading or false claims
artificially inflated the price of Virgin Galactic stock purchased by class members,
involve similar, if not identical, questions of law and fact. To the extent there are unique
issues as to each class member, for instance, whether they purchased stock before the
reverse merger or after (and therefore whether their claims are “actionable” or
“dismissed”), the common questions are much “more substantial.” Payment Card, 330
F.R.D. at 55 (quotation marks omitted). Accordingly, the Court finds that common
questions of law and fact predominate over individual questions, and the proposed
class is “sufficiently cohesive to warrant adjudication by representation.” Amchem
Prods., Inc., 521 U.S. at 623.
b. Superiority
“Rule 23(b)(3)’s superiority requirement may be satisfied when ‘the costs of
bringing individual actions outweigh the expected recovery,’ and when consolidation
‘will achieve significant economies of time, effort and expense, and promote uniformity
of decision.’” Rosenfeld, 2021 WL 508339, at *10 (quoting In re U.S. Foodservice Inc. Pricing
Litig., 729 F.3d 108, 130 (2d Cir. 2013) (internal quotation marks omitted)). “The
superiority requirement is designed to avoid repetitious litigation and possibility of
inconsistent adjudications.” Payment Card, 330 F.R.D. at 57 (quotation marks omitted).
Additionally, “[c]ourts have found that the superiority requirement is satisfied” when
“potential class members are both significant in number and geographically dispersed.”
Meredith Corp. v. SESAC, LLC, 87 F. Supp. 3d 650, 661 (S.D.N.Y. 2015) (quotation marks
omitted). In the securities context, courts have held that a class action is the superior
method of litigation because “‘the alternatives are either no recourse for thousands of
stockholders’ or ‘a multiplicity and scattering of suits with the inefficient administration
of litigation which follows in its wake.’” In re MF Glob. Holdings Ltd. Inv. Litig., 310
F.R.D. 230, 239 (S.D.N.Y. 2015) (quoting Green v. Wolf Corp., 406 F.2d 291, 301 (2d Cir.
1968)); see also In re NIO, Inc. Sec. Litig., No. 19-CV-1424 (NGG) (JRC), 2023 WL 5048615,
at *17 (E.D.N.Y. Aug. 8, 2023) (finding class action superior in securities context).
Here, Plaintiffs submit that “there is no evidence that putative class members
desire to bring separate individual actions,” and it would be “desirable to concentrate
the claims in this Court as it is already familiar with the factual and legal issues in the
case.” Mem., ECF 197, at 14. Given the numerosity and geographic dispersion of
potential class members, “there is great utility in resolving the claims of the many
[members of] the class through the class action mechanism.” Meredith Corp., 87 F. Supp.
3d at 661. Furthermore, in light of these factors, “[c]lass adjudication of this case is
superior to individual adjudication because it will conserve judicial resources.” Zeltser
v. Merrill Lynch & Co., No. 13-CV-1531 (FM), 2014 WL 4816134, at *3 (S.D.N.Y. Sept. 23,
2014). The Court therefore finds it likely that the superiority requirement will be met.
* * * * *
For the above reasons, the Court finds that Plaintiffs have demonstrated a good
likelihood of class certification. Having concluded that Plaintiffs have also
demonstrated a likelihood of final settlement approval, the Court respectfully
recommends granting preliminary settlement approval and finding that notice to “all
class members who would be bound by the proposal” is justified. Fed. R. Civ. P.
23(e)(1)(B).
III. Notice
Under Rule 23, notice may be issued by either “United States mail, electronic
means, or other appropriate means.” Fed. R. Civ. P. 23(c)(2)(B). Additionally:
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).
Id. Ultimately, “[t]he standard for the adequacy of a settlement notice in a class action
under either the Due Process Clause or the Federal Rules is measured by
reasonableness.” Visa U.S.A., 396 F.3d at 113. Courts in this Circuit have found that a
settlement notice is substantively sufficient “when it describe[s] the terms of the
settlement generally, inform[s] the class about the allocation of attorneys’ fees, and
provide[s] specific information regarding the date, time, and place of the final approval
hearing.” Payment Card, 330 F.R.D. at 58 (alterations in original) (quotation marks
omitted); see id. at 58–59 (collecting cases). Courts are concerned both procedurally and
substantively with whether the notice plan will provide “‘class members the best notice
that is practicable under the circumstances.’” Vargas v. Capital One Fin. Advisors, 559 F.
