Opposition Brief — Brandt v. Weiner
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No. 95-631 (
ame emcees acai
October Term, 1995
IN RE: SOUTHEAST BANKING CORP. SECURITIES
LITIGATION.
+
WILLIAM A. BRANDT, JR., AS ADMINISTRATOR OF THE
INVESTMENT PLUS PLAN OF THE SOUTHEAST
BANKING CORPORATION,
Petitioner,
vs.
HARVEY WEINER, WILLIAM J. HALL, THE MAYNARD
SLESSINGER TRUST, PAULA P. FOLKMAN, GASPER
SCLAFANI, MYERS L. GIRSCH AND DCA GRANTOR
TRUST,
Respondents.
On Petition for Writ of Certiorari to the United States Court
of Appeals for the Eleventh Circuit .
Eee
RESPONDENTS’ BRIEF IN OPPOSITION
C. OLIVER BURT, III
Counsel of Record
MICHAEL J. PUCILLO
WENDY H. ZOBERMAN
BURT & PUCILLO
Attorneys for Respondents
222 Lakeview Avenue
Esperanté Suite 300
West Palm Beach, Florida 33401
(407) 835-9400
(800) 3 APPEAL + (800) 5 APPEAL + (800) BRIEF 21
i
QUESTION PRESENTED
Whether in a Rule 23(b)(3) class action, a representative of
non-named class members who has failed to intervene pursuant to
Rule 24 and who has failed to avail himself of collateral
procedures to protect the interests of the non-named class
members he represents, lacks standing to appeal the district
court’s order approving the settlement of the action.
ii
TABLE OF CONTENTS
Page
Question Preseseed «oo ios san kzstceceades shseieneu i
ee WT rr ree eee ee ii
Teble Of CHRMMGRS ..0 s ocacksvsngeccnnede Seaeaeenee iii
Statemest ol he Case... sccceus cavicanen ceuanapede 1
Reasons for Denying the Writ ............0ceseeeees 6
I. There Are No “Compelling Reasons” for the
Granting of a Writ of Certiorari. .............. 6
II. There Is No Major Conflict Among the Circuits,
and This Court Has Three Times Rejected
Certiorari Petitions on Cases Raising the Same
Issues Advanced by Petitioner. ............... 8
A. Subsequent to Marino v. Ortiz, the Circuit
Courts are Unanimous in the View that
Intervention Under Rule 24 is Required to
Obtain Standing to Appeal a Final Order
Approving a Class Action Settlement. ..... 8
B. Petitioner’s Claimed Conflict Among the
Ciscotts io SIGE. 6 50 cnc ac cisvedevcdssce 13
Ill. The Application of the Rule of Guthrie Did Not
Deprive Petitioner of Due Process. ............ 24
Comebeeiee asic ccccstnctaneseneeoeeeeee renee 27
—e eee
iii
Contents
Page
TABLE OF CITATIONS
Cases Cited:
Ace Heating & Plumbing, Inc. v. Cranz, 453 F.2d 30 (3d
Dn ccichesdeehsesdhacdsicdeneass études 22,23
Armstrong v. Board of School Directors, 616 F.2d 305 (7th
CT Stone seas babe dese creases daseesede 18
Bell Atlantic Corp. v. Bolger, 2 F.3d 1304 (3d Cir. 1993) .. 22,23
Bramon v. Barnett Banks, Inc., 38 F.3d 572 (11th Cir.
1994), cert. denied, 15 S.Ct. 1824(1995) ........... 8
Camden I Condominium Ass’n, Inc. v. Dunkle, 946 F.2d
POO BOOED od ba wevcncecs cise cessasceess 3,4
Carlough v. Amchem Products, Inc., 5 F.3d 707 (3d Cir.
EE Cie Cheech pesaeGneae se bedsececcccceeses 22,23
Cohen v. Young, 127 F.2d 721 (6thCir. 1942) .......... 19,20
Concorde Resources, Inc. v. Woosley (In re: Woosley), 855
F.2d 687 (10th Cir. 1988) ........ 2. cece eee eeeeees 25
Croyden Associates v. Alleco, Inc., 969 F.2d 675 (8th Cir.
1992), cert. denied, 113 S.Ct. 1251(1993) ....... 8,9, 10,22
Dosier v. Miami Valley Broadcasting Corp., 656 F.2d 1295
DOr Cle, IGRI) oo ob csc ccacccccccsccewccvccss 15
iv
Contents
Page
Gottlieb v. Wiles, 11 F.3d 1004 (10th Cir. 1993) .........
pc easeNdGd onde shad eeeeuseanennee 10, 12, 13, 17,22, 24
Guthrie v. Evans, 815 F.2d 626 (11th Cir. 1987) ........ passim
Hansberry v. Lee, 311 U.S.32(1940) ......... eee aee 25
In re Cement Antitrust Litigation, 688 F.2d 1297 (9th Cir.
SOG. wie ce akade bck Vie sdketannentacusdnuanees 15
In re Southeast Banking Corp. Securities Litigation, 51
Fee BO GRO BINED 46 Ned deed eens caenescees 10
In the Matter of VMS Limited Partnership Securities
Litigation, 976 F.2d 362 (7th Cir. 1992) ........... 10, 18,24
Insurance Company of North America v. Dynamic
Construction Co., 1995 U.S. App. Lexis 525 (6th Cir.
19DSD. cise sc eWsnsc dae cbs eseei OA 24
Loran v. Furr’s/Bishop’s, Inc., 988 F.2d 554 (Sth Cir. 1993)
coccccendbéee cddaveaduukebs pucsmeaeeehspaawa 10
Marino v. Ortiz, 484 U.S. 301 (1988) . . .8,9, 10, 11, 13, 14, 15, 19
Marshall v. Holiday Magic, Inc., 550 F.2d 1173 (9th Cir.
MOTT) voice ber oka es Ces ae ee eettan sewaekdedes is
Martin v. Wilks, 490 U.S. 755 (1989) .......-.eeeeeeee 25, 26
Midway Finance Corp. v. Walters, 1992 U.S. App. Lexis
SZTIO CCE. BOGE) oc ccciccccccccccessasscceoes 24
Vv
Contents
Page
Research Corp. v. Asgrow Seed Co., 425 F.2d 1059 (7th Cir.
i PERT C ET EET. CTC r Te Teer Eres eee 15, 16, 17, 18
Rosenbaum v. MacAllister, 64 F.3d 1439 (10th Cir. 1995)
SPIRE Deeb bagel i kaewees sib dkeesdekseesneaines 19, 20
Shores v. Sklar, 844 F.2d 1485 (11th Cir. 1988), cert.
Saad, FISD. TORS IGG) ccc scccaccnsncnses 8,10
Shults v. Champion Int’l Corp., 35 F.3d 1056 (6th Cir.
| PECTED FET NSES per ey Pere 1,9, 10, 12, 20, 21,22, 24
Silber v. Mabon, 957 F.2d 697 (9th Cir. 1992) .......... 15, 16
Tryforos v. Icarian Development Co., S.A., 518 F.2d 1258
(7th Cir. 1975), cert. denied, 423 U.S. 1091 (1976) ... 18
Walker v. City of Mesquite, 858 F.2d 1071 (Sth Cir. 1988)
PEE eres PU Pee ET EO TCS TT Tore ETT Pree rT. 10,22
Rules Cited:
Federal Rule of Appellate Procedure 27(c) ............ 6
Federal Rules of Civil Procedure:
et Parr re pera ea rre rae 6, 11, 13, 16, 23, 24, 25, 27
UD SMOMS) oc cccccccccsecccanscesscesacseces 26
Contents
Page
REO ZINE) 6 csecccisccccedssisetevpocduss 7, 15, 16, 17
PDA) cvccccccccccusocccsncusadawaanens 7, 15,18
Rule 23(b)(3) .......... 4,6,7,9, 11, 16, 17, 18, 20,23, 25, 26
RUS TIGINGED occ cccccvcccdbeshocsdescusbeduawe 4, 12,25
RESTING) ccc cccccvcsgecccesswincdedesets 15, 16
PUEDE) cccccevccvctcccssdodedessvdueveuste 4,11,24
RUEOZRE scccccccctessdsvosedvcceevovcededesed 4,7,22
yy PPrrerri ri ry i, 1,5,6,8, 10, 11, 12, 13, 14, 15,22
REGIME) oo. cccccccccccdsveddbicdouncuaseenus 22
REO DOD) occcccccdeccoccsccvdacdudheddeecesee 22
MORI) ccccdccccctccécccbvdvsusecedevese 16
Supreme CourtRule 10 .......... cece cc ceeceeeenee 8
APPENDIX
Appendix A— Plaintiffs’ Reply Memorandum ........ la
Appendix B — Notice of Pendency of Class Action,
Proposed Settlement, Settlement Hearing, and Right to
l
Respondents, Harvey Weiner, William J. Hall, The Maynard
Slessinger Trust, Paula P. Folkman, Gasper Sclafani, Myers L.
Girsch and DCA Grantor Trust (“Class Plaintiffs”), submit this
brief in opposition to the Petition for a Writ of Certiorari.
STATEMENT OF THE CASE
The Petitioner in this action seeks certiorari review of a per
curiam dismissal of the Petitioner’s appeal for lack of standing.
Petitioner is the Administrator of the Investment Plus Plan (the
“Plan”), the pension plan for former employees of Southeast
Banking Corporation (“Southeast”) and its affiliates.'
Beneficiaries of the Plan, which made purchases of Southeast
stock during the Class Period, are also members of the Class
certified by the district court. It is undisputed that Petitioner was
not a named party and, notwithstanding clear authority in the
Eleventh Circuit requiring intervention under Rule 24,
Fed.R.Civ.P. (“Rule 24”) in order to perfect rights to appeal,
Petitioner never moved to intervene as Administrator of the Plan
in the district court.? As such, Petitioner has no standing to
1. Petition for a Writ of Certiorari (hereinafter “Cert. Pet.”), p.3. Record
references to pleadings and other court documents are indicated by “R[ volume
#)}-[document #]-[page #],” and record references to transcripts are indicated
by “R[ volume #]-[page #]”.
2. Petitioner attempted to intervene in the district court in his separate
capacity as bankruptcy Trustee for the Chapter 7 estate of Southeast. He did so
not to protect the interests of the Plan or the Class, but because he claimed the
Stipulation of Settlement contained language that “might be construed by
aggressive defense counsel to impair or impede the Trustee's ability to recover
money damages on behalf of Southeast’s bankruptcy estate.” R11-225-1.
Petitioner's Motion to Intervene as Bankruptcy Trustee was never granted by
the district court. Even if it had been, the bankruptcy Trustee is not a member
of the Class, does not represent any members of the Class and would have no
standing to object to the settlement approved below.
”
—
prosecute this appeal. Petitioner now challenges the dismissal of
his appeal by attacking the precedent he failed to follow.
Petitioner attempts to describe a split among the Circuits
which, he asserts, is growing “both wider and more mature.”
Cert. Pet. p. 1. However, as discussed below, the conflict
suggested by Petitioner is neither as real nor as significant as
Petitioner suggests. Rather, there is a very definite trend among
every Circuit which has addressed the issue directly to adopt the
approach set forth by the Eleventh Circuit in Guthrie v. Evans,
815 F.2d 626 (11th Cir. 1987), which held that in order to preserve
the right to appeal from a class action settlement, a non-named
class member must formally intervene under Rule 24. As this
Court has done three times since 1990, it should deny certiorari
review on this issue.
This action arose as a consolidation of several shareholder
class actions, the first of which was filed in March of 1990. The
action concerned and preceded the collapse of Southeast Bank, a
major economic institution in South Florida. The Class Plaintiffs’
claims were brought pursuant to Section 10(b) of the Securities
Exchange Act of 1934 on behalf of those persons who purchased
the common stock and debentures of Southeast during the Class
Period. On September 20, 1991, Southeast filed for protection
under Chapter 7 of the United States Bankruptcy Code, after its
primary subsidiary, Southeast Bank, N.A., was seized by
government regulators and its assets were transferred to First
Union Bank in a federally assisted bail-out. Class Plaintiffs
subsequently moved, and were granted leave, to file a Fourth
Consolidated Amended and Supplemental Complaint which
asserted claims on behalf of those persons who purchased the
common stock and debentures of Southeast during the period
from February 27, 1989 through end including July 4, 1991.
This litigation was extremely hard fought for three and one-
3
half years, as evidenced by the more than 250 docket entries
contained in the record index. On August 19, 1993, a Stipulation
of Settlement was executed whereby the case was settled for
$5,000,000 in cash, plus interest accrued thereon. Plaintiffs’
Counsel (who had incurred over $975,500 in attorneys’ time
prior to the appeal) petitioned for an award of counsels’ fees in
the amount of $1,250,000, or 25% of the settlement fund,
pursuant to controlling Eleventh Circuit law as set forth in
Camden I Condominium Ass'n, Inc. v. Dunkle, 946 F.2d 768 (11th
Cir. 1991). The settlement and the fee were approved over the
objections of Petitioner, who was the only objector to any part of
the settlement or fee request, notwithstanding the fact that more
than 47,500 notices were mailed to Class members, as well as
nominees and brokers.’
After extensive litigation in the district court, a settlement
was reached. Competing claims had been filed by Petitioner (in
his alternate role as Trustee) and others, including the Federal
Deposit Insurance Corporation and the Resolution Trust
Corporation, that — together with mounting defense costs —
3. The settlement and fee petition were supported by extensive
memoranda as well as the sworn affidavits of Plaintiffs’ Counsel, which
included detailed time summaries, broken down by each attorney who worked
on the case, as well as the types of activity performed. See R10-221-1, R11-
235-1. Further, in Plaintiffs’ Reply Memorandum in Support of Plaintiffs’
Counsels’ Joint Petition for an Award of Attorneys’ Fees and Reimbursement
of Expenses, Class Plaintiffs specifically responded to Petitioner's objections,
noted that he relied on inapplicable authority which did not concern common
fund fee awards, questioned Petitioner's standing as well as his motives given
his conflicting loyalties as both Trustee of the Chapter 7 estate of Southeast and
Administrator of the Plan, and pointed out that his demand to inspect Counsel's
underlying time records ran counter to the Eleventh Circuit’s mandate in
Camden that “attorneys’ fees awarded from a common fund shall be based
upon a reasonable percentage of the fund established for the benefit of the
class.” 946 F.2d at 774. Resp. App. at 1a-26a. Citation to “Resp. App. at
” refers to the appendix to this Brief in Opposition.
4
threatened to deplete the available directors’ and officers’
liability insurance which, upon the collapse of Southeast, offered
the only meaningful source of recovery in this litigation as well as
for the competing actions. In the face of the numerous competing
claims, the seizure of Southeast Bank, the absence of any other
real source of recovery for the Class, and in light of a damage
analysis, based upon data evaluated by Plaintiffs’ financial
expert, of approximately $26 million (assuming Plaintiffs
established the Defendants’ liability), Plaintiffs’ Counsel, after
months of settlement negotiations, negotiated a $5 million cash
settlement. Of that amount, and following more than three years
of litigation for which they did not receive any payment,
Plaintiffs’ Counsel requested 25% of the settlement fund, the
“benchmark” identified by the Eleventh Circuit in Camden, as
attorney’s fees.
The notice program included publication in the Miami
Herald and The Wall Street Journal and the mailing of over
47,500 copies of the Class Notice.‘ This notice program elicited a
4. Contrary to Petitioner’s assertion, Rule 23(e) does not require that, in
the settlement of Rule 23(b)(3) and 23.1 class and shareholder derivative
actions, all absent class members be “summoned into court.” Cert. Pet. p.i1.
Rather, Rule 23(e), which only applies to class actions, provides that, a class
action shall not be dismissed or compromised without the approval of the
court, and that notice of any proposed dismissal or compromise “shall be given
to all members of the class in such manner as the court directs.” In accordance
with the provisions of Rule 23(c)(2) and (e) and the district court’s Order
and the Settlement Hearing, as well as their right to seek-exclusion (opt out)
from the Class, and the opportunity to appear and be heard in support of or in
opposition to the settlement. No one was “summoned into court.” See Notice
of Pendency of Class Action, Proposed Settlement, Settlement Hearing, and
Right to Appear and Notice to Nominees, Resp. App. at 27a-30a, 34a-38a, 44a-
47a.
5
total of one objection — that of the Petitioner — to any part of the
settlement or fee request.°
At what the district court characterized as “11:59,” R13-46,
Petitioner’s Counsel appeared at the November 15, 1993,
Settlement Hearing on behalf of the Trustee of the estate of
Southeast, R13-27, challenged the fee request, demanded to see
Plaintiffs’ Counsel’s underlying time records and damage
analysis and questioned the negotiation process. R13-40. At the
Settlement Hearing, during which the district court heard
extensive argument from Petitioner’s Counsel, the district judge
noted his personal familiarity with the case and the negotiation
process which culminated in the settlement, his satisfaction with
the record in so far as it supported the settlement and the fee
petition, and stated that, in his opinion, this was a “very good
settlement for all parties.” R13-43-44, 50, 52, 54,55. In an order
dated November 23, 1993, the district court approved the
settlement and Plaintiffs’ Counsel’s fee request.°
Petitioner objected at the Settlement Hearing and filed
papers in opposition to the settlement, but never bothered to
intervene under Rule 24. Upon the filing of their answer brief in
the Eleventh Circuit, Class Plaintiffs pointed out, inter alia, that
the Petitioner lacked standing to prosecute this appeal by reason
5. Petitioner never objected to the Notice in the district court, nor did he
assert any denial of due process until the filing of his Petition for Rehearing and
Suggestion for Rehearing En Banc in the Eleventh Circuit.
6. Petitioner's unwarranted claim that the district court “rubber
stamped” the proposed settlement, Cert. Pet. p.3, is belied by the record below,
particularly the district judge's statements at the Settlement Hearing as to his
own familiarity with this action as well as the extensive briefing with respect to
the settlement and Petitioner's objections thereto, and the lengthy Settlement
Hearing at which Petitioner was given a full and fair opportunity to appear and
be heard.
6
of his failure to formally intervene under Rule 24.’ The Eleventh
Circuit agreed and summarily dismissed the appeal based upon
the clear precedent set forth in Guthrie. Pet. App. at la-2a.°
REASONS FOR DENYING THE WRIT
I.
THERE ARE NO “COMPELLING REASONS” FOR
THE GRANTING OF A WRIT OF CERTIORARI.
There are no “compelling reasons” for the granting of a Writ
of Certiorari in this case as required by Rule 10 of the Rules of this
Court. The principal argument advanced by Petitioner for the
granting of a Writ of Certiorari is that a conflict exists among the
Circuits as to the requirement to intervene under Rule 24 as a
party to the litigation in order to have standing to appeal a final
order in a class action brought pursuant to Rule 23(b)(3). There is
hardly a conflict among the Circuits on this issue. Indeed, every
Circuit that has squarely addressed this issue since 1987 has
adopted the same holding as Guthrie in the context of a Rule 23
class action. There is no court that has specifically addressed the
question presented here and decided the issue in a manner
contrary to Guthrie. The decisions on which Petitioner relies to
create some “conflict” on this procedural question are cases in
which the issue was simply never addressed; discussed only in
dicta; or decided in the context, not of a Rule 23(b)(3) class
7. Since a single judge on a motion calendar is without authority to
dismiss an appeal pursuant to Rule 27(c) Fed. R. App. P., the Appellee’s Brief
was the appropriate time to raise the fact that the Appellant had failed to follow
the clearly articulated holding of prior Eleventh Circuit case law by not
intervening pursuant to Rule 24.
8. Citation to “Pet. App. at ____” refers to the appendix to the Petition
for a Writ of Certiorari.
7
action, but of a shareholder derivative action brought under Rule
23.1, where the shareholder has no claim independent of the
corporation and is not given the opportunity to opt out, or Rule
23(b)(1) or (2) class actions where there is, similarly, no right to
opt out.”
Neither Petitioner’s mischaracterization of the factual
background of the settlement, nor his untimely due process
arguments provide grounds for certiorari review. This case was
settled after extensive, hard-fought litigation, when the parties
and the district judge were in a position to evaluate the merits of
the case and the settlement. At the eleventh hour, Petitioner, who
is also the Trustee of the bankruptcy estate of Southeast and who
was spearheading a competing claim to that of the Class
Plaintiffs, appeared and objected to the settlement for reasons
known only by Petitioner. Proper notice of the settlement was
afforded Petitioner, who was represented by counsel, yet failed to
either intervene in the action or opt out of the Class, and is thus
bound by the district court’s final judgment. Petitioner’s rhetoric
does not change that fact, or in any way suggest a basis for further
review.
9. Petitioner attempts to draw a “determinative” distinction between
Rule 23(b)(1) & (2) class actions on one hand, and Rule 23(b)(3) and 23.1 class
and shareholder derivative actions on the other, based upon the fact that the
their objections, if any, to the proposed settlement. Cert. Pet. p.3. This is not
the relevant distinction in this case. Rather, a fundamental difference exists
between Rule 23(b)(3) class actions and all other class categories including
Rule 23.1 shareholder derivative actions, because the latter do not allow for
class members to opt out of a settlement, thus eliminating one of the rationales
underlying Guthrie. Apparently, Petitioner seeks to lump Rule 23(b)(3) and
23.1 actions together because Petitioner's argument that certain Circuits
adhere to the theory that intervention is not required relies upon cases which
involve Rule 23.1 derivative actions.
8
Il.
THERE IS NO MAJOR CONFLICT AMONG THE
CIRCUITS, AND THIS COURT HAS THREE TIMES
REJECTED CERTIORARI PETITIONS ON CASES
RAISING THE SAME ISSUES ADVANCED BY
PETITIONER.
This Court has consistently denied certiorari in cases which
presented the same standing issue on which Petitioner seeks
certiorari review. See Bramon v. Barnett Banks, Inc., 38 F.3d 572
(11th Cir. 1994), cert. denied, 15 S. Ct. 1824 (1995); Croyden
Associates v. Alleco, Inc., 969 F.2d 675 (8th Cir. 1992), cert.
denied, 113 S. Ct. 1251 (1993); Shores v. Sklar, 844 F.2d 1485
(11th Cir. 1988), cert. denied, 493 U.S. 1045 (1990). This
suggests that the issues advanced by Petitioner are not
“compelling” within the meaning of Supreme Court Rule 10 and
that the conflict described by Petitioner is neither as real nor as
significant as Petitioner suggests.
A. Subsequent to Marino v. Ortiz, the Circuit Courts are
Unanimous in the View that Intervention Under Rule 24 is
Required to Obtain Standing to Appeal a Final Order
Approving a Class Action Settlement.
In Marino v. Ortiz, 484 U.S. 301 (1988), this Court was faced
with an appeal from a final hearing approving a consent decree in
settlement of an action brought under Title VII of the Civil Rights
Act of 1964. The action was brought on behalf of Black and
Hispanic police officers. The petitioners, while not absent class
members, were officers who would be affected by the final
judgment in the case and, thus, had a legally cognizable interest at
stake. The petitioners had failed to intervene, but had presented
their objections to the district court. This Court held that “since
petitioners were not parties to the lawsuit, and because they failed
9
to intervene for purposes of appeal, they may not appeal the
consent decree.” 484 U.S. at 304. In doing so, this Court adhered
to the rule that “only parties to a lawsuit, or those that properly
become parties, may appeal an adverse judgment.” Jd. (citations
omitted.) This Court went on to note that, while the Court of
Appeals had suggested there may exceptions to this rule, “. . . We
think the better practice is for such a non-party to seek
intervention.” 484 U.S. at 305.
Petitioner’s suggestion that this Court’s holding in Marino
has created “confusion” and has been “taken out of context” to
support the principle that unnamed Rule 23(b)(3) class members
must intervene in addition to objecting in order to have standing
to appeal (Cert. Pet. p.16), has been rejected by the Courts of
Appeals and this Court. In Croyden Associates v. Alleco, Inc.,
969 F.2d 675 (8th Cir. 1992), the Eight Circuit, in holding that an
unnamed class member could not appeal, even though it objected
to the settlement agreement, because it had failed to intervene,
stated, “We agree with Guthrie that Marino provides substantial
support for holding that unnamed class members who object to a
settlement must move to intervene, and they will be denied
standing to appeal when they have not done so.” Jd. at679. Upon
application for certiorari review of the court’s holding in
Croyden, that Marino does support the theory that unnamed class
members must intervene in addition to objecting in order to have
standing to appeal, this Court denied certiorari review,
suggesting that neither the Croyden Court nor the Court in
Guthrie was “confused” in its interpretation of Marino.
Similarly, Shults v. Champion Int’l Corp., 35 F.3d 1056,
1060-61 (6th Cir. 1994), recognized that Marino “addressed the
standing to appeal of non-parties and not ... of non-
representative members of a class or derivative suit.” Id.
However, based upon the reasoning set forth in Marino, the Sixth
Circuit came to the logical conclusion that, “Similarly, merely the
10
interest of unnamed, non-intervening class members in the
outcome of the class litigation is insufficient to confer standing
upon them, even if they voluntarily make their interests known,
through objections, to the district court. . .. Marino supports the
notion that persons who are not proper parties should overcome
some additional hurdle before attaining, for purposes of appeal,
party status.” Jd.
In the year prior to this Court’s holding in Marino, the
Eleventh Circuit in Guthrie v. Evans, 815 F.2d 626 (11th Cir.
1987), held that in order to preserve the right to appeal from a
class action settlement, a class member must formally intervene
under Rule 24. Subsequent to this Court’s holding in Marino,
every Circuit Court that has addressed this issue has held that,
absent intervention, a non-party class member has no standing to
appeal. See Shults v. Champion Int’ Corp., 35 F.3d 1056 (6th Cir.
1994); Gottlieb v. Wiles, 11 F.3d 1004 (10th Cir. 1993); Loran v.
Furr’s/Bishop’s, Inc., 988 F.2d 554 (Sth Cir. 1993); Croyden
Associates v. Alleco, Inc., 969 F.2d 675 (8th Cir. 1992); Walker v.
City of Mesquite, 858 F.2d 1071 (Sth Cir. 1988); Shores v. Sklar,
844 F.2d 1485 (11th Cir. 1988); as well as the court below in Jn re
Southeast Banking Corp. Securities Litigation, 51 F.3d 1003
(11th Cir. 1985). In addition, the Seventh Circuit in Jn the Matter
of VMS Limited Partnership Securities Litigation, 976 F.2d 362,
368 (7th Cir. 1992), found “Guthrie’s analysis persuasive where
an unnamed class member ... is appealing a post-settlement
order implementing the settlement agreement.” Jd.'°
10. Petitioner’s reliance upon Rosenbaum v. MacAllister, 64 F.3d 1439
(10th Cir. 1995), does not support certiorari review. Rosenbaum did not
overturn Gottlieb v. Wiles, 11 F.3d 1004 (10th Cir. 1993), wherein the Tenth
Circuit, “joined circuits that require intervention by a class member in a Rule
23(b)(3) case in order to have standing to appeal the district court's approval of
the settlement.” Rosenbaum, 64 F.3d at 1440. Additionally, the rationale set
(Cont'd)
11
Contrary to Petitioner’s assertion, the issue of whether an
unnamed, but timely objecting member of a Rule 23(b)(3) class
action may appeal the district court’s approval of the settlement
without intervention is not “unsettled.” Post-Guthrie and
Marino, there has been virtually no contrary view on this issue in
the context of a class action settlement. In order to appeal a final
judgment approving a class action settlement, one must take the
relatively simply step of intervening under Rule 24 as a party
plaintiff.
The rationale of Guthrie and subsequent cases is clear and
well-reasoned. Rule 23 establishes a procedure whereby a class
representative acts as a fiduciary on behalf of the class. Further,
under Rule 23(e) the district court acts as a fiduciary who must
serve as a guardian of the rights of absent class members. An
individual who has some interest in the outcome of litigation, but
does not assume the fiduciary responsibilities of the class
representative, and is not certified as such by the court, cannot act
on behalf of the class. The notion of non-parties bringing
appeals, often when they take interest in the litigation only at its
conclusion, is contrary to the framework for representative
litigation set forth in Rule 23. Just as merely having an interest in
the outcome of litigation was held by this Court in Marino to be
(Cont'd)
forth in Rosenbaum to justify a non-named class member’s appeal of an
attorneys’ fee award does not withstand close scrutiny. For instance, the court
theorized that, “should the dissident’s appeal succeed in reducing attorneys’
fees, there would be additional funds for later distribution to the class
members.” However, it did not take into consideration the potential enormous
costs of such a redistribution in the context of a large shareholder action or how
those costs would be paid. Further, the court’s speculation that named
plaintiffs could be biased in favor of their counsel and agree to what could be an
excessive fee award, the excess portion of which would otherwise go to the
class, ignores the fiduciary nature of the procedural framework of Rule 23 and,
renders meaningless the district court's role in determining adequacy of
representation. Rosenbaum does not provide support for Petitioner's position.
12
insufficient to confer standing, “merely the interest of unnamed,
non-intervening class members in the outcome of the class
litigation is insufficient to confer standing upon them.” Shults,
35 F.3d at 1060.
Class members have adequate procedures under the Federal
Rules of Civil Procedure to protect their substantive rights. As
Guthrie and subsequent cases point out, class members may
intervene under Rule 24 by filing a motion for intervention in the
district court. The denial of such a motion is appealable. A
second alternative is that a class member, if dissatisfied with the
representation in the class action, may pursue a collateral
proceeding. A third option is that a class member may simply opt
out of the class under Rule 23(c)(2) and, thereby, not be bound by
any final adjudication. Guthrie, 815 F.2d at 628. These are ample
means of protecting the substantive rights of absent class
members.!!
If unnamed class members who have not intervened as
11. Some of the authorities relied on by Petitioner are inapposite because
they involve non-opt out classes. As the Sixth Circuit explained in Gottlieb v.
Wiles, 11 F.3d at 110-11:
[Cjases holding that an unnamed plaintiff in a
shareholder derivative suit under Rule 23.1 has
standing to appeal are inapposite . . . . Rule 23.1 does
not offer the same protective mechanisms offered by
Rule 23. Unlike class actions under Rule 23, in
shareholder derivative suits under 23.1, a preliminary
affirmative determination that the named plaintiffs will
fairly and adequately represent the interests of the
other class members is not a prerequisite to the
maintenance of the action . . . . In addition, there is no
opt out provision in shareholder derivative suits. Thus,
all shareholders are bound by the outcome regardless
of their objections.
13
parties could initiate appellate proceedings without formally
becoming parties, class actions would become unmanageable.
“A fundamental purpose of the class action is to render
manageable litigation that involves numerous members of a
homogenous class ....” Guthrie, 815 F.2d at 629. When
procedural protections afforded class members under Rules 23
and 24 are balanced against the specter of unwieldy litigation and
the loss of manageability in class litigation, there is no question
that the balance tips in favor of precluding appeals by those who
have failed to take the simple step of intervention:
If individual appeals without formal
intervention were permitted, the class action
would break down under the burden of
unpredictable and unlimited individual
actions. Such a result would directly conflict
with the goals of Rule 23 and would
eviscerate the utility of the class action suit.
Gottlieb v. Wiles, 11 F.3d at 1009.
This Court squarely held in Marino, that the right to bring
appellate review of an adverse judgment is limited to a party. The
better practice is to adhere to that limitation in the class context,
particularly in light of the procedures whereby one can relatively
easily become a party through intervention and, if necessary,
appeal the denial of the requested intervention.
B. Petitioner’s Claimed Conflict Among the Circuits is
Illusory.
Petitioner suggests that there is a widening split among the
Circuits on this issue of standing, and that the Fifth, Eighth, Tenth
and Eleventh Circuits are “in direct conflict” with the Third,
Sixth, Seventh and Ninth Circuits. This is simply not the case. A
14
careful reading of the citations advanced by Petitioner reveals no
such conflict.
1. Ninth Circuit
Although Petitioner asserts that the Ninth Circuit has
“established that an unnamed class member has standing to
appeal a settlement agreement,” Cert. Pet. p.13, the fact is that
there has been no post-Guthrie/Marino decision in the Ninth
Circuit which squarely deals with this issue. Marshall v. Holiday
Magic, Inc., 550 F.2d 1173 (9th Cir. 1977), was decided a decade
before Guthrie and Marino, and did not squarely address the
question of whether intervention under Rule 24 is required to
obtain standing to appeal a class action settlement. Marshall
arose out of a settlement of a class action involving a pyramid
scheme. Numerous class actions with differing and somewhat
conflicting definitions of the class were consolidated into one
action. After the case was settled, an appeal was brought by an
entity sued as a defendant in one case, but also part of a defined
plaintiff class in another. While it was appellants’ status as class
members that ultimately served as a basis for standing to appeal,
the issue of whether formal intervention under Rule 24 was
required was never raised by the parties or addressed by the
Court.”
12. The Marshall court ultimately rejected the appellants’ argument that
they were not adequately represented, stating:
Appellants had the right and opportunity to opt out in
this action. They chose not to. We believe that they
should not now be allowed to play the role of spoilers
for a class of more than 31,000 people when they could
have chosen not to be bound by the settlement.
$50 F.2d at 1177.
15
Similarly, in In re Cement Antitrust Litigation, 688 F.2d
1297 (9th Cir. 1982), another pre-Guthrie/Marino decision,
which concerned a multidistrict antitrust class action wherein the
plaintiffs sought a writ of mandamus with respect to the district
judge’s recusal, the court specifically stated, “We need not decide
the general question whether class members are in fact ‘parties’
to a class action suit .... Here, we need decide only if, for
purposes of [28 U.S.C.] section 455, stock ownership in a class
member constitutes an interest in a ‘party to the proceeding.’ ”
Id. at 1310. The issue of intervention was neither raised nor
decided. Dosier v. Miami Valley Broadcasting Corp., 656 F.2d
1295 (9th Cir. 1981), also a pre-Guthrie/Marino decision,
involved a discrimination action brought pursuant to Rule
23(b)(2) which does not require that unnamed plaintiffs be
allowed to opt out. Thus, the Court’s statement in dicta that the
unnamed class member who appeared and objected to the
settlement could have challenged the settlement by direct appeal
is neither significant nor relevant.”
Finally, Silber v. Mabon, 957 F.2d 697 (9th Cir. 1992), the
only post-Guthrie/Marino Ninth Circuit authority cited by
Petitioner, involved an appeal by an unnamed class member of
the district court’s denial of his motion to opt out of the settlement
of a securities action. In Silber the class member received notice
too late to opt out, as he desired, but in time for the Rule
13. The fact that the Dosier court, in making this statement relied upon
Research Corp. v. Asgrow Seed Co., 425 F.2d 1059, 1060 (7th Cir. 1970) is,
however, significant. As discussed infra, Respondents submit that the Asgrow
court’s statement that one who intervenes, or “even appears in response to a
notice,” may maintain an appeal, referred to the non-opt out class claims under
Rule 23(b)(1) and (2), which were asserted in that case and not the Rule
23(b\(3) claims. Dosier supports this interpretation, and contradicts
Petitioner's assertion that, as opposed to class members in a 23(b)(3) class
action, “class members in Rule 23(b)(1)&(2) actions need to intervene
pursuant to Rule 24 if they wish to appear before a district court for any
purpose.” Cert. Pet. p.3.
16
23(c)(2)(C) hearing. The Silber court did not, as Petitioner
contends, hold that as long as an unnamed Rule 23(b)(3) class
member appears in response to a notice of hearing of proposed
settlement and puts forth his objections, he can attack the
dismissal or compromise on appeal. Rather, the court found that,
because one of the protective mechanisms of Rule 23 was not
heeded, (in that case adequate notice) “Appellant might have
more properly moved the district court for relief from the
proceedings pursuant to Fed.R.Civ.P. 60(b)(4) on the grounds
that the proposed settlement was void as tohim. . . . [W]e find no
barrier to construing what was done as in effect a 60(b)(4) motion
made pursuant to that provision,” 957 F.2d at 700, and allowed
the appeal on that basis. The court in Silber never addressed the
issue of intervention."
2. Seventh Circuit
The notion that the Seventh Circuit law conflicts with the
prevailing view articulated in Guthrie is also highly
questionable. Petitioner cites a 1970 opinion of the Seventh
Circuit, Research Corp. v. Asgrow Seed Co., 425 F.2d 1059 (7th
Cir. 1970), in support of the view that the Seventh Circuit does
not require formal intervention to obtain standing to appeal.
However, a review of that opinion, and subsequent opinions that
have considered it, reveals that Petitioner’s interpretation is
incorrect.
Asgrow arose out of a consent judgment as to the validity of a
patent and an infringement of that patent, and an antitrust action.
The antitrust action was maintained as a class action under Rule
23(b)(3), from which there is a right to opt out. The infringement
action was maintained as a class action under Rule 23(b)(1) and
14. In the instant case, Petitioner never challenged of Notice in the
district court and never attempted to opt out of the class.
17
(2), from which there is no right to opt out. With respect to the
antitrust action, the Court specifically stated:
We need not consider the factual questions
concerning the degree of participation by
appellants in the settlement hearing and
negotiations since the failure of appellants to
formally intervene, after receipt of notice
under Fed.R.Civ.P. 23(e) before final
judgment forecloses their right to appeal.
Asgrow, 425 F.2d at 1060, n.2 (emphasis added). Asgrow is
consistent with Guthrie on this issue. While confusion in the
reading of Asgrow arises from a further statement by the court
with respect to the non-opt out class claims under Rule 23(b)(1)
and (2) that one who intervenes or “even appears in response to a
notice,” may maintain an appeal, the above language is clear on
the issue of the need to intervene.
In Gottlieb v. Wiles, 11 F.3d 1004 (10th Cir. 1993), the Tenth
Circuit squarely pointed out that Asgrow did not support the
notion that formal intervention was not required. After pointing
to the above-quoted Asgrow footnote, the court in Gottlieb stated:
Thus, in the only portion of the Asgrow
decision directly parallel to the situation in
this case, the Seventh Circuit held that formal
intervention was a prerequisite to the right of
appeal.
11 F.3d at 1011. As the Gottlieb court noted, Asgrow stands for
the same proposition as Guthrie in the context of a Rule 23(b)(3)
class.
Further, the other Seventh Circuit authorities relied upon by
18
Petitioner for his argument that Asgrow is contrary to Guthrie,
demonstrate that Petitioner’s reliance is misplaced. The most
recent Seventh Circuit decision cited by Petitioner suggests that
the Seventh Circuit is likely to follow Guthrie if squarely
confronted with this issue. In In the Matter of VMS Limited
Partnership Securities Litigation, 976 F.2d 362 (7th Cir. 1992), a
Seventh Circuit panel appeared reluctant to depart from what it
construed as the Circuit’s prior holding in Asgrow, but failed to
apply Asgrow so as to permit an appeal from a class member who
had not intervened. After citing Guthrie and finding that its
reasoning was “persuasive,” the court in VMS held that an
unnamed class member who had failed to intervene could not
appeal a post-judgment order implementing the settlement
agreement. The Seventh Circuit’s opinion in VMS reflects a clear
departure from any notion that a class member who fails to
formally intervene has standing to bring an appeal.
Tryforos v. Icarian Development Co., S.A., 518 F.2d 1258
(7th Cir. 1975), cert. denied, 423 U.S. 1091 (1976), also supports
the interpretation that the language appearing in the body of the
Asgrow opinion applies only to non-opt out classes. Petitioner
incorrectly paraphrases the Court’s holding. What the 7ryforos
court actually stated in footnote 22 is, “The law is clear that a non-
party shareholder who appears, pursuant to a Rule 23.1 notice, to
present objections to a proposed dismissal or settlement of a
derivative action may appeal an adverse decision even though he
has not been formally made a party to the action.” 518 F.2d at
1263, n.22 (emphasis added). Similarly, Armstrong v. Board of
School Directors, 616 F.2d 305 (7th Cir. 1980), involved a non-
opt out class action brought pursuant to Rule 23(b)(2).
No Seventh Circuit opinion has held that an unnamed class
member in a Rule 23(b)(3) class action need not intervene in
order to have standing to appeal an adverse final judgment.
Indeed, Asgrow, like Guthrie, stands for the opposite proposition.
3. Sixth Circuit
Petitioner’s assertion that the Sixth Circuit adheres to the
axiom that an unnamed class member who objects to a settlement
agreement has standing to appeal all aspects of the agreement is
simply unsupportable. In Shults v. Champion Int’l Corp., 35 F.3d
1056 (6th Cir. 1994), the court, after discussing Guthrie in detail,
and noting that it “appears to be the progenitor of the modern
trend” with respect to non-named individual class members who
seek to appeal, clearly held that, “A non-named class member has
standing to appeal a settlement order if he has formally intervened
in the action... .” Id. at 1061. (emphasis added). The court went
on to delineate two exceptions to the mandatory intervention rule,
stating:
However, a non-named party that has not
been permitted to intervene may also have
standing to bring a direct appeal if a motion to
intervene, which is then appealed, should
have been granted. A non-named party may
also haye standing to appeal if the district
court has otherwise “summoned” him into
court. Of course, as the Supreme Court has
indicated, “the better practice is...to seek
intervention for purposes of appeal.”
Id. at 1061 (quoting Marino v. Ortiz, 484 U.S. 301, 304 (1988)).'5
15. The two exceptions to the mandatory intervention rule cited in Shults
stem from two pre-Guthrie/Marino Sixth Circuit opinions, Sertic v.
Carpenters Dist. Counsel, 459 F.2d 579 (6th Cir. 1972), and Cohen v. Young,
127 F.2d 721 (6th Cir. 1942). In Cohen, an unnamed class member “received
an order in a class shareholder derivative suit to show cause why a proposed
settlement should not be approved by the district court.” Shults, 35 F.3d at
1059. The class member appeared at the hearing, objected to the settlement,
and petitioned to intervene as a plaintiff, which petition was denied. The class
(Cont'd)
20
Petitioner’s assertion that the notice required in a Rule
23(b)(3) class action is the equivalent of being “summoned into
court” (and therefore tantamount to some mandatory
intervention) is disingenuous at best. In fact, the Sixth Circuit in
Shults, after noting that the notices at issue there, like the notice in
the instant action, provided that a class member “may” appear at
the settlement hearing, either on his own behalf or through
counsel of his own choice, specifically rejected this notion:"*
The appellants have not intervened in this
action. Nor did they seek to intervene.
Further, the notices in this case do not satisfy
the requirement in Cohen that the appellants
be haled into court. The district court
allowed, pursuant to Rule 23(e), for their
appearance to make objections. However, as
(Cont'd)
member appealed the order approving the settlement, but not the order denying
him intervention. The Sixth Circuit held that the appellant’s appearance in
court pursuant to a “notice to show cause why the settlement should not be
approved” was “like a defendant who is summoned by process of court and
after an adverse ruling has the right to appeal.” Cohen, 127 F.2d at 724
(citations omitted). The Shults court thus determined that “under Cohen, an
unnamed member of a derivative suit who has not been allowed to intervene
may Ne a Tree eee
court.” 35 F.3d at 1060.
In Sertic, non-named class members whose petitions to intervene had
been denied by the district court, had standing to appeal, because, “the
appellants who were successful in their appeal of the denial of their petitions to
intervene, were essentially intervening parties and accordingly had the rights
of such parties, including the right to appeal an adverse final judgment.”
Shults, 35 F.3d at 1060.
16. The Notice sent to Class members herein also allowed for their
appearance on a non-mandatory basis. See Resp. App. 46a-47a.
21
explicitly stated in the first notice, their
appearance was not of a mandatory nature.
We are hard pressed to say that the appellants
here were like defendants “summoned by
process of court.” Cohen, 127 F.2d at 724.
Therefore, the appellants lack standing to
bring this appeal because, by not intervening
in this action below and not seeking to
intervene, they have not satisfied the
requirements of Sertic, and because the
record indicates that the requirements of
Cohen have not been satisfied.
35 F.3d at 1061.”
It cannot, in good faith, be argued that the Sixth Circuit is in
“direct conflict” with the Eleventh Circuit and other Circuits
which have held that unnamed class members generally lack
standing to appeal class settlements.
4. Third Circuit
Finally, Petitioner’s assertion that the Third Circuit has
rejected the Guthrie approach is also suspect. While Third
17. The Sixth Circuit in Shults further stated:
We note, too, that the Cohen requirement is in accord
with the public policies identified in and underlying
Guthrie and subsequent cases....[BJecause the
manageability of class litigation depends, at least in
part, on the absence of numerous individual and
divergent interests, those interests must do more than
merely appear and object in order to have standing to
appeal.
35 F.3d at 1060.
22
Circuit case law suggests a Third Circuit panel might well rule
contrary to Guthrie in the context of a class action, no Third
Circuit panel has squarely done so.
In Carlough v. Amchem Products, Inc., 5 F.3d 707 (3d Cir.
1993), several class members moved to intervene following
certification of the class in an asbestos case. The court denied
both intervention as of right under Rule 24(a) and permissive
intervention under Rule 24(b). The proposed intervenors then
took an immediate appeal. The Third Circuit dismissed the
interlocutory appeal on the theory that, under its prior holding in
Ace Heating & Plumbing, Inc. v. Crane, 453 F.2d 30 (3d Cir.
1971), the class members who had been denied intervention
would later have the right to appeal from any settlement in the
case. The Carlough court in dicta, sought to distinguish the
contrary holdings in Croyden, Guthrie and Walker,"*so as to
suggest that an appeal would be available absent intervention.
The Carlough case stands for the proposition that the denial of
intervention cannot be addressed on an interlocutory appeal. The
panel in Carlough seemed to accept, without really analyzing, the
notion that Ace Heating holds that one need not seek to intervene
as a party to obtain rights to appeal a class action settlement, and
did not address whether such a rule makes sense."
Petitioner also relies on Bell Atlantic Corp. v. Bolger, 2 F.3d
1304 (3d Cir. 1993). That case arose out of a shareholder
derivative action, not a class action. The Third Circuit held that an
objector to a shareholder derivative action brought pursuant to
Rule 23.1 had standing to object to a settlement even though he
18. Gottlieb and Shults had not yet been decided.
19. In fact, the Ace Heating opinion did not address the issue of whether
intervention under Rule 24 was required. The word “intervention” appears
nowhere in the Ace Heating opinion, as the issue simply never came up.
23
did not file a motion to intervene in the district court. While
Petitioner suggests that the distinction between a class action and
a derivative action is not a meaningful one in the standing
analysis, the Third Circuit panel in Bell Atlantic clearly
recognized that that is not the case. In a footnote, the court noted
that, “[I]n derivative suits, unlike shareholder class actions,
recoveries belong to the corporation on whose behalf the suit was
brought.” 2 F.3d at 1307, n.4. The plaintiff in a Rule 23 class
action has a personal claim that can be prosecuted outside the
context of the class case. The court in Bell Atlantic pointed out
that at least one rationale offered in support of the intervention
requirement does not apply to derivative cases. Specifically, the
court noted that in a Rule 23(b)(3) class action a shareholder has a
right to opt out of the class and bring his own separate action. /d.
In a derivative action, the named plaintiff acts solely as a
representative for the corporate entity and has no individual stake
or claim that can be pursued independently. The Plaintiff in a
class action has an individual economic stake in the outcome,
because the recovery on a damage claim is paid to the members of
~ the class. In a derivative case, a shareholder who has no monetary
interest in the outcome of the case would have little incentive to
intervene in an on-going lawsuit. Thus, the factors noted in
Guthrie as to Rule 23’s protections of substantive rights have no
application in the context of a derivative case.”
In summary, there is no clear or compelling conflict between
the Circuits as Petitioner suggests. Petitioner concedes that the
Fifth, Eighth, Tenth and Eleventh Circuits all, consistent with
Guthrie, have held that an unnamed class member who has not
intervened in the action lacks standing to appeal an order
20. The Beil Atlantic opinion is also significant in its characterization of
Ace Heating & Plumbing. Unlike Carlough, the court in Bell Atlantic noted
only that “it is suggested” in Ace Heating & Plumbing that an objecting class
member need not intervene to protect the right to appeal. Bell Atlantic, 2 F.3d
at 1309.
24
approving a settlement. Cert. Pet. pp.7,14. Further, the Sixth
Circuit’s approach, as set forth in Shults, is in accord with the
public policies identified in and underlying Guthrie and its
progeny. The Seventh Circuit is at least leaning in the direction of
Guthrie as evidenced by VMS, and because a close reading of the
Asgrow opinion suggests that that Circuit’s view is actually
consistent with Guthrie. Finally, the Ninth Circuit does not
represent a countervailing view, since the issue of intervention in
the same context as the instant action has not been raised or
decided. At most, it may be said that the Third Circuit appears to
be leaning in a direction contrary to Guthrie.
Il.
THE APPLICATION OF THE RULE OF GUTHRIE
DID NOT DEPRIVE PETITIONER OF DUE PROCESS.
Petitioner has not been denied due process by virtue of the
Eleventh Circuit’s application of Guthrie. Petitioner was given
proper notice pursuant to the mandate of Rule 23. He never
objected to the Notice in the district court.”" Rule 23(e) does not
require that class members be informed of every procedural step
necessary to preserve an appeal. Petitioner’s argument to the
contrary has been specifically rejected. See Gottlieb v. Wiles, 11
F.3d at 1013:
[Objectors] further argue that the notice of the
21. Because this issue was not timely raised by Petitioner below, it is
questionable whether the issue can properly be raised before this Court.
Insurance Company of North America v. Dynamic Construction Co., 1995 U.S.
- App. Lexis 525 (6th Cir. 1995) (Where appellant did not raise issue until
motion for reconsideration, issue was raised too late to be preserved for
appeal.); Midway Finance Corp. v. Walters, 1992 U.S. App. Lexis 32229 (9th
Cir. 1992) (same with respect to issue first raised in a motion made after the
entry of the district court's final judgment).
inate
25
settlement was constitutionally deficient
because it failed to inform the class members
of the need to intervene in order to preserve
their right to appeal from the approval of the
settlement .... Rule 23(e) requires only
notice of the proposed dismissal or
compromise, not a tutorial on the Rules of
Civil Procedure.
Moreover, Petitioner’s citations in support of the general
principal that a party affected by a final order has standing to
appeal such order are inapposite to this action.” Petitioner
acknowledges that there is an exception to the general rule that a
judgment or decree among parties to a lawsuit resolves issues
among them, but does not conclude the rights of strangers to those
proceedings, where “the non-party is otherwise adequately
represented.” Cert. Pet. p.19. Among the specific exceptions set
forth by this Court in Martin v. Wilks, 490 U.S. 755, 762 n.2
(1989) are “class” or “representative” suits. Jd. (citing
Hansberry v. Lee, 311 U.S. 32, 41-42 (1940)).
There is a very good reason why class actions are exempt
from the general rule. It is because the Federal Rules of Civil
Procedure impose procedural regulations on the class action not
applicable to any other. The mechanics of Rule 23 assure that
class members are afforded minimal due process. If aclass action
is maintained under subsection (b)(3), minimum due process is
guaranteed through the requirements of subsection (c)(2). The
class is entitled to notice, as well as the right to opt out of the
litigation and not be bound by the class judgment. If class
22. In fact, the court in Concorde Resources, Inc. v. Woosley (In re:
Woosley), 855 F.2d 687 (10th Cir. 1988), relied upon by Petitioner, specifically
noted that, “a ‘non-party does not have standing to appeal in the absence of
most extraordinary circumstances.’ ” /d. at 687 (citations omitted).
26
members decide to stay in, the Court must still determine whether
they would be adequately represented under Rule 23(a)(4). See
Fed. R. Civ. P. 23, Notes of Advisory Committee, 1966
Amendment (“This mandatory notice pursuant to subdivision
(c)(2), together with any discretionary notice which the court
may find it advisable to give under subdivision (d)(2) is designed
to fulfill requirements of due process ....”). Because of the
various procedural safeguards built into Rule 23(b)(3), as well as
the collateral proceedings available to an unnamed class member,
as set forth in Guthrie, 815 F.2d at 628, requiring a class member,
especially one who is represented by counsel, to take the
relatively easy step of intervening in an action does not, as
Petitioner suggests, “severely impair the due process rights of
unnamed class members.” Cert. Pet. p.19.
Petitioner is incorrect in his assertion that “only through an
appeal and a substantive review of the district court’s decision
can an appellate court determine whether an unnamed Rule
23(b)(3) . . . class member has become a stranger vis-a-vis the
settlement.” Jd. That determination is neither available to
Petitioner nor appropriate here. Petitioner had his interests
“adequately represented by someone with the same interests who
is a party,” in this class action. Martin v. Wilks, 490 U.S. at 762
n.2. Petitioner never complained of inadequate representation.
Where, as here, the unnamed class member never bothered
to intervene, never objected to the notice in the district court, and
only became involved in the action at the “eleventh hour,”” and
where the record indicates the district court judge’s familiarity
23. As the district court stated to Petitioner's Counsel at the Settlement
Hearing:
Where were you, representing your client, in all of
those prior hearings when this record was being made?
R13-46.
eee a ee
27
with the litigation, such second guessing of the district court’s
determination would simply vitiate the court’s role in class
litigation and render the representative framework of Rule 23
meaningless. Petitioner was afforded full due process.
CONCLUSION
Petitioner has not demonstrated any true split among the
Circuits. Petitioner simply failed to follow clear Eleventh Circuit
precedent that required him to intervene in order to establish the
right to prolong this litigation through appeals. For the reasons
stated above, this Court should deny the Petition for Writ of
Certiorari.
Respectfully submitted,
C. OLIVER BURT, III
Counsel of Record
MICHAEL J. PUCILLO
WENDY H. ZOBERMAN
BURT & PUCILLO
Attorneys for Respondents
222 Lakeview Avenue
Esperante Suite 300
West Palm Beach, Florida 33401
(407) 835-9400
la
APPENDIX A — PLAINTIFFS’ REPLY MEMORANDUM
IN THE UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
MIAMI DIVISION
IN RE: SOUTHEAST BANKING CORP. MASTER FILE
SECURITIES LITIGATION CIVILACTION NO.
90-0760-CIV-MOORE
THIS DOCUMENT RELATES
TOALLACTIONS JURY TRIAL DEMANDED
PLAINTIFFS’ REPLY MEMORANDUM IN SUPPORT
OF PLAINTIFFS’ COUNSELS’ JOINT
PETITION FOR AN AWARD OF ATTORNEYS’ FEES AND
REIMBURSEMENT OF EXPENSES
Michael J. Pucillo Jules Brody
Wendy H. Zoberman Mark Levine
CHIMICLES, BURT & STULL, STULL & BRODY
JACOBSEN 6 East 45th Street
Esperanté, Suite 960 New York, New York 10017
22 Lakeview Avenue (212) 687-7230
West Palm Beach, FL 33401
(407) 835-9400
C. Oliver Burt, III Joseph H. Weiss
CHIMICLES, BURT & LAW OFFICE OF JOSEPH H.
JACOBSEN WEISS
One Haverford Centre 319 Sth Avenue
361 W. Lancaster Avenue New York, New York 10016
Haverford, PA 19041 (212) 532-4171
(215) 642-8500
PLAINTIFFS’ LEAD COUNSEL
2a
Appendix A
PRELIMINARY STATEMENT
William A. Brandt, Jr., as Administrator of the Investment
Plus Plan (the “Plan”), of Southeast Banking Corp. (“Southeast”)
has filed a Memorandum of Law (“Brandt Mem.”) in Opposition
to Plaintiffs’ Counsel’s Joint Petition for an Award of Attorneys’
Fees and Reimbursement of Expenses (“Joint Petition”).' Mr.
Brandt’s opposition, in essence, advocates ignoring the mandate
of the Eleventh Circuit as set forth in Camden I Condominium
Association, Inc. v. Dunkle, 946 F.2d 768 (11th Cir. 1991)
(“Camden I’), and instead returning to the “lodestar” method of
calculating attorneys’ fees as set forth in Lindy Brothers Builders,
Inc. v. American Radiator and Standard Sanitary Corp., 487 F.2d
161 (3d Cir. 1974), appeal following remand, 540 F.2d 102 (3d
Cir. 1976).
Mr. Brandt’s Memorandum contains a number of
misstatements of fact and is supported solely by inapplicable
authority.2, Moreover, this Court should note that the
1. Although the Certificate of Service on Brandt’ s opposition Memorandum
states that it was served by “regular mail” on October 31, 1993, October 31, 1993
was a Sunday and, as indicated by the envelope in which the opposition
Memorandum was received (a copy of which is attached hereto as Exhibit “1"’), the
opposition Memorandum was postmarked on November 1, 1993. Thus, this Reply
would have been due on November 11, 1993. Because November 11 is a “legal
holiday” as defined in Rule 6, Fed. R. Civ. P., this Reply is being filed on Friday,
November 12, 1993.
2. Before the Court attaches any credibility to the representations of Mr.
Brandt's counsel herein, J. Joseph Bainton, Esquire, the Court should review the
Second Circuit opinion in Warner Brothers, Inc. v. Dae Rim Trading, Inc.,877 F.2d
1120, 1128 (2d Cir. 1989) in which Mr. Bainton, consistent with his conduct in this
Court, was sanctioned for vexatious litigation and demonstrated his view of
(Cont'd)
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3a
Appendix A
“Administrator” is also the “Trustee in Bankruptcy” for
Southeast and has filed a number of actions which seek to recover
from the same sources of funds that will fund the settlement
herein. Mr. Brandt has been unsuccessful to date, however, in his
efforts to litigate against the former officers and directors of
Southeast, and based upon his own predictions as to the value of
Southeast’s Estate, there is little chance that Southeast
shareholders will derive any benefit at all from the activities of
the Trustee. Notwithstanding this, special counsel for the Trustee,
Mr. Bainton and his former law firm have been paid enormous
fees by the bankrupt Estate and appear to be seeking an avenue to
justify additional awards through this collateral and unjustified
attack on Plaintiffs’ counsel herein.’
Given the complete lack of legal authority to support Mr.
Brandt’s position, as well as the suspect motives of Mr. Brandt
and his counsel, this Court should give short shrift to the
litigation as akin to a sport. (“In this Court, as well as in the district court, attorney
Bainton has demonstrated a blatant disregard of the rules and regulations which
permit the judicial machinery to function smoothly. An obligation is imposed on
this Court to exercise its disciplinary powers to deter such happenings in the
future.”)
3. Originally, J. Joseph Bainton, Esquire and the law firm of Whitman &
Ransom were retained by the Trustee and approved by the bankruptcy court as
special counsel to the Trustee to investigate and prosecute the Trustee’s claims
against former officers and directors of Southeast and against former attorneys and
accountants of Southeast. Effective February 1, 1993, Whitman & Ransom
determined that they could no longer represent both the Trustee and the FDIC. As a
result, Mr. Bainton withdrew from Whitman & Ransom and joined Ross & Hardies
which has been substituted as special counsel in place of Whitman & Ransom. See
Whitman & Ransom’s Application for Final Compensation and Reimbursement of
Expenses, attached to the Joint Petition as Exhibit “L,” pp. 2, 6,7. Mr. Bainton and
Ross & Hardies are representing the Trustee/Administrator in his opposition to
Plaintiffs’ counsel’ s fees herein.
4a
Appendix A
objection. Plaintiffs’ counsel submit, as set forth in the Joint
Petition, that an award of counsel fees representing 25% of the
settlement fund is reasonable under the controlling authority of
this Circuit and should be approved.
I. IT IS UNCLEAK WHETHER BRANDT HAS
STANDING TO OBJECT TO THE SETTLEMENT
An objector to any portion of a class action settlement has the
burden of establishing that he has standing to object. Jn Re:
School Asbestos Litig., 921 F.2d 1330, 1332 (3d Cir. 1990), cert.
denied, __ U.S. __, 111 S.Ct. 1622 (1991). Brandt in his capacity
as bankruptcy Trustee, apparently also acts as co-administrator of
the Plan. It is unclear, however, whether the Plan is a member of
the Class. If the Plan is not a member of the Class, there is no
standing to object.
After Class counsel received Brandt’s opposition to their fee
petition, they sent a facsimile to counsel for the Trustee of the
Plan seeking Plan documents that would disclose the scope of the
Administrator’s authority and the process through which stock
was purchased by the Plan and allocated to its participants. (See
Letter from Michael J. Pucillo to Sharon Dixon Dated November
9, 1993, a copy of which is attached hereto as Exhibit “2.”) This
information would presumably shed some light on how Plan
shares were purchased, who has authority to act for the Plan, and
whether Brandt has standing to object to the settlement. To date,
Class counsel has not received any documents from the Plan
Trustee.
Without reviewing the Plan documents, it is impossible to
determine whether Brandt, as Plan Administrator (as opposed to
the Plan trustee), has independent authority to object on behalf of
the Plan. See In Re: American Continental Corp./Lincoln Savings
Sa
Appendix A
and Loan Sec. Litig., [Current Transfer Binder] Fed.Sec.L.Rep.
(CCH) 497,656 at 97,039 n.1 (D. Ariz. June 2, 1993) (where
ESOP Administrator objected to the scope of the class period,
Court specifically pointed out that the ESOP Plan Trustee
supported and joined the Administrator’s position).‘
If the Plan did not purchase Southeast stock on the open
market, or the Plan did not purchase Southeast stock during the
Class Period, the Trustee has no standing.’ See, e.g., American
Continental, (Current Transfer Binder] Fed. Sec. L. Rep. at
97,039-40 (ESOP is part of class only if stock was “actually
purchased” by the ESOP (as opposed to merely allocated to its
participants) during the Class Period). Because Brandt has not
established that the Plan is a member of the Class, he does not
have standing to object to any portion of the settlement, including
Plaintiffs’ attorneys’ fees. Brandt has not met his burden of
establishing that he has authority to represent the Plan or that the
~ Plan is amember of the Class.
Il. MR. BRANDT CANNOT REPRESENT THE CLASS
DUE TO HIS CONFLICTING LOYALTIES
Brandt, the sole objector to any part of the Class settlement,
wears multiple hats as both Trustee of the Chapter 7 Estate of
Southeast and Administrator of the Plan. Brandt cannot be
permitted to switch hats whenever he chooses to pursue
4. Significantly, the Plan Trustee, First Union National Bank of Florida,
N.A., joined Brandt’s Emergency Motion for an Order Adjourning the Hearing
Date, but has not joined Brandt’s objection to Class counsel's fee petition. Thus,
because Brandt has failed to establish that the Plan Administrator (in contrast to the
Pian Trustee) has the requisite authority to object on behalf of the Plan, Brandt lacks
standing to object.
5. Todate, the Plan has not filed a proof of claim.
6a
Appendix A
conflicting and competing interest. Because lawsuits initiated by
Brandt as Trustee seek damages against the same defendants as
this action by the Class, and seek to recover from the same limited
insurance funds available to defendants to pay damages, Brandt’s
true interests are in conflict with those of the Class.
This conflict becomes clear when Brandt’s motion to
intervene is compared to his objection. On or about October 15,
1993, Brandt, wearing his bankruptcy Trustee hat, filed a motion
to intervene attacking the settlement, not because it was harmful
to the Class, but because Brandt perceived it potentially could
impair his ability as Trustee to recover damages in competing
suits against the defendants. Thus, Brandt was effectively
attacking the settlement because it provided relief to the Class
potentially at his expense. Now, Brandt has conveniently
switched to his Administrator hat on objecting to attorneys’ fees
— and indirectly to the settlement — as a Class member. In a 180
degree turnaround, Brandt, as Administrator, now questions,
inter alia, whether the $5 million settlement amount is
sufficiently beneficial to the Class to warrant the awarding of the
attorneys’ fee requested by Class Counsel. (Brandt Mem. at 7.)
An objection raised by a class member with a conflict of
interest similar to Brandt’s was significantly discounted by the
Court in Podesta v. Pay Television Corp., No. 80 Civ. 2819
(WCC) (S.D.N.Y. Jan. 19, 1981) (a copy of Podesta is attached
hereto as Exhibit “3”). In Podesta, a derivative action, the only
shareholder to object to the settlement was also a “major creditor”
of the corporate plaintiff. In considering the objection as part of
the analysis of the “reaction of class members,” the Court stated:
Needless to say, where, as here, the sole
6. Plaintiff expresses no opinion on the validity of Brandt's contention that
the Class settleinent may impair his claims as Trustee against the defendants.
7a
Appendix A
objectors to a settlement appear to be
motivated by concerns extraneous and even
inimical to the legitimate interests of the
class, the reaction of class members must be
regarded as evidencing the fairness,
reasonableness and adequacy of the
settlement.
Id. (emphasis added).
- The Podesta Court recognized that an objection by one
whose interests conflict with those of the Class must be
discounted, notwithstanding the objector’s status as a Class
member. Like the objection in Podesta, Brandt’s objection must
be viewed in light of the objector’s internal conflict of interest.
The efforts of Mr. Brandt as Trustee and his counsel Mr.
~ Bainton have, so far, been unsuccessful with respect to their
claims against the former officers and directors of Southeast.
Originally, Mr. Brandt filed an action on June 16, 1992 against
various former officers and directors of Southeast and on
September 4, 1992 the FDIC sought to intervene in that action.
Mr. Brandt took the position that the claims in his complaint were
claims by Southeast against its own officers and directors which
belonged to the Trustee and not to the FDIC. On April 29, 1993
Magistrate Judge Linnea R. Johnson recommended dismissal of
Mr. Brandt’s claims noting:
Plaintiff/Trustee’s argument that the holding
company is a special stockholder not subject
to FIRREA is without basis in law. There is
not a single bit of authority to support
Plaintiff/Trustee’s position.
8a
Appendix A
See Omnibus Report and Recommendation attached hereto as
Exhibit “4,” p. 10. Subsequently, Judge Aronovitz in large part
adopted, ratified and confirmed Magistrate Johnson’s
recommendation, dismissing all of Brandt’s claims which were
derivative and turned on acts taken by, and injury to Southeast,
with one small exception. The Court stated:
[A]s the parties have described it, a ‘sliver’ of
Trustee’s complaint remains viable. The
‘sliver’ that remains consists of Trustee’s
claims in connection with the acquisitions of
the two thrift institutions, actions that, at least
facially, occurred at the holding company
level.
See Omnibus Order dated July 12, 1993, attached hereto as
Exhibit “5,” p. 8. Apparently, this “sliver” was enough to
~ encourage Mr. Bainton and his former law firm to seek, and
obtain, $580,370 for services rendered from May 1, 1992 through
January 31, 1993.’ Thereafter, notwithstanding Judge Aronovitz’
Order, the Trustee subsequently filed an action against former
officers and directors of Southeast derivatively and on behalf of
the FDIC in its capacity as Receiver of Southeast Bank, N.A. and
Southeast Bank of West Florida as well as separate actions
against, inter alia, the former outside accountants of Southeast.
7. Mr. Bainton’s former law firm, Whitman & Ransom actually requested
fees of $586,478.50 for that time period, with Mr. Bainton logging 127.10 hours ata
rate of $310 an hour, and represented to the Bankruptcy Court in their fee petition
that “although certain claims alleged against the former officers and directors have
been dismissed as derivative of [Southeast Bank, N.A.’s], highly significant claims
alleged have been held by Judge Aronovitz to belong to the Trustee.” See Final Fee
Application, p. 19.
9a
Appendix A
In the instant case Plaintiffs’ counsel have fought the
Defendants for three-and-one-half years, and produces $5
million for the class. In notable contrast Mr. Brandt and his
special counsel have filed four lawsuits, none of which has
produced anything for Southeast’s shareholders. Brandt and
Bainton, his counsel have however been paid handsomely for
their efforts. The Miami Herald reported on September 19, 1993
that “Southeast shareholders still have a long way to go before
receiving any cash. The Trustee estimates the Estate will have
about $100 million cash. There are $425 million in claims that
must be paid before shareholders receive a dime.” The true
motivation behind the objection lodged herein is to justify
additional fees to Mr. Brandt and his counsel.®
Ill. THE OBJECTIONS OF MR. BRANDT AND HIS
COUNSELARE BASED UPON INAPPLICABLE LAW
’A. BRANDT AND HIS COUNSEL IGNORE THE
MANDATE OF THE ELEVENTH CIRCUIT AND
ADVOCATE A_ LODESTAR ANALYSIS’ OF
ATTORNEYS’ FEES IN THIS COMMON FUND CASE
The various misstatements of law set forth by Mr. Brandt and
his counsel Mr. Bainton in their opposition Memorandum reflect,
at best, a basic misunderstanding of (1) the differences between
common fund fee awards and statutory fee awards, and (2) the
Eleventh Circuit’s rejection of the lodestar approach and
acceptance of the percentage of fund approach for the
determination of attorneys’ fees in common fund cases. At worst,
8. Apparently, this is not the first time Mr. Brandt has shown poor judgment
in over-litigating claims. See Brandt v. Schal Associates, Inc., 960 F.2d 640, 642
(7th Cir. 1992) (“This case is an unfortunate example of why ‘litigation’ has taken
ona bad name.”).
10a
Appendix A
they represent a knowing and deliberate attempt to mislead this
Court as to the applicable standards for awarding attorneys’ fees
in this Circuit.
The Eleventh Circuit in Camden I held that “henceforth in
this Circuit, attorneys’ fees awarded from a common fund shall
be based upon a reasonable percentage of the fund established for
the benefit of the Class.” 946 F.2d at 774. In making this holding,
the Court relied heavily on Court Awarded Attorneys’ Fees,
Report of the Third Circuit Task Force, October 8, 1985, (Arthur
R. Miller, Reporter), 108 F.R.D. 237 (1985) (the “Task Force
Report”). The Task Force Report found that:
The Lindy lodestar approach, or for that
matter any method premised upon the number
of hours expended, failed to achieve any of
the stated goals in common fund cases in
which the measure of the recovery is the best
determinant of the reasonableness and quality
of the time expended.
Camden I, 946 F.2d at 773.° The Camden I Court also relied on the
Supreme Court decision in Blum v. Stenson, 465 U.S. 886 (1984)
where the Court stated:
Unlike the calculation of attorneys’ fees
under the ‘common fund doctrine’ where a
reasonable fee is based upon a percentage of
the fund bestowed on the class, a reasonable
fee under §1988 reflects the amount of
attorney time reasonably expended on the
litigation.
9. The Task Force concluded that the Lindy method was a “cumbersome,
enervating, and often surrealistic process of preparing and evaluating fee petitions
that now plagues the Bench and Bar. . .” 108 F.R.D. at 258.
lla
Appendix A
465 U.S. at 900 n. 16. After quoting Blum, the Eleventh Circuit
went on to note:
The Supreme Court’s assertion in Blum is not
surprising in light of the criticism
commentators and lawmakers have leveled
against the lodestar and twelve factor
methods in common fund cases, and more
particularly, against the emphasis placed by
such fee computation methods on the number
of hours expended.
946 F.2d at 773.
The underlying rationale established by the Task Force
Report, the Supreme Court’s opinion in Blum and the Eleventh
Circuit’s opinion in Camden 1 is to reject the same burdensome
focus on counsel’s time characteristic of the lodestar approach
that Brandt seeks to engage in here."° The question is not whether
counsel’s lodestar in a given case is reasonable, but whether the
percentage of the fund requested as attorneys’ fees is
10. Seealso Swedish Hospital Corp. v. Shalala, 1 F.3d 1261, 1269 (D.C. Cir.
1993):
Additionally, a percentage of the fund approach is less
demanding of scarce judicial resources than the
lodestar method. The lodestar method makes
considerable demands upon judicial resources since it
can be exceptionally difficult for a court to review
attorney billing information over the life of a complex
litigation and make a determination about whether the
time devoted to the litigation was necessary or
reasonable. ... It is much easier to calculate a
percentage of the fund fee than to review hourly billing
practices over a long, complex litigation.
12a
Appendix A
reasonable." Thus, Mr. Brandt’s and Mr. Bainton’s argument that
Plaintiffs’ counsel must submit “proof that the number of hours
spent on this matter was reasonable” (Brandt Mem., p. 8)
represents a return to the very quagmire of analyzing time records
that Camden rejected.
Virtually all of the cases relied upon by Brandt and his
counsel to support their proposition are statutory fee cases where
the lodestar method was used to calculate attorneys’ fees. These
cases have no application to this action. See Hensley v. Eckerhart,
461 U.S. 424, 433 (1983) (“the standards set forth in this opinion
are generally applicable in all cases in which Congress has
authorized an award of fees to a ‘prevailing party.’ ”); Ramos v.
Lamm, 713 F.2d 546, 551 (10th Cir. 1983) (determining fees
submitted by the plaintiffs pursuant to the Civil Rights Attorneys’
Fees Awards Act, 42 U.S.C. §1988 and setting forth “standards
for district courts to follow in this and similar cases.”); Norman v.
Housing Authority of the City of Montgomery, 836 F.2d 1292
(11th Cir. 1988)"; United Slate, Tile & Composition v. G&M
Roofing & Sheet Metal Co., 732 F.2d 495 (6th Cir. 1984) (award
of statutory attorneys’ fees under Fair Labor Standards Act);
Cantor v. Detroit Edison Company, 86 F.R.D. 752 (E.D. Mich.
1980) (determination of attorneys’ fees in Clayton Act Antitrust
case based on lodestar analysis — “number of attorneys’ hours
spent multiplied by reasonable hourly rate.”); Gutierrez v. City of
11. Mr. Brandt and Mr. Bainton fail to note that the Camden Court, in an
apparent attempt to avoid the kind of backsliding into the lodestar approach
advocated in their opposition Memorandum, specifically held out 25% of the fund
as a reasonable “benchmark” “which may be adjusted in accordance with the
individual circumstances of each case, as opposed to the lodestar hourly fee used in
statutory fee awards.” 946 F.2d at 775.
12. In Norman, the Eleventh Circuit “refined its analysis for determining
statutory fee awards” in favor of the lodestar approach. Camden I, 946 F.2d at 772.
13a
Appendix A
Hialeah, 729 F.Supp. 1329 (S.D. Fla. 1990) (a Rule 11 case, nota
common fund); Dorfman v. First Boston Corp., 70 F.R.D. 366
(E.D. Pa. 1976) (attorneys’ fees determined under the Lindy
lodestar approach). Mr. Brandt simply cannot rely on statutory
fee cases to argue fee criteria under acommon fund.
Further, in a misrepresentation of Brown v. Phillips
Petroleum Co., 838 F.2d 451, 454 (10th Cir. 1988) cert. denied,
488 U.S. 822, 109 S.Ct. 66 (1988), Mr. Brandt and Mr. Bainton
assert that the Brown opinion stands for the proposition that
“attorneys’ hours reasonably billed and hourly rate “ ‘measure
the attorneys’ contributions, [and] are . . . appropriate in setting
and reviewing percentage fee awards in common fund cases.’ ”
Brandt Mem. at 8. That is not true. What the Tenth Circuit
actually held in Brown was, “Because these factors [set forth in
Johnson v. Georgia Highway Express, Inc., 488 F.2d. 714 (Sth Cir.
1974)] measure the attorneys’ contributions, they are also
appropriate in setting and reviewing percentage fee awards in
common fund cases.” 838 F.2d at 454. Not one of the Johnson
factors is “attorneys’ hours reasonably billed and hourly rate.”"
13. The Johnson factors are:
(1) the time and labor involved; (2) the novelty and
difficulty of the questions; (3) the skill requisite to
perform the legal service properly; (4) the preclusion
of other employment by the attorney due to acceptance
of the case; (5) the customary fee; (5) any prearranged
fee — this is helpful but not determinative; (7) time
limitations imposed by the client or the circumstances;
(8) the amount involved and the results obtained; (9)
the experience, reputation and ability of the attorneys;
(10) the undesirability of the case; (11) the nature and
length of the professional relationship with the client;
and (12) awards in similar cases. 488 F.2d at 717-19.
—
14a
Appendix A
More importantly, Mr. Brandt and Mr. Bainton fail to reveal that
the Court in Brown went on to specifically state:
Although the Johnson factors are relevant in
determining a reasonable fee in a common
fund case, the inherent differences between
statutory fee and common fund cases could
justify a trial judge’s decision to assign
different relative weights to those factors in
the two types of cases. For example, the first
factor — time and labor required — is an
essential touchstone for recovery in a
statutory fee case where reasonableness is
measured in part by reference to the lodestar
analysis. In a common fund case, however,
although time and labor required are
appropriate considerations, the ninth Johnson
factor — the amount involved and the results
obtained — may be given greater weight
when, as in this case, the trial judge
determines that the recovery was highly
contingent and that the efforts of counsel
were instrumental in realizing recovery on
behalf of the class . . . we hold here only that
in awarding attorneys’ fees in a common fund
case, the ‘time and labor involved’ factor
need not be evaluated using the lodestar ;
formulation when, in the judgment of the trial
court, a reasonable fee is derived by giving
greater whether to other factors, the basis of
which is clearly reflected in the record.
838 F.2d at 456.
15a
Appendix A
Thus, because they rely on inapplicable and irrelevant
authority, Mr. Brand and Mr. Bainton make the completely
erroneous assertion that, in a common fund case in which fees
must be computed on the percentage of the fund method, “parties
must be specific as to the reasonableness or unreasonableness of
the time worked and it is imperative that the attorney seeking an
award of fees submit evidence, preferably in the form of
contemporaneous time records, which set forth in detail the tasks
allegedly performed and the time devoted to those tasks.” Brandt
Mem. at 10." Tellingly, Mr. Brandt and Mr. Bainton cite no
relevant authority where this phantom requirement was imposed.
By contrast, in Ressler v. Jacobsen, [1992-93 Transfer
Binder] Fed. Sec. L. Rep. (CCH) $97,224 (M.D. Fla. 1992), a
post-Camden common fund case in which the Court applied the
percentage of the fund method, the Court, while taking note of the
“time and labor required,” did not engage the type of audit of
plaintiffs’ counsel’s hours which Mr. Brandt and Mr. Bainton
would have this Court do. Rather, the Ressler Court compared the
percentage of the fund requested by counsel to the percentages
“customarily found in standard contingency fee arrangements or
14. This is not the first time that Mr. Bainton has applied erroneous law to a
completely distinct legal doctrine. See Warner Brothers, Inc. v. Dae Rim Trading,
Inc.,677 F.Supp. 740, 760(S.D.N.Y. 1988) aff'd in part and rev'd in part, appeal
dismissed, 877 F.2d 1120 (2d Cir. 1989) (“the [plaintiff s, who was represented by
Mr. Bainton] application of trademark concepts in a copyright case was an error of
law. There is a great difference between the objective of trademark projection and
the objective of copyright protection. The two legal doctrines are distinct, different
and separate.”). Similarly, the Court in Camden I acknowledged “the great
distinctions between the policies and rationale supporting common fund fee awards
versus statutory fee awards” that led to the Third Circuit commissioning the Task
Force Report. 946 F.2d at 773.
16a
Appendix A
awarded in class actions.” 97,224 at 94,967.'° That is the proper
analysis which should be taken by this Court. Clearly, the
adoption of the percentage of the fund approach is an effort to
avoid the court having to undertake the tedious task of auditing
detailed time records submitted by counsel. As one court has
noted:
A related weakness in the lodestar approach is
that it often results in a substantial delay in
distribution of the common fund to the class.
The lodestar procedure requires detailed
involvement by the District Court, evaluating
the reasonableness of expenditure of attorney
time and effort, and making comparative
inquiries on reasonable rates for those
services. Given the complexity of many class
action lawsuits, combined with the degree of
detailed review required and considering the
heavy workload of most district court judges,
lodestar calculation is likely to cause
significant delay between the creation of a
common fund and remuneration of class
counsel. In contrast, the application of a
percentage of the fund methodology is
relatively straightforward and much less time
consuming.
15. Indeed, the Ressler Court specifically noted, “Under the ‘lodestar’
analysis, which is not the rule applied in this Circuit but which is still used in some
circuits, the fee requested would be a 1.16 multiple of the lodestar. Such an award is
extremely reasonable as courts in common fund cases regularly award multiples of
2 to 3 times lodestar in attorneys’ fees to reflect the quality of the work performed
and the risks undertaken.”/d. (Emphasis in original). In this case, the fee requested
would be approximately a 1.28 multiple of the lodestar.
17a
Appendix A
Swedish Hospital Corp. v. Shalala, 1 F.3d 1261, 1270 (D.C. Cir.
1993).
Indeed, the adoption of the percentage of the fund approach
alleviates the need for the Court to engage in a detailed analysis of
counsel’s time because:
In the common fund case, if a percentage of
the fund calculation controls, inefficiently
expended hours only serve to reduce the per
hour compensation of the attorney expending
them.
Id. at 1269. This concept seems to elude Mr. Brandt and Mr..
Bainton. The inescapable conclusion is that the detailed analysis
of Plaintiffs’ counsel’s time which Mr. Brandt and Mr. Bainton
advocate has no place in these proceedings.
Further, although Brandt and his counsel have not directly
objected to the settlement amount, they obliquely complain that
Plaintiffs’ counsel have not produced “evidence” to allow the
Court to evaluate the “value” of the settlement and would have
this Court disregard the settlement amount. Brandt Mem. at 8.
Mr. Brandt and his counsel ignore the 13 pages of Plaintiffs’
memorandum in support of the proposed settlement, which
delineate and discuss each of the criteria for evaluating the
fairness of the settlement as set forth in the Eleventh Circuit’s
opinion in Bennett v. Behring Corp., 737 F.2d 982 (11th Cir.
1984).'* In their Memorandum Plaintiffs further discuss, inter
16. Notwithstanding Mr. Brandt and Mr. Bainton’s representations to the
contrary, Plaintiffs’ counsel most certainly have presented facts establishing the
adequacy of the proposed settlement which include the fact that, “although the total
market losses of members of the Class likely exceed $100 million, Plaintiffs’
(Cont'd )
18a
Appendix A
alia: the vigorous litigation of this action for the past three years;
the fact that Magistrate Johnson has already recommended
dismissal of the Third Consolidated and Amended Complaint; the
insolvency of Southeast and the seizure of its primary banking
subsidiary; the various competing claims — including those
asserted by Mr. Brandt — in excess of the amount of available
directors’ and officers’ liability insurance; and the fact that, if any
or all of these-competing actions were to conclude before
Plaintiffs in this action achieve success at trial, there is a
substantial risk that the available directors’ and officers’ liability
insurance could be depleted. Contrary to Brandt’s assertions,
therefore, Plaintiffs’ Memorandum in Support of the Proposed
Settlement contains an exhaustive analysis of why this
settlement, in light of all of the attendant circumstances, is a good
settlement.
Moreover, Mr. Brandt and Mr. Bainton once again ignore
~ controlling precedent:
{I]n evaluating the terms of the compromise
in relation to the likely benefits of a
successful trial, the trial judge ought not try
the case in the settlement hearings. . .
... The trial court should not make a
proponent of 2 proposed settlement ‘justify
each term of the settlement against a
hypothetical or speculative measure of what
concessions might have been gained;
(Cont'd )
counsel has concluded, based upon data evaluated by their financial expert, that the
provable damages may be no more than $26 million, assuming Plaintiffs establish
the Defendants’ liability.” Plaintiffs’ Memorandum in Support of the Proposed
Class Action Settlement at pp. 15-16, 21-22.
19a
Appendix A
inherent in compromise is a yielding of
absolutes and an abandoning of highest
hopes.”
Cotton v. Hinton, 559 F.2d 1326, 1330 (Sth Cir. 1977).'’ The
Court may not substitute its judgment for that of the parties who
negotiated the settlement. Jd.; Behrens v. Wometco Enterprises,
Inc., 118 F.R.D. 534, 539 (S.D. Fla. 1988), aff’d, 899 F.2d 21
(11th Cir. 1990). Rather, in determining whether final approval
should be granted, the Court must determine whether the
proposed settlement falls within the “range of possible recovery.”
Behrens, 118 F.R.D. at 539.
Mr. Brandt and Mr. Bainton also seem to think that this Court
can decide “what weight, if any, to give to the terms of this
settlement in determining a reasonable fee” (Brandt Mem. at 6)
based solely upon Detroit v. Grinnell Corp., 560 F.2d 1093 (2d
~ Cir. 1977), a pre-Camden I case which strictly applied the Lindy
lodestar approach. Actually, inherent in the percentage of the
fund approach is the fact that the most important factor is the size
of the recovery. Mr. Brandt and Mr. Bainton cannot advocate in
good faith, under Camden I, thai this Court can ignore the size of
the settlement in determining a percentage of the fund. It is
axiomatic that, if attorneys’ fees in common fund cases must be
determined as a percentage of the fund, the amount of the fund
must be taken into account. See Camden I, 946 F.2d at 744.
(“[M]onetary results achieved predominate over all other
criteria.”) See also Brown 838 F.2d at 456 (“a decisive factor in
this common fund class action case is the amount involved and
the results obtained.”); Swedish, 1 F.3d at 1269 (“In the common
17. Decisions of the United States Court of Appeals for the Fifth Circuit
rendered prior to October 1, 1981 are binding as precedent in the Eleventh Circuit.
Bonner v. City of Prichard, 661 F.2d 1206, 1209 (1 1th Cir. 1981).
20a
Appendix A
fund case. . . the monetary amount of the victory is often the true
measure of success, and therefore it is most efficient that it
influence the fee award.”)
B. THE PERCENTAGE OF THE FUND REQUESTED BY
PLAINTIFFS’ COUNSEL IS REASONABLE UNDER
CONTROLLING LAW
Contrary to Mr. Brandt and Mr. Bainton’s accusation,
Plaintiffs’ counsel never suggested that the Johnson factors, to
the extent applicable in any given case, are not relevant in
determining a reasonable fee in a common fund case. However,
the Court in Camden I unquestionably did reject the lodestar
approach set forth in Lindy Brothers and Johnson. Thus, while
the Johnson factors are relevant, the relative weights given those
factors will vary when utilized in the percentage.of the fund
approach. See Brown v. Phillips Petroleum, 838 F.2d at 456.
Brandt and his counsel ignore this difference in application and
improperly continue to over-emphasize the “time and labor”
factor, in essence reinstituting the very “lodestar” approach
rejected by Camden I.
Plaintiffs’ counsel satisfy the criteria outlined in Camden I,
and address the Johnson factors applicable to this case including:
the time and labor required; novelty and difficulty of the
questions; the skill requisite to perform the legal services
properly; the preclusion of other employment; the experience,
reputation and ability of the attorneys; and awards in similar
cases, as well as an additional factor noted by the Court in
Camden I — the economics involved in prosecuting a class
action. See Plaintiffs’ Memorandum in Support of Proposed
Settlement, pp. 27-35. Another additional factor set forth by the
Court in Camden I is relevant to evaluating the fee award is “any
substantial objections by class members or other parties to the
2la
Appendix A
settlement terms or the fees requested by counsel.” 946 F.2d at
775. In this regard it should be noted that there have been no
objections to the settlement amount by any bona fide Class
member. Further, Mr. Brandi is the only person who has objected
to Plaintiffs’ counsel’s fee request. This is true notwithstanding the
fact that more than 47,500 notices were mailed to Class members, as
well as nominees and brokers.
As indicated by the Court in Ressler, an important factor in
analyzing a fee request using a post-Camden percentage of the fund
approach is whether the fee requested by petitioners when considered
in terms of a percentage of the fund “is fair and reasonable when
compared to the percentages customarily found in standard
contingency fee arrangements or awarded in class actions.” {97,224
at 94,967.
Although Plaintiffs’ counsel have previously set forth a list of
fee awards in various cases throughout the country well in excess of
the 25% of the common fund requested herein,"* set forth below (and
attached hereto as Exhibits “6” through “11”’) are orders in six recent
18. Mr. Brandt and Mr. Bainton misleadingly contend that Plaintiffs’
counsel are requesting a fee of “over 33.3% of the amount to be received by all of the
Plaintiffs.” Brandt Mem. at 2. This is incorrect. Plaintiffs are requesting 25% of the
common fund obtained for the benefit of the Class. Apparently Mr. Brandt and Mr.
Bainton arrive at the 33.3% figure by subtracting the amount of Plaintiffs’ fee
request from the common fund and then comparing that amount to the remaining
amount of the fund. This is clearly an inappropriate, and highly disingenuous,
analysis under the percentage of the fund approach and Mr. Brandt and Mr. Bainton
can cite no authority in support of their type of analysis. Rather, normal market
conditions should be employed in determining contingent fees. In Re: Continental
Mlinois Securities Litig., 962 F.2d 566, 572 (7th Cir. 1992) (“The object in awarding
areasonable attorneys’ fee. . . is to give the lawyer what he would have gotten in the
way of a fee in an arm’s length negotiation had one been feasible.”). Contingent fees
are typically calculated as a percentage of the gross recovery.
22a
Appendix A
common fund cases, five from this Court and one from the Middle
District of Florida wherein fees equal to or in excess of 25% of the
settlement fund were awarded: In Re: Aero Systems, Inc. Securities
Litigation, Civil Action No. 90-0083-CIV-Paine (S.D. Fla. Oct. 19,
1993) (28% of $1,550,000 settlement); In Re: Royce Laboratories,
Inc. Securities Litigation, Civil Action No. 92-0923-CIV-Moore
(S.D. Fla. Sep. 28, 1993) (30% of settlement fund); CV Reit, Inc. v.
Levy, et al., Civil Action No. 91-8177-CIV-Gonzalez (S.D. Fla. Sep.
24, 1993) (26.9% of $2.45 million settlement); In Re: Perfumania,
Inc. Securities Litigation, Civil Action No. 92-1490-CTV-Marcus
(S.D. Fla. Sep. 22, 1993) (30% of $850,000 settlement); Kaser v.
Swann, Civil Action No. 90-607-CIV-ORL-3A18 (M.D. Fla. April
13, 1993) (30% of net settlement fund after deduction of costs and
expenses); In Re: FPL Group Consolidated Litigation, Civil Action
No. 90-8461-CIV-Nesbitt (S.D. Fla. Feb. 24, 1992) (25% of
settlement fund of $12.5 million).
Plaintiffs submit that, in light of the foregoing, Plaintiffs’
counsels’ request for 25% of the settlement fund is reasonable and
should be approved by this Court.
Dated: November 12, 1993
Respectfully submitted,
CHIMICLES, BURT & JACOBSEN
By: s/Andrew H. Kayton for
MICHAEL J. PUCILLO
Fla. Bar No.: 261033
WENDY H. ZOBERMAN
Fla. Bar No.: 434670
Esperanté, Suite 960
222 Lakeview Avenue
West Palm Beach, FL33401
(407) 835-9400
C. Oliver Burt, III
CHIMICLES, BURT & JACOBSEN
One Haverford Centre
361 W. Lancaster Avenue
Haverford, PA 19041
(215) 642-8500
and
STULL, STULL & BRODY
By: s/Andrew H. Kayton for
Jules Brody
Mark Levine
6 East 45th Street
New York, New York 10017
(212) 687-7230
and
LAW OFFICES OF JOSEPH H. WEISS
By: s/Andrew H. Kayton for
Joseph H. Weiss
319 Sth Avenue
New York, New York 10016
(212) 532-4171
and
24a
Appendix A
WAMPLER, BUCHANAN & BREEN
Atlee W. Wampler, III
900 Sun Bank Building
777 Brickell Avenue
Miami, Florida 33131-2298
and
WOLF POPPER ROSS WOLF
& JONES
Marian Rosner
845 Third Avenue
New York, New York 10022
and
ABBEY & ELLIS
Mark Gardy
212 East 39th Street
New York, New York 10016
Attorneys for Plaintiffs
25a
Appendix A
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the
foregoing has been furnished via facsimile and U.S. Mail to J. Joseph
Bainton, Esq., Ross & Hardies, Park Avenue Tower, 65 East 55th
Street, New York, NY 10022-3219; Lewis F. Murphy, Esquire, Steel
Hector & Davis, 4000 S.E. Financial Center, Miami, Florida 33131,
and Robert T. Wright, Esquire, Mershon, Sawyer, Johnston,
Dunwody and Cole, 4500 Southeast Financial Center, 200 South
Biscayne Boulevard, Miami, FL 33131; and by U.S. Mail to all other
parties on the attached Service List, this 12th day of November, 1993.
s/ Andrew H. Kayton
ANDREWH. KAYTON, ESQUIRE
26a
Appendix A
SERVICE LIST
IN RE: SOUTHEAST BANKING COP.
SECURITIES LITIGATION
Michael J. Pucillo, Esquire Mark C. Gardy, Esquire
Chimicles, Burt & Jacobsen Abbey & Ellis ©
Esperante, Suite 960 212 East 39th Street
222 Lakeview Avenue New York, New York 10016
West Palm Beach, Florida 33401
C. Oliver Burt, III, Esquire Joseph H. Weiss, Esquire
Chimicles, Burt & Jacobsen Law Offices of Joseph H. Weiss
One Haverford Centre 319 Fifth Avenue
361 West Lancaster Avenue New York, New York 10016
Haverford, Pennsylvania 19041
Jules Brody, Esquire Atlee W. Wampler, III, Esquire
Stull, Stull & Brody Wampler, Buchanan & Breen
6 East 45th Street 900 Sun Bank Building
New York, New York 10017 777 Brickell Avenue
Miami, Florida 33101
Marian P. Rosner, Esquire Lewis F. Murphy, Esquire
Laurence D. Paskowitz,Esquire § Steel, Hector & Davis
Wolf Popper Ross Wolf 4000 S.E. Financial Centre
& Jones 200 South Biscayne Boulevard
845 Third Avenue Miami, Florida 33131
New York, New York 10022
Robert T. Wright, Esquire J. Joseph Bainton, Esq.
Mershon, Sawyer, Johnston Ross & Hardies
Dunwody and Cole Park Avenue Tower
4500 Southeast FinancialCenter 65 East 55th Street
200 South Biscayne Boulevard New York, NY 10022-3219
Miami, FL 33131
27a
APPENDIX B — NOTICE OF PENDENCY OF CLASS
ACTION, PROPOSED SETTLEMENT, SETTLEMENT
HEARING, AND RIGHT TO APPEAR AND
NOTICE TO NOMINEES
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
MIAMI DIVISION
MASTER FILE
CIVILACTION NO.
90-0760-CIV-MOORE
IN RE: SOUTHEAST BANKING CORP. SECURITIES
LITIGATION
THIS DOCUMENT RELATES TO ALLACTIONS
NOTICE OF PENDENCY OF CLASS ACTION,
PROPOSED SETTLEMENT, SETTLEMENT
HEARING, AND RIGHT TO APPEAR AND
NOTICE TO NOMINEES
TO: ALL PERSONS WHO PURCHASED OR
OTHERWISE ACQUIRED PUBLICLY TRADED
SECURITIES OF SOUTHEAST BANKING CORP. DURING
THE PERIOD FROM FEBRUARY 27, 1989 THROUGH
AND INCLUDING SEPTEMBER 20, 1991. THE TERM
“SECURITIES” INCLUDES COMMON _ STOCK,
PREFERRED STOCK, CAPITAL NOTES, NOTES,
CONVERTIBLE SUBORDINATED DEBENTURES, NON-
CONVERTIBLE DEBENTURES AND/OR SECURITIZED
ASSET INTERESTS.
PLEASE READ THIS NOTICE CAREFULLY AND IN
ITS ENTIRETY. YOUR RIGHTS WILL BE AFFECTED BY
LEGAL PROCEEDINGS IN THIS LITIGATION. IF YOU
28a
Appendix B
PURCHASED OR ACQUIRED SOUTHEAST SECURITIES
DURING THE PERIOD OF TIME DESCRIBED ABOVE
(THE “CLASS PERIOD”), YOU MAY BE A CLASS
MEMBER, ULTIMATELY ENTITLED TO RECEIVE
BENEFITS PURSUANT TO THE PROPOSED
SETTLEMENT DESCRIBED HEREIN, AND MAY BE
BOUND BY A JUDGMENT RELEASING ANY CLAIMS
THAT YOU MAY HAVE AGAINST THE DEFENDANTS,
FORMER OFFICERS AND DIRECTORS OF SOUTHEAST
AND OTHER RELEASED PARTIES. IF YOU WERE NOT
THE BENEFICIAL OWNER OF SOUTHEAST
SECURITIES AS DESCRIBED ABOVE DURING THE
CLASS PERIOD, PLEASE TRANSMIT THIS DOCUMENT
TO SUCH BENEFICIAL OWNER.
THE SETTLEMENT DESCRIBED IN THIS NOTICE IS
SUBJECT TO COURT APPROVAL. THE COURT HAS NOT
YET FINALLY CONSIDERED THE FAIRNESS OR
ADEQUACY OF THE PROPOSED SETTLEMENT AND
HAS NOT YET DETERMINED THE AMOUNT OF
ATTORNEYS’ FEES AND REIMBURSEMENT OF
EXPENSES TO BE AWARDED TO COUNSEL FOR THE
REPRESENTATIVE CLASS PLAINTIFFS. THIS NOTICE
IS NOT AN EXPRESSION OF ANY FINAL OPINION OF
THE COURT AS TO THE REASONABLENESS OF THE
PROPOSED SETTLEMENT OR ANY APPLICATION FOR
ATTORNEYS’ FEES AND EXPENSES. THE COURT WILL
NOT RULE ON THE PROPOSED SETTLEMENT OR FEE
APPLICATION UNTIL THE HEARING DESCRIBED
BELOW.
IF YOU PURCHASED OR ACQUIRED SOUTHEAST
SECURITIES DURING THE CLASS PERIOD FOR THE
BENEFICIAL INTEREST OF A PERSON OTHER THAN
|
29a
Appendix B
YOUSELF, IT IS IMPORTANT THAT YOU READ THE
“SPECIAL NOTICE TO SECURITIES BROKERS AND
OTHER NOMINEES” AT THE END OF THIS DOCUMENT.
IF YOU AREA“RELEASED PARTY” AS DEFINED ON
PAGE 3 OF THIS NOTICE, YOU SHOULD SEE THE
“SPECIAL NOTICE TO RELEASED PARTIES” AT THE
END OF THIS DOCUMENT.
NOTICE OF HEARING
NOTICE IS HEREBY GIVEN, pursuant to Rule 23 of the
Federal Rules of Civil Procedure and an Order of the United
States Distrct Court for the Southern District of Florida (the
“Court”) dated August 27, 1993, that a hearing will be held
before the Honorable Kevin Michael Moore in the South
Courtroom of the Old Federal Courthouse Building at 300
Northeast First Avenue, Miami, Florida 33128 at 8:30 a.m. on
November 15, 1993 (the “Settlement Hearing”) to determine
whether a proposed settlement (the “Settlement”) of the
above-captioned litigation (the “Litigation”) between class
Representative Plaintiffs Harvey Wiener, William J. Hall, The
Maynard Slessinger Trust, Paula P. Folkman, Gasper Sclafani,
Myers L. Girsh and DCA Grantor Trust, individually and as
representative of all Class Members (as hereinafter defined),
and Defendants John E. Porta, Charles J. Zwick, Paul L. Hill,
Kristen M. Hudak, Samuel A. Milne, Douglas E. Ebert and
Florence Schust Bassett as Personal Representative of the
Estate of Harry Hood Bassett (sometimes collectively referred
to as the “Defendants”), as set forth in the Stipulation of
Settlement dated August 19, 1993 (the “Stipulation”), is fair
reasonable and adequate, and in the best interests of the Class
Members, and to determine to what extent attorneys’ fees,
30a
Appendix B
reimbursement of expenses and individual awards to the
named Plaintiffs should be awarded.
NOTICE OF CLASS ACTION DETERMINATION AND
BACKGROUND OF THE LITIGATION
Pursuant to an Order entered by the District Court on
August 27, 1993, the Court has certified this Litigation as a
Class Action for settlement purposes on behalf of all persons
who purchased or otherwise acquired publicly traded
securities including common stock, preferred stock, capital
notes, notes, convertible subordinated debentures, non-
convertible debentures and securitized asset interests of
Southeast Banking Corporation and its former corporate
parents, subsidiaries (including Southeast Bank, N.A.),
predecessors, successors and assigns (“Southeast”) during the
period from February 27, 1989 through and including
» September 20, 1991, excluding the Defendants herein, the
former officers and directors of Southeast, members of their
immediate families, their heirs, and affiliates, successors, and
assigns of the Defendants.
If you do not elect to be exluded from the Class by
following the steps described below, you are a “Class
Member” and will be eligible to participate in the benefits of
the Settlement as described herein, and will be subject to the
terms of a Final Order and Judgment to be entered herein,
barring you from pursuing any claims, rights, or causes of
action that you may have against Defendants or other officers,
directors, attorneys, advisors, insurers, agents or
representatives of Southeast.
Following an investigation by Plaintiffs’ counsel, on
March 22, 1990, a class action complaint was filed in this
3la
Appendix B
Court, captioned Harvey Wiener v. Southeast Banking Corp.,
et al., Civil Action No. 90-0760. Shortly thereafter, another
class action was filed in this Court, captioned William J. Hall
v. Southeast Banking Corp., et al., Civil Action No. 90-0838.
On April 6, 1990, Unitd States District Judge Eugene P.
Spellman entered an Order of Consolidation and Reference
consolidating the two actions and referring them to United
States Magistrate Judge Linnea R. Johnson. On April 24,
1990, Magistrate Judge Johnson ordered that the cases be
consolidated and that all pleadings be filed under Case No. 90-
0760-CIV-EPS. On April 23, 1990, the actions were filed as
one consolidated, amended complaint. Thereafter, on April
27, 1990, a Second Consolidated Amended Complaint was
filed to correct certain matters. Defendants moved to dismiss
the Second Consolidated Amended Complaint. On or about
July 18, 1990, Magistrate Judge Johnson, upon the stipulation
~ of the parties, granted Plaintiffs leave to file a Third
Consolidated Amended Complaint. In that Complaint,
Plaintiffs The Maynard Slessinger Trust and Paula P. Folkman
joined in the action, alleging purchases of Southeast Banking
Corp. securities during the second quarter of 1990. The
Defendants moved to dismiss Plaintiffs’ Third Consolidated
Amended Complaint, On June 26, 1991, after hearing
argument on Defendants’ Motion to Dismiss Plaintiffs’ Third
Consolidated Amended Complaint, Magistrate Judge Linnea
Johnson recommended the dismissal of the Third
Consolidated Amended Complaint. On July 11, 1991,
Plaintiffs filed objections to and moved to vacate the
Magistrate’s Report. However, those motions were never
ruled upon and became moot due to subsequent intervening
events.
On September 19, 1991, the Comptroller of the Currency
32a
Appendix B
declared insolvent Southeast’s principal subsidiary banks,
Southeast Bank, N.A. (“Southeast Bank”) and Southeast Bank
of West Florida, and appointed the Federal Deposit Insurance
Corporation (“FDIC”) as Receiver of those banks. On
September 20, 1991, Southeast Banking Corp. filed a
bankruptcy petition under Chapter 7 of the United States
Bankruptcy Code. The failure of Southeast Banking Corp. and
its subsequent filing for Chapter 7 protection affected the
Plaintiffs’ ability to pursue their claims brought against that
corporation, but did not eliminate the claims against the
individual defendants named in the Third Consolidated
Amended Complaint.
On November 7, 1991, Plaintiffs Wiener, Hall, The
Maynard Slessinger Trust and Folkman, previously Plaintiffs
in this action, as well as Plaintiffs Gasper Sclafani, Myers L.
Girsh and DCA Grantor Trust, who sought to join as iaintiffs
~ in this action, moved to file a Fourth Consolidated Amended
and Supplemental Complaint. The proposed Fourth
Consolidated Amended and Supplemental Complaint deleted
Southeast as a Defendant and sought recovery from the
remaining Defendants, in addition to that sought in the Third
Consolidated Amended Complaint, on behalf of those persons
who purchased common stock and debentures of Southeast
during the period from June 15, 1990 through July 3, 1991. On
March 12, 1992, Unitd States District Judge William J. Zloch.
granted Plaintiffs’ Motion to File a Fourth Consolidated
Amended and Supplemental Complaint.
On June 16, 1992, the Trustee in Bankruptcy for
Southeast Banking Corp. initiated an action against certain of
the Defendants named in the Fourth Consolidated Amended
and Supplemental Complaint, and other former officers and
directors of Southeast Banking Corp., alleging
33a
Appendix B
mismanagement and breaches of fiduciary duty, in an action
styled William A. Brandt, Jr. v. Florence S. Bassett, et al., Case
No. 92-1600-Civ-Aronovitz (the “Trustee Suit”). On
September 4, 1992, the FDIC moved to intervene in the
Trustee Suit asserting that any claims that exist for
mismanagement and breaches of fiduciary duty would be
solely and exclusively the rights of the FDIC. The FDIC’s
Motion to Intervene was granted and, subsequent to the
FDIC’s Intervention in the Trustee Suit, both the FDIC and the
Trustee moved for summary judgment on the issue of
ownership of the claims. Both the Trustee and FDIC have
asserted claims in excess of the amount of the available
directors and officers’ liability insurance, and each claim is
viewed by Plaintiffs’ lead counsel as a competing claim to the
claims asserted on behalf of the Class in the Fourth
Consolidated Amended and Supplemental Complaint.
. On April 29, 1993, United States Magistrate Linnear R.
Johnson recommended that the Trustee Suit be dismissed, and
that the FDIC’s Motion for Summary Judgment as to the
ownership of the claims be granted. Plaintiffs’ Lead Counsel
thereafter attempted to explore a coordinated prosecution of
the Class claims and the FDIC claims, with an appropriate
allocation of the recovery to the Class. Those efforts failed,
and it became apparent to Plaintiffs’ Lead Counsel that the
FDIC intends to prosecute its claim as a competing claim to
the class action. On May 4, 1993, the Resolution Trust
Corporation (“RTC”), acting as the receiver for American
Pioneer Savings Bank, also filed a suit against, among others,
the Defendants in this action, alleging violations of federal
securities law in relation to Southeast. The RTC’s suit is also a
competing claim to the Class action.
During 1992 and 1993, the case proceeded through
34a
Appendix B
additional motion practice. On August 19, 1993, after
substantial investigation and negotiation, the parties entered
into a Stipulation of Settlement.
SUMMARY OF SETTLEMENT
In full and complete settlement of all the Released Claims
(as defined herein), encompassing all the claims which have or
could have been asserted by Plaintiffs and the other Class
Members against the Defendants or Released Parties (as
defined below), and subject to the terms and conditions of the
Stipulation, the Defendants have agreed to pay to Plaintiffs
and the Class, the sum of $5,000,000 plus accrued interest
thereon. After deducting attorneys’ fees and reimbursement of
expenses, including notice, the costs of settlement
administration expenses, taxes, if any, and any incentive
awards to the Named Plaintiffs allowed by the Court, the
remaining funds will be distributed to Class Members who
have submitted valid Proofs of Claim in accordance with the
instructions herein.
Lead Counsel for the Plaintiffs has conducted an
examination into and evaluation of the law and facts relating
to the matters set forth in the Fourt Consolidated Amended and
Supplemental Complaint regarding how best to confer a
substantial benefit upon the Class, in light of the substantial -
obstacles to and risks of establishing liability and damages
and the potential duration of this complex litigation.
Based upon their discovery and investigation and
evaluation of the facts and law relating to the matters set forth
in the Fourth Consolidated Amended and Supplemental
Complaint, Plaintiffs’ Lead Counsel has concluded that (i)
irrespective of any merit to the claims asserted in the Fourth
35a
Appendix B
Consolidated Amended and Supplemental Complaint, there
are substantial obstacles to collecting any judgment that may
be obtained; (ii) the attendant risks of litigation, especially in
complex actions such as this, as well as the difficulties and
delays inherent in such litigation, could substantially delay or
eliminate any meaningful recovery; (iii) the uncertainty
relating to the proof of the allegations included in the Fourth
Consolidated Amended and Supplemental Complaint could
jeopardize any recovery; (iv) the uncertainties regarding
collection of any judgment posed by the competing claims of
the Trustee, the FDIC, and the RTC could further jeopardize
any recovery; (v) the desirability of permitting the Stipulation
to be promptly consummated according to its terms is
substantial; and (vi) resolution of the Litigation as set forth in
the Stipulation confers a substantial benefit upon the Class
and is in the best interest of the Class.
Defendants deny the material allegations of the Fourth
Consolidated Amded and Supplemental Complaint and deny
any and all liability with respect to any and all facts and claims
alleged or that could have been alleged in this Litigation and
continue to deny each and all of the claims and contentions
alleged by Plaintiffs in the Litigation. The Defendants
nonetheless consider it desirable that the Litigation be settled
and dismissed in accordance with the provisions of the
Stipulation because it will (i) halt the substantial expense,
inconvenience and uncertainties associated with continued
litigation of Plaintiffs’ claims; (ii) finally put to rest those
claims; and (iii) confer a substantial benefit upon the Class
and the Defendants including, without limitation, the
avoidance of further expense, diversion of resources and
disruption due to the pendency of the Litigation.
36a
Appendix B
The Court has not determined the merits of the claims
against, or the defenses of, the Defendants. This notice does
not imply that there has been or would be any finding of
violation of the law, or that recovery could be had in any
amount, if the Litigatgion were not settled with respect to the
Defendants.
On October 12, 1993, prior to the Settlement Hearing, the
parties will file with the Clerk of the Court any materials in
support of the Settlement and pertaining to the other matters to
be considered by the Court at the Settlement Hearing,
including plaintiffs’ counsels’ petition for attorneys’ fees and
petition for reimbursement of costs and expenses.
If the Stipulation and the proposed Settlement are
approved by the Court, all claims which have or, based upon
the claims alleged, could have been asserted in the Litigation
- will be dismissed on the merits and with prejudice in
accordance with the terms of the Stipulation as to all Class
Members (except those who have properly excluded
themselves from the Class), and all Class Members shall be
forever barred from prosecuting a Class Action or any other
action encompassing a Released Claim (as defined below).
The Settlement will become effective at such tme as the
Order entered by the District Court finally approving the
Settlement shall become final and not subject to appeal, as set
forth in the stipulation (the “Settlement Effective Date”). If
for any reason any of the contingencies set forth in the
Stipulation is not met or complied with in accordance with its
terms, then in that event, the Settlement may be terminated.
Upon final approval by the Court of the Settlement, and
subject to the contingencies set forth in the Stipulation, all
37a
Appendix B
Class Members who are not determined by the Court to have
properly excluded themselves from the Class shall
conclusively be deemed to have remised, released and
discharged, absolutely and forever, each and all of the
Released Parties (as defined below) of and from any and all
Released Claims (as defined below).
The Released Parties are the Defendants, and their
respective spouses, heirs, executors, administrators,
successors and assigns; National Union Fire Insurance
Company of Pittsburgh, PA and any other insurers that provide
directors’ and officers’ liability insurance to Southeast, and
their directors and officers; and all former officers, directors,
employees, agents, attorneys, auditors, accountants,
representatives, advisors, insurers, reinsurers, actuaries,
underwriters, commercial or investment bankers, investors,
consultants, affiliates, independent contractors and associates
- (as defined in SEC Rule 12b-2, promulated pursuant to the
Securities Exchange Act of 1934) of Southeast and their
respective spouses, heirs, executors, administrators,
successors and assigns. EXCEPT THAT ANY CLASS
MEMBER WHO FILES A PROOF OF CLAIM SEEKING TO
BENEFIT FROM THE SETTLEMENT FUNDS SHALL NOT
BEA RELEASED PARTY.
The Released Claims are (i) any and all claims, actions or
causes of action, rights or liabilities, including Unknown
Claims, which have existed, exist, or may in the future exist
against any Released Party by reaon of any matter, cause or
thing whatsoever, arising out of, or relating to the offer,
purchase, acquisition, sale, transfer, retention or exchange of
Southeast Securities, by a Class Member; and (ii) any and all
claims, actions, causes of action, rights or liabilities,
including Unknown Claims, which a Class Member had, has
38a
Appendix B
or may in the future have that are or could have been alleged,
in the Litigation arising out of, or relating to any acts,
omissions, or failures to act of any of the Released Parties,
individually or in their capacities as officers, directors,
shareholders, employees, agents, consultants, attorneys,
auditors, accountants, representatives, insurers, reinsurers,
actuaries, underwriters, commercial or investment bankers,
investors, affiliates, independent contractors, associates, and/
or advisors of Southeast.
Southeast Securities and/or Southeast’s Securities mean
any and all securities issued by Southeast and publicly traded
during the Class Period, including but not limited to common
stock, preferred stock, capital notes, notes, convertible
subordinated debentures, non-convertible debentures and/or
securitized asset interests.
Unknown Claims means any existing or future claims,
demands, causes of action or rights, against any Released
Party that the Class Members do not know or suspect to exist
in their favor at the time the Final Order and Judgment is
entered in this Litigation, provided that such claim(s) would
arise out of, or relate to Southeast, including the offer,
purchase, acquisition, sale, transfer, retention or exchange of
Southeast’s Securities.
CLASS MEMBERSHIP, FILING PROOF OF
CLAIM, AND CALCULATION OF PAYABLE CLAIMS
TO BE ELIGIBLE TO PARTICIPATE IN THE
DISTRIBUTION OF THE SETTLEMENT FUND, YOU
MUST COMPLETE AND SIGN THE ATTACHED PROOF
OF CLAIM FORM AND SEND IT BY PREPAID FIRST
39a
Appendix B
CLASS MAIL POST-MARKED ON OR BEFORE
DECEMBER 27, 1993 AND ADDRESSED AS FOLLOWS:
Southeast Banking Corp. Securities
Litigation
Settlement Administrator
P.O. Box 1367
Blue Bell, PA 19422
IF YOU ARE A CLASS MEMBER AND IF YOU DO
NOT TIMELY FILE A PROPER PROOF OF CLAIM FORM
AND HAVE NOT EXCLUDED YOURSELF FROM THE
CLASS, YOU WILL NOT SHARE IN THE SETTLEMENT
FUND. HOWEVER, YOU WILL STILL BE BOUND BY THE
FINAL ORDER AND JUDGMENT OF THE COURT
DISMISSING THIS LITIGATION AND RELEASING ALL
CLAIMS AND POTENTIAL CLAIMS AS SET FORTH
ABOVE.
For purposes of the Settlement,
(a) “Claimant” means any Class Member who files a
Proof of Claim in such manner and within such time as
provided herein;
(b) “Authorized Claimant” means a Claimant who;
properly completes the enclosed Proof of Claim form
establishing the Claimant’s status as a Class Member, who has
a “Recognized Loss” as defined below, who has submitted it
along with all required documentation to the Settlement
Administrator at the address provided on the Proof of Claim
form on or before December 27, 1993 on the basis of which the
Class Member is found to have a right to participate in the
benefits of the Settlement.
eaieadiiee <r aaemamaieee ~
40a
Appendix B
All Proofs of Claim must be submitted by December 27,
1993. Any Class Member who fails to file a proper Proof of
Ciaim with all required documentation by such date shall be
forever barred from receiving any payment pursuant to the
Stipulation but shall in all other respects be bound by the terms
of the Stipulation and the Final Order and Judgment to be
entered in the Litigation, including the terms of the release
contained in the Stipulation. A Proof of Claim shall be deemed
to have been timely submitted if received by the Settlement
Administrator or postmarked on or before December 27, 1993.
Each Proof of Claim shall be submitted to and reviewed
by the Settlement Administrator under the supervision of
Plaintiffs’ Lead Counsel, who shall determine in accordance
with the Stipulation and the Court’s Order with Respect to
Notice, Settlement Hearing and Administration, the extent, if
any, to which each claim shall be allowed, in the sole
discretion of Plaintiffs’ Lead Counsel, subject to final review
by the Court.
The Settiment Administrator will notify, in writing, all
Claimants whose Proofs of Claim have been rejected in whole
or in part, setting forth the reasons therefor. Any Claimant
whose claim has been finally rejected in whole or in part and
who desires to contest such final rejection must, within twenty
(20) days after the date of mailing of the notice of final
rejection of the Proof of Claim, serve upon Plaintiffs’ Lead
Counsel by certified mail a notice and statement of reasons for
contesting the final rejection along -with any supporting
documentation. Any such notice and statement shall be
deemed served when actually received by Plaintiffs’ Lead
Counsel. Plaintiffs’ Lead Counsel will thereafter present any
such notice along with a response, if desired, for review and
final decision by the Court.
4la
Appendix B
Each Claimant shall be deemed to have submitted to the
jurisidiction of the Court with respect to the Claimant’s claim,
and the Claimant will be subject to discovery under the
Federal Rules of Civil Procedure, limited to the Claimant’s
status as a Class Member, the amount and circumstances of the
Claimant’s claim, and the contents of the Proof of Claim as
submitted.
The Net Settlement Funds consisting of the Settlement
Funds, plus accrued interest, less (i) Attorneys’ Fees and
Expenses; (ii) Notice and Administration Expenses; and (iii)
any awards to the Plaintiffs allowed by the Court, shall be
allocated among the Authorized Claimants in the following
manner (the amount so allocated to each Authorized Claimant
constituting his or her “Payable Claim”):
(a) Each Authorized Claimant will be
entitled to receive from the Net Settlement
Fund that portion of the Net Settlement
Fund represented by a fraction of the Net
Settlement Fund which equals the
individual Recognized Loss of such
Authorized Claimant to the sum of all
Recognized Losses of the Authorized
Claimants;
(b) Each Authorized Claimant’s
Recognized Loss will be computed as set
forth in the following Plan of Allocation:
(i.) All definitions set forth in the
Stipulation of Settlement shall
govern this Plan of Allocation, and
42a
Appendix B
terms employed herein shall have the
same meaning as in the Stipulation
of Settlement. Additionally, “FIFO
basis” means Southeast Securities
purchased during the Class Period
shall be matched in chronological
order with Southeast Securities sold
during the Class Period or held at the
end of the Class Period on a first in,
first out, basis.
(ii.) The Net Settlement Funds
shall be allocated among claimants
in two separate funds. Seventy
percent (70%) of the Net Settlement
Funds, plus any interest earned or
accrued thereon, shall be allocated to
claimants who purchased publicly
traded Southeast Banking Corp.
Stock (common or preferred), during
the Class Period (the “Stock Fund”).
Thirty percent (30%) of the Net
Settlement Funds shall be allocated
to Claimants who purchased
publicly traded Southeast Banking
Corp. debt securities (notes, capital
notes, convertible and non-
convertible subordinated debentures)
during the Class Period (the “Debt
Fund”).
(iii.) Claims shall be paid to
Claimants from the Stock Fund and
43a
Appendix B
the Debt Fund in accordance with the
Recognized Loss of each Claimant.
The Recognized Loss shall be
defined as a fraction, the numerator
of which shall be the losses actually
sustained by the Claimant, and the
denominator of which shall be total
value of the claims submitted by
Ciaimants in the respective Stock
and Bond Funds. The losses shall be
determined by subtracting from the
amount paid (less commissions and
fees) for the Claimants’ Southeast
Securities, any funds received upon
sale of such securities (exclusive of
commissions or fees). Southeast
Securities not sold during the Class
Period shall have a market loss in the
amount equal to the amount paid for
such Southeast Securities (less
commissions and fees) minus the
publicly quoted price, if any, of such
Southeast Securities on the last day
of the Class Period.
- (iv.) All determinations of losses
shall be determined on a “FIFO”
basis.
(v.) Prior to payment to
Claimants, Court approval shall be
obtained authorizing the distribution
of the Net Settlement Funds to
44a
Appendix B
claimants in accordance with the
foregoing Plan of Allocation.
(c) The Net Settlement Fund shall be
distributed to Authorized Claimants in
accordance with the terms of the
Stipulation and the Final Order and
Judgment to be entered therein.
Payment in the manner set forth above shall be deemed
conclusive as to the claims of all Class members. All Class
Members who do not submit timely and properly completed
Proofs of Claim against Settlement Funds or whose Proofs of
Claim are not approved shall be barred from participating in
distributions from Settlement Funds, but otherwise shall be
bound by the terms and conditions of the Stipulation,
including the terms of the Release contained in the
Stipulation, and the Fine! Order and Judgment to be entered in
the Litigation, unless they have been properly excluded from
the Class.
REQUEST FOR EXCLUSION
IF YOU PROPERLY REQUEST EXCLUSION FROM
THE CLASS, YOU WILL NOT RECEIVE ANY PAYMENT
PURSUANT TO THE SETTLEMENT.
If you wish to be excluded from the Class, you may ask the
Court to exclude you by filing a Request for Exclusion. Your
Request for Exclusion must be in writing and postmarked on
or before October 18, 1993. You must include your name,
address and telephone number, and the caption of the
_ Litigation and state that you wish to be excluded from the
45a
Appendix B
Class. You MUST also list purchases of Southeast Securities
during the Class Period (by number of shares, type of shares
and price paid per share); sales or dispositions of such
securities during the Class Period, if applicable (by number of
shares, type of shares, and price received from any such sale
or disposition); the date of each such transaction; and the
name of the person in whose name the securities were
registered. You should also provide documentation of your
transaction in Southeast Securities with your request for
exclusion. All Requests for Exclusion must be mailed to:
Lewis F. Murhphy, P.A., Stee! Hector & Davis, 4000 First
Union Financial Center, 200 S. Biscayne Boulevard, Miami,
FL 33131-2398
If you properly and timely request exclusion from che
Class, you will not be bound by any judgment entered in the
Litigation, and you will be free to pursue whatever legal rights
~ you may have against any of the Defendants at your own
expense.
If you do not timely mail your election to be excluded
from the Class and do not or cannot file a proper Proof of
Claim that entitles you to receive Settlement proceeds, you
will not share in the Settlement but you will be included
automatically in the Class and bound by the Stipulation of
Settlement and the Final Order and Judgment to be entered in
this lawsuit pursuant thereto.
If you do not request exclusion from the Class you may, if
you so choose, enter an appearance through legal counsel of
your choice at your own expense and have all the rights and
obligations set forth in Rule 23 of the Federal Rules of Civil
Procedure. If this is your choice, you must notify the Clerk of
46a
Appendix B
the Court, United States District Court for the Southern
District of Florida, United States District Courthouse, 301
North Maimi Avenue, Miami, Florida 33128, that you wish to
be represented by your personal attorney and send a copy of
such notice to Michael J. Pucillo, Esquire at the address set
forth below, and to Lewis F. Murphy, P.A., at the address set
forth above. Any such request must be in writing and must be
postmarked on or before November 1, 1993.
If you do not have your attorney appear for you, your
interests will be represented by one or more of the following
Lead counsel for the Class:
Michael J. Pucillo, Esquire Joseph H. Weiss, Esquire
Chimicles, Burt & Jacobsen 319 Fifth Avenue
222 Lakeview Avenue New York, NY 10016
Suite 960
West Palm Beach, FL 33401
Jules Brody, Esquire
6 East 45th Street
New York, NY 10017
SETTLEMENT HEARING
The Settlement Hearing will b> held on November 15,
1993, at 8:30 a.m. in the Courtroom of Judge Kevin Michael
Moore in the South Courtroom of the Old Federal Courthouse
Building at 300 Northeast First Avenue, Miami, Florida
33128. The Settlement Hearing may be adjourned from time to
time by the Court without further notice. Notice of any such
adjournment may only be provided at the Settlement Hearing.
47a
Appendix B
At the Settlement Hearing, the Court will consider
whether it should finally approve this Settlement and dismiss
the Litigation on the merits and with prejudice. At the
Settlement Hearing, any Class Member who has not
previously filed a Request for Exclusion from the Class in the
manner set fourth above may appear in person or by counsel
and be heard to the extent allowed by the Court in support of,
or in opposition to, the fairness, reasonableness and adequacy
of the Settlement or any of the other matters to be considered
by the Court, provided, however, that in no event shall a
person be heard in opposition to the proposed Settlement,
Plaintiffs’ applications for counsel fees, reimbursement of
expenses and/or individual awards to named Plaintiffs unless,
on or before November 1, 1993 such person (a) files with the
Clerk of the Court notice of such person’s intention to appear,
together with a statement that indicates the basis for such
opposition which includes the information described in the
- second paragraph under the heading REQUEST FOR
EXCLUSION hereof, along with any supporting
documentation and; (b) serves copies of such notice, statement
and documentation, together with copies of any other papers
or briefs such person files with the Court, in person or by mail
uopn each of the following attorneys:
Michael J. Pucillo, Esquire Lewis F. Murphy, P.A.
Chimicles, Burt & Jacobsen Steel Hector & Davis
222 Lakeview Avenue 4000 First Union Financial
Suite 960 Center
West Palm Beach, FL 33401 200 S. Biscayne Boulevard
for Plaintiffs’ Lead Counsel Miami, FL 33131-2398
for Defendants’
Representative Counsel
48a
Appendix B
ATTORNEYS’ FEES, DISBURSEMENTS, AND
INDIVIDUAL PAYMENTS TO NAMED PLAINTIFFS
At the Settlement Hearing or at such later time as the
Court may direct, Plaintiffs’ Lead Counsel will apply to the
Court for an award from the Settlement Funds of attorneys’
fees, which will not be in an amount greater than 25% of the
Settlement Funds, and for reimbursements of out-of-pocket
expenses, together with interest earned upon such amounts.
Plaintiffs’ Lead Counsel will also seek payment from the
Settlement Funds of an amount, that will not exceed $2,000, to
each of the named Plaintiffs over and above their
proportionate share of the Settlement Funds.
EXAMINATION OF PAPERS AND INQUIRIES
For a more detailed statement of the matters involved in
’ the Litigation, reference is made to the pleadings, to the
Stipulation of Settlement, to the orders entered by the Court
and to the other papers filed in the Litigation, which may be
inspected at the Office of the Clerk of the United States
Distrcit Court for the Southern District of Florida, 301 N.
Miami Avenue, Miami, FL 33128, during business hours of
each business day.
Any inquiries concerning this Notice or the Proof of
Claim form by Class Members should be made to Plaintiffs’
Lead Counsel in writing. No telephone inquiries should be
made. Inquiries should not be directed to the Court or the
Clerk’s office.
Distribution of the proceeds of the Settlement is subject to
Court approval.
49a
Appendix B
SPECIAL NOTICE TO SECURITIES
BROKERS AND OTHER NOMINEES
If you purchased or acquired Southeast securities during
the Class Period for the beneficial interest of a person or
organization other than yourself, you are required to provide
to the Settlement Administrator the name and last known
address of each person or organization for whom or which you
purchased or acquired Southeast Banking Corp. publicly
traded securities, including common stock, preferred stock,
capital notes, notes, convertible subordinated debentures,
non-convertible debentures, and/or securitized asset interests
during such time period. Such information should be sent to:
Southeast Banking Corp. Securities
Litigation
Settlement Administrator
P.O. Box 1367
Blue Bell, PA 19422
within seven (7) days of your receipt of this notice. The
Settlement Administrator will forward copies of this Notice
and a Proof of Claim form to each beneficial owner so
designated by you in writing.
Alternatively, you may request additional copies of this
Notice and Proof of Claim forms for each Class Member for
whom you acted and whom you identify, which will be
provided to you at the expense of the Class, and you may mail
the Notice and Proof of Claim forms directly to the beneficial
owners of the Southeast Securities referred to herein. You may
be entitled to reimbursement of your reasonable out-of-pocket
expenses actually incurred in connection with the foregoing,
50a
Appendix B
provided that the Settlement Administrator will reimburse you
at the prevailing domestic postage rate for each Notice and
Proof of Claim form mailed to members of the Class at the
lowest rate at which they could properly be mailed. No
payment will be permitted for service charges, handling fees,
excess postage or similar charges. Payment will be made for
these charges as submitted by affidavit or declaration under
penalty of perjury to the Settlement Administrator and only
after review and approval by the Settlement Administrator.
SPECIAL NOTICE TO RELEASED PARTIES
Regardless of whether you purchased Southeast
Securities during the Class Period, if you are a former officer
or director of Southeast or if you are a spouse, heir, executor,
administrator, successor or assign of a former officer or
director of Southeast, including any Defendant in this
Litigation, you are NOT a Class Member and may not
participate in this Settlement as a Class Member. Other
“Released Parties” — such as employees, accountants,
attorneys and advisors of Southeast — who purchased
Southeast Securities during the Class Period ARE Class
Members and may participate in this Settlement as a Class
Member. However, you cannot benefit financially from the
Settlement Funds and also benefit from the release to Released
Parties. Therefore, Class members who file a Proof a Claim
and seek to benefit from the Settlement Funds will
automatically lose their status as a “Released Party” and will
in no way benefit from the release from potential liability
conferred upon other Released Parties.
S5la
Appendix B
Dated: September 15, 1993
CLERK, UNITED STATES DISTRICT COURT
T. G. CHELIOTIS
INSTRUCTIONS FOR COMPLETING
SUBSTITUTE FORM W-9
(Section references are to the Internal Revenue Code.)
Purpose of Form. — A person who is required to file an
information return with IRS must obtain your correct taxpayer
identification number (TIN) to report income paid to you, real
estate transactions, mortgage interest you paid, the acquisition
or abandonment of secured property, or contributions you
made to an individual retirement arrangement (IRA). Use
Form W-9 to furnish your correct TIN to the requester (the
~ person asking you to furnish your TIN), and, when applicable,
(1) to certify that the TIN you are furnishing is correct, (2) to
certify that you are not subject to backup withholding, and (3)
to claim exemption fro backup withholding if you are an
exempt payee. Furnishing your correct TIN and making the
appropriate certifications will prevent certain payments from
being subject to the 31% backup withholding.
Note: If a requester gives you a form other than a W-9 to
request your TIN, you must use the requester’s form.
How To Obtain a TIN. — If you do not have a TIN, you
should apply for one immediately. To apply for the number,
obtain Form SS-5, Aoplication for a Social Security Number
Card (for individuals), or Form SS-4, Application for
Employer Identification Number (for businesses and all other
52a
Appendix B
entities), at your local office of the Social Security
Administration or the Internal Revenue Service. Complete
and file the appropriate form according to its instructions.
To complete Form W-9 if you do not have a TIN, write
“Applied For” in the space for the TIN in Part 1, sign and date
the form, and give it to the requester. For payments that could
be subject to backup withholding, you will then have 60 days
to obtain a TIN and furnish it to the requester.
During the 60-day period, the payments you receive will
not be subject to the 31% backup withholding, unless you
make a withdrawal. However, if the requester does not receive
your TIN form you within 60 days, backup withholding, if
applicable, will begin and continue until you furnish your TIN
to the requester.
Note: Writing “Applied For” on the form means that you have
already applied for a TIN OR that you intend to apply for one
in the near future.
As soon as you receive your TIN, complete another Form
W-9, include your new TIN, sign and date the form, and give it
to the requester.
What is Backup Withholding? — Persons making certain
payments to you are required to withhold and pay to IRS 31%
of such payments under certain conditions. This is called
“backup withholding.” Payments that could be subject to
backup withholding include interest, dividends, broker and
barter exchange transactions, rents, royalties, nonemployee
compensation, and certain payments from fishing boat
operators, but do not include real estate transactions.
53a
Appendix B
If you give the requester your correct TIN, make the
appropriate certifications, and report all your taxable interest
and dividends on your tax return, your payments will not be
subject to backup withholding. Payments you receive will be
subject to backup withholding if:
(1) You do not furnish your TIN to the requester, or
(2) IRS notifies the requester that you furnished an
incorrect TIN, or
(3) You are notified by IRS that you are subject to backup
withholding because you failed to report all your interest and
dividends on your tax return (for interest and dividend
accounts only), or
(4) You fail to certify to the requester that you are not
subject to backup withholding under (3) above (for interest
and dividend accounts opened after 1983 only), or
(5) You fail to certify your TIN. This applies only to
interest, dividend, broker, or barter exchange accounts opened
after 1983, or broker accounts considered inactive in 1983.
For other payments, you are subject to backup
withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup
withholding and information reporting. See Payees and
Payments Exempt From Backup Withholding, below, and
Exempt Payees and Payments under Specific Instructions, on
page 2, if you are an exempt payee.
54a
Appendix B
Payees and Payments Exempt From Backup Withholding.
— The following lists payees that are exempt from backup
withholding and information reporting. For interest and
dividends, all listed payees are exempt except item (9). For
broker transactions, payees listed in (1) through (13), and a
person registered under the Investment Advisers Act of 1940
who regularly acts as a broker are exempt. Payments subject to
reporting under sections 6041 and 6041A are generally
exempt from backup withholding only if made to payees
described in items (1) through (7), except that a corporation
that provides medical and health care services or bills and
collects payments for such services is not exempt from backup
withholding or information reporting. Only payees described
in items (2) through (6) are exempt from backup withholding
for barter exchange transactions, patronage dividends, and
payments by certain fishing boat operators.
(1) Acorporation.
(2) An organization exempt from tax under section
501(a), or an individual retirement plan (IRA), or a custodial
account under 403(b)(7).
(3) The United States or any agency or instrumentality
thereof.
(4) A state, the District of Columbia, a possession of the
United States, or any political subdivision or instrumentality
thereof.
(5) A foreign government or a political subdivision,
agency or instrumentality thereof.
55a
Appendix B
(6) An international organization or any agency or
instrumentality thereof.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to
register in the U.S. ora possession of the U.S.
(9) A futures commission merchant registered with the
Commodity Futures Trading Commission.
(10) Areal estate investment trust.
(11) An entity registered at all times during the tax year
under the Investment Company Act of 1940.
(12) A common trust fund operated by a bank under
section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community
as a nominee or listed in the most recent publication of the
American Society of Corporate Secretaries, Inc., Nominee
List.
(15) A trust exempt from tax under section 664 or
described in section 4947.
Payments of dividends and patronage dividends generally
not subject to backup withholding also include the following:
56a
Appendix B
* Payments to nonresident aliens subject to withholding
under section 1441.
* Payments to partnerships not engaged in a trade or
business in the U.S. and that have at least one nonresident
partner.
* Payments of patronage dividends not paid in money.
* Payments made by certain foreign organizations.
Payments of interest generally not subject to backup
withholding include the following:
* Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this
interest is $600 or more and is paid in the course of the
payer's trade or business and you have not provided your
correct TIN to the payer.
* Payments of tax-exempt interest (including exempt-
interest dividends under section 852).
* Payments described in section 6049(b)(5) to nonresident
aliens.
* Payments on tax-free covenant bonds under section 1451.
* Payments made by certain foreign organizations.
* Mortgage interest paid by you.
57a
Appendix B
Payments that are not subject to information reporting are
also not subject to backup withholding. For details, see
sections 6041, 6041A(a), 6042, 6044, 6045, 6049, 6050A, and
6050N, and the regulations under such sections.
Penalties
Failure To Furnish TIN. — If you fail to furnish your correct
TIN to a requester, you are subject to a penalty of $50 for each
such failure unless your failure is due to reasonable cause and
not to willful neglect.
Failure to Include Certain Items on Your Tax Return. — If
you fail to properly include on your tax return certain items
reported to IRS, such failure will be treated as being due to
negligence, and you will be subject to a penalty of 5% on any
part of an underpayment of tax attributable to that failure
unless there is clear and convincing evidence to the contrary.
Civil Penalty for False Information With Respect to
Withholding. — If you make a false statement with no
reasonable basis that results in no imposition of backup
withholding, you are subject to a penalty of $500.
Criminal Penalty for Falsifying Information. — Willfully
falsifying certifications or affirmations may subject you to
criminal penalties including fines and/or imprisonment.
Specific Instructions
Name. — If you are an individual, generally provide the name
shown on your social security card. However, if you have
changed your last name, for instance, due to marriage, without
58a
Appendix B
informing the Social Security Administration of the name
change, you may enter your first name and both the last name
shown on your social security card and your new last name.
Signing the Certification. —
(1) Interest, Dividend, and Barter Exchange Accounts
Opened Before 1984 and Broker Accounts That Were
Considered Active During 1983. — You are not required to
sign the certification; however, you may do so. You are
required to provide your correct TIN.
(2) Interest, Dividend, Broker and Barter Exchange
Accounts Opened After 1983 and Broker Accounts That
Were Considered Inactive During 1983. — You must sign
the certification or backup withholding will apply, If you are
subject to backup withholding will apply. If you are subject to
backup withholding and you are merely providing your
correct TIN to the requester, you must cross out item (2) in the
certification before signing the form.
(3) Real Estate Transactions. — You must sign the
certification. You may cross out item (2) of the certification if
you wish.
(4) Other Payments. — You are required to furnish your
correct TIN, but you are not required to sign the certification
unless you have been notified of an incorrect TIN. Other
payments include payments made in the course of the
requester’s trade or business for rents, royalties, goods (other
than bills for merchandise), medical and health care services,
payments to a nonemployee for services (including attorney
and accounting fees), and payments to certain fishing boat
crew members.
59a
Appendix B
(5) Mortgage Interest Paid by You, Acquisition or
Abandonment of Secured Property, or IRA Contributions.
— You are required to furnish your correct TIN, but you are
not required to sign the certification.
(6) Exempt Payees and Payments. — If you are exempt
from backup withholding, you should complete this form to
avoid possible erroneous backup withholding. Enter your
correct TIN in Part I, write “EXEMPT” in the block in Part II,
cross out item (2) of the certification, sign and date the form. If
you are a nonresident alien or foreign entity not subject to
backup withholding, give the requester a completed Form W-
8, Certificate of Foreign Status.
(7) TIN “Applied For.” — Follow the instructions under
How To Obtain a TIN, earlier, sign and date this form.
Signature. — For a joint account, only the person whose TIN
is shown in Part I should sign the form.
Privacy Act Notice. — Section 6109 requires you to furnish
your correct taxpayer identification number (TIN) to persons
who must file information returns with IRS to report interest,
dividends, and certain other income paid to you, mortgage
interest you paid, the acquisition or abandonment of secured
property, or contributions you made to an individual
retirement arrangement (IRA). IRS uses the numbers for
identification purposes and to help verify the accuracy of your
tax return. You must provide your TIN whether or not you are
required to file a tax return. Payers must generally withhold
31% of taxable interest, dividend, and certain other payments
to a payee who does not furnish a TIN to a payer. Certain
penalties may also apply.
60a
Appendix B
What Name and Number to Give the Requester
For this type of account:
1. individual
2. Twoor more individuals
(joint account)
3. Custodian account ofa
minor (Uniform Gift to
Minors Act)
4. a. Theusual revocable
savings trust (grantor
is also trustee)
b. So-called trust account
that is not a legal or valid
trust under state law
5. Sole proprietorship
Give the name and
SOCIAL SECURITY
number of:
The individual
The actual owner
of the account or,
if combined funds,
the first individual
on the account!
The minor?
The grantor-trustee'
The actual owner’
The owner®
6la
Appendix B
Give the name and
For this type of account: EMPLOYER
IDENTIFICATION
number of:
6. A valid trust, estate, or Legal entity (Do
pension trust not furnish the
identification number of
the personal representative
or trustee unless the legal
entity itself is not
designated in the account
title. )*
7. Corporate The corporation
8. Association, club, The organization
religious, charitable,
educational, or other
tax-exempt organization
9. Partnership The Partnership
10. A broker or registered The broker or nominee
nominee
11. Account with the The public entity
Department of Agriculture
in the name of a public entity
(such as a state or local
government, school district,
or prison) that receives
agricultural program payments
62a
Appendix B
' List first and circle the name of the person whose number you furnish.
2 Circle the minor’s name and furnish the minor’ s social security number.
* Show the name of the owner.
* List first and circle the name of the legal trust, estate, or pension trust.
Note: Jfno name is circled when there is more than one name,
the number will bne considered to be that of the first name
listed.
63a
Appendix B
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
MIAMI DIVISION
MASTER FILE
CIVIL ACTION NO.
90-0760-CIV-MOORE
IN RE: SOUTHEAST BANKING CORP.SECURITIES
LITIGATION
THIS DOCUMENT RELATES TO ALLACTIONS
PROOF OF CLAIM AND RELEASE
NOTE: YOU SHOULD NOT COMPLETE THIS FORM
UNLESS YOU PURCHASED SOUTHEAST BANKING
CORP. PUBLICLY TRADED COMMON § STOCK,
PREFERRED STOCK, CAPITAL NOTES, NOTES,
CONVERTIBLE SUBORDINATED DEBENTURES, NON-
CONVERTIBLE DEBENTURES, SECURITIZED ASSET
INTERESTS AND/OR OTHER PUBLICLY TRADED
SECURITIES OF SOUTHEAST BANKING CORP. DURING
THE PERIOD FROM FEBRUARY 27, 1989 THROUGH
SEPTEMBER 20, 1991. IF YOU DID SO, YOU ARE A
“CLASS MEMBER” ENTITLED TO PARTICIPATE IN THE
SETTLEMENT OF THE LITIGATION, AND YOU MAY BE
ENTITLED TO SETTLEMENT PROCEEDS. (Excluded from
the Class are the Defendants, former officers and directors of
Southeast Banking Corp., and their spouses, heirs, executors,
administrators, successors and assigns, and those persons who
have excluded themselves pursuant to the provisions of the
Notice.)
64a
Appendix B
IN ORDER TO RECEIVE ANY PAYMENTS TO WHICH
YOU MAY BE ENTITLED AS A CLASS MEMBER, YOU
MUST COMPLETE AND SIGN THIS PROOF OF CLAIM,
AND MAIL IT BY PRE-PAID, FIRST CLASS MAIL,
POSTMARKED NO LATER THAN DECEMBER 27,1993
TO THE FOLLOWING ADDRESS:
Southeast Banking Corp. Securities Litigation
Settlement Administrator
P.O. Box 1367
Blue Bell, PA 19422
YOUR FAILURE TO SUBMIT YOUR CLAIM BY
DECEMBER 27, 1993 WILL SUBJECT YOUR CLAIM TO
REJECTION AND PRECLUDE YOU FROM RECEIVING
ANY MONEY IN CONNECTION WITH’ THE
SETTLEMENT OF THIS LITIGATION. DO NOT MAIL OR
DELIVER YOUR CLAIM TO THE COURT OR TO ANY OF
THE PARTIES OR THEIR COUNSEL, AS ANY SUCH
CLAIM WILL BE DEEMED NOT TO HAVE BEEN
SUBMITTED.
THIS WILL BE YOUR ONLY OPPORTUNITY TO SHARE
IN THE BENEFITS OF THE SETTLEMENT OF THIS
ACTION. HOWEVER, EVEN IF YOU DO NOT SUBMIT
THIS PROOF OF CLAIM, YOU WILL BE BOUND BY THE
COURT’S FINAL ORDER AND JUDGMENT IN THIS
MATTER AND WILL BE FOREVER BARRED FROM
PURSUING ANY ACTION AGAINST ANY OF THE
DEFENDANTS IN THIS ACTION, OR ANY RELEASED
PARTY, RELATING TO ANY RELEASED CLAIM UNLESS
YOU HAVE BEEN PROPERLY EXCLUDED FROM THE
CLASS.
65a
Appendix B
I. I did __, Idid not ___ (check one) purchase any publicly
traded securities of Southeast Banking Corp. (“Southeast”)
during the period from February 27, 1989 through and
including September 20, 1991.
II. By submitting this Proof of Claim, I state that I
believe in good faith that I am a Class Member as defined in
the Notice of Pendency of Class Action, Proposed Settlement,
Settlement Hearing, and Right to Appear (“Notice”), or am
acting for such person; that I have read and understood the
contents of the Notice; that I am not, and am not acting for any
of the Defendants herein or the former officers or directors of
Southeast Banking Corp. or their spouses, heirs, executors,
administrators, successors or assigns; that I have not filed a
Request for Exclusion, seeking to be excluded from the Class;
that I believe that I am entitled to receive a share of the Net
Settlement Fund; and that I elect to participate In the proposed
Settlement described in the Notice.
III. I have set forth where requested all relevant
information with respect to each purchase, of Southeast’s
publicly traded securities during the Class Period; and each
sale, if any, of such securities.
IV. I have enclosed photocoples or facsimiles of the
stockbrokers confirmation slips or other documents
evidencing each acquisition and sale listed below in support
of my claimed loss. (VOTE: IF ANY SUCH DOCUMENTS
ARE NOT IN YOUR POSSESSION, PLEASE OBTAIN A
COPY, FACSIMILE OR EQUIVALENT DOCUMENTS
FROM YOUR BROKER BECAUSE THESE DOCUMENTS
ARE NECESSARY TO PROVE AND PROCESS YOUR
CLAIM.)
66a
Appendix B
V. I agree and understand that if the proposed Settlement
is approved by the Court and becomes effective, all claims,
demands, or causes of action against any or all Defendants and
certain other persons which have been or could have been
asserted relating to the subject matter of the litigation will be
satisfied, discharged and extinguished forever in accordance
with the Release provided on behalf of Class Members in the
Stipulation of Settlement and by the terms of the Final Order
andJudgment.
VI. My signature hereto constitutes a full and complete
release, remise and discharge by me or, if I am submitting this
Proof of Claim on behalf of a corporation, partnership, estate
or one or more persons, by it, him, her or them, and by my, its,
his, her or their heirs, executors, administrators, successors,
affiliates and assigns, of all Defendnats, former officers,
directors, employees, agents, attorneys, auditors, accountants,
representatives, advisors, insurers, reinsurers, actuaries,
underwriters, commercial or investment bankers, consultants,
investors, affiliates, independent contractors and associates of
Southeast Banking Corp. and its subsidiaries, affiliates,
divisions and predecessors or successor corporations, and
their respective spouses