App’x 22, 26 (2d Cir. 2014) (quoting Fed. R. Civ. P. 23(c)(2)(B)); see also id. at 26–27
(stating that notice to class members must be “sent by an adequate physical delivery
method” and “fairly apprise the prospective members of the class of the terms of the
proposed settlement and of the options that are open to them in connection with the
proceedings” (quotation marks omitted)).
A. The Notice Plan
Plaintiffs request that the Court appoint Strategic Claims Services (“SCS”) to
administer the notice process. Mem., ECF 197, at 21. At the preliminary fairness hearing,
Plaintiffs represented that this vendor was chosen because it “provides services at a low
cost and is very proactive about resolving any issues that may arise in the claims
administration process,” in Lead Counsel’s experience having worked with SCS as a
claims administrator previously. Preliminary Fairness Hr’g Tr., ECF 204, at 28:11–25; see
id. at 31:13–24 (representing that SCS was the claims administrator appointed in In re 3D
Sys. Sec. Litig., No. 21-CV-1920 (NGG) (TAM), 2023 WL 5018625 (E.D.N.Y. June 5, 2023)).
In Plaintiffs’ supplemental filing, they indicated that SCS’s total notice and
administration costs are estimated at $985,000, which will be paid out separately from
the $1.55 million set aside for litigation expenses. See Pls. Letter, ECF 203, at 1; Revised
Proposed Short Form Notice, ECF 203, at ECF p. 4; Revised Proposed Long Form
Notice, ECF 203, at ECF pp. 7, 19. Finding that there are no grounds on which to deny
Plaintiffs’ choice of claims administrator, the Court recommends appointing SCS to
administer the notice process.
The Notice Plan consists of the following components: (1) an email and postcard
notice campaign; (2) posting the Long Notice, Proof of Claim, and Stipulation on a
website maintained by SCS; (3) allowing class members to submit their claims via the
settlement website; (4) upon request, mailing copies of the Long Notice and/or Proof of
claim; and (5) an informational release via PR Newswire and Investor’s Business Daily.
Mem., ECF 197, at 24; see also Proposed Prelim. Approval Order, ECF 198-1, at ECF pp.
50–51. SCS will obtain the mailing and/or email addresses of settlement class members
from Defendants, who will provide their security holder lists for purchasers of Virgin
Galactic and Social Capital common stock during the class period within 10 days of the
entry of the proposed order. See Proposed Prelim. Approval Order, ECF 198-1, at ECF
pp. 49–50.
B. Notice Content
Plaintiffs have submitted a long form notice for the Court’s review. See Revised
Proposed Long Form Notice, ECF 203, at ECF pp. 6–23; see also Proposed Long Form
Notice, ECF 198-1, at ECF pp. 62–79. This notice sets forth an extensive description of
the action and claims process and addresses the concerns the Court raised at the
preliminary fairness hearing. Specifically, the Court requested that the long form notice
clearly communicate (1) that $55,000 of the Litigation Expenses is intended to cover
incentive awards for the Named and Lead Plaintiffs; (2) that settlement class members
may represent themselves pro se to register objections or opt-out; and (3) how ERISA
plan participants, beneficiaries, and administrators may submit claims. Jan. 5, 2026 Min.
Entry & Order; see Revised Proposed Long Form Notice, ECF 203, at ECF pp. 7–8, 11, 13,
19; see also Revised Proposed Short Form Notice, ECF 203, at ECF p. 4.
Having carefully reviewed the parties’ filings, the Court finds that the proposed
notices contain the information required by Rule 23, set forth “in plain, easily
understood language.” Fed. R. Civ. P. 23(c)(2)(B).
Plaintiffs have also submitted the following proposed schedule of events:
Event Proposed Timing
Deadline for mailing the Postcard Notice or
emailing a link to the Notice and Claim Form Not later than 25 business days
to Settlement Class Members (which date shall after entry of Prelim. Approval
be the “Notice Date”) (Prelim. Approval Order Order
¶ 7(b))
Deadline for publishing the Summary Notice Not later than 10 business days
(Prelim. Approval Order ¶ 7(d)) after the Notice Date
Deadline for filing of papers in support of final
approval of the Settlement, Plan of Allocation,
Not later than 35 calendar days
and Lead Counsel’s application for attorneys’
prior to the Settlement Hearing
fees and expenses (Prelim. Approval Order
¶ 27)
Deadline for receipt of exclusion requests and Not later than 21 calendar days
objections (Prelim. Approval Order ¶¶ 13, 17) prior to the Settlement Hearing
Deadline for filing reply papers (Prelim. 7 calendar days prior to the
Approval Order ¶ 27) Settlement Hearing
Deadline for submitting Claim Forms (Prelim. 120 calendar days after the Notice
Approval Order ¶ 10) Date
Not earlier than 120 calendar days
after entry of the Prelim. Approval
Settlement Hearing
Order, or at the Court’s earliest
convenience thereafter
Mem., ECF 197, at 26; Proposed Prelim. Approval Order, ECF 198-1, at ECF pp. 46–61.
The Court finds that Plaintiffs’ proposed schedule and manner of notice as
reflected in their submissions comply with Rule 23 and adequately afford due process.
Notice should be ordered as proposed by the parties, including distribution of the
revised long form notice and online notices. See Revised Proposed Long Form Notice,
ECF 203, at ECF pp. 6–23; Revised Proposed Short Form Notice, ECF 203, at ECF p. 4.
IV. Appointment of Class Counsel
“When a district court certifies a class, it must appoint class counsel.” Payment
Card, 330 F.R.D. at 58. Under Rule 23(g)(1)(A), the Court “must consider: (i) the work
counsel has done in identifying or investigating potential claims in the action;
(ii) counsel’s experience in handling class actions, other complex litigation, and the
types of claims asserted in the action; (iii) counsel’s knowledge of the applicable law;
and (iv) the resources that counsel will commit to representing the class[.]” Fed. R. Civ.
P. 23(g)(1)(A). The Court may also “consider any other matter pertinent to counsel’s
ability to fairly and adequately represent the interests of the class[.]” Fed. R. Civ. P.
23(g)(1)(B). “The adequacy of counsel requirement is [ordinarily] satisfied where the
class attorneys are experienced in the field or have demonstrated professional
competence in other ways, such as by the quality of the briefs and the arguments during
the early stages of the case.” Mendez v. MCSS Rest. Corp., No. 16-CV-2746 (NGG) (RLM),
2019 WL 2504613, at *13 (E.D.N.Y. June 17, 2019) (quotation marks omitted).
As discussed above, the filings in this case show that Lead Counsel has engaged
in significant investigation of the underlying claims, that they are experienced in class
action litigation and are knowledgeable in the applicable area of law, and that they have
the resources necessary to represent the class. The Court therefore respectfully
recommends appointment of Lead Counsel as class counsel for the purposes of
settlement.
CONCLUSION
For the foregoing reasons, the Court respectfully recommends that Plaintiffs’
motion for preliminary settlement approval be granted. Mot., ECF 196. The Court
further recommends that (1) the settlement class be preliminarily certified for the
purposes of settlement; (2) Plaintiffs be appointed as the class representatives; (3) The
Rosen Law Firm P.A. and Glancy Prongay Wolke & Rotter LLP be appointed as class
counsel; (4) the settlement agreement be preliminarily approved; (5) the notice plan be
approved7; (6) SCS be appointed as settlement administrator and be directed to
commence the notice plan; (7) a fairness hearing be scheduled8 to consider final
approval of the settlement; and (8) the Proposed Preliminary Approval Order be
entered, see Proposed Prelim. Approval Order, ECF 198-1, at ECF pp. 46–61.
* * * * *
This report and recommendation will be filed electronically. Objections to this
report and recommendation must be filed, with a courtesy copy sent to the Honorable
Nina R. Morrison, at 225 Cadman Plaza East, Brooklyn, New York 11201, within
fourteen (14) days of filing. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b)(2); see also Fed.
R. Civ. P. 6(a) (providing the method for computing time). Failure to file objections
within the specified time waives the right to appeal before both the district and
7 The Court observes a typographical error in the Revised Proposed Long Form Notice.
See Revised Proposed Long Form Notice, ECF 203, at ECF p. 11 (advising class members that
they are “represented by Plaintiffs and Lead Counsel, unless you chose to represent yourself or
enter an appearance through counsel . . .” (emphasis added)). The Court recommends that the
Notice Plan be approved subject to the condition that Plaintiffs correct this typographical error
(“unless you choose to represent yourself”) before disseminating the Long Form Notice in the
manner specified by the Notice Plan.
8 Alternatively, the undersigned Magistrate Judge respectfully recommends referring the
parties to this Court for scheduling of the final approval hearing.
appellate courts. See, e.g., Caidor v. Onondaga County, 517 F.3d 601, 604 (2d Cir. 2008)
(explaining that “failure to object timely to a... report [and recommendation] operates
as a waiver of any further judicial review of the magistrate[ judge’s] decision”
(quotation marks omitted)).
SO ORDERED.
Dated: Brooklyn, New York
February 24, 2026 __
TARYN A. MERKL
UNITED STATES MAGISTRATE JUDGE
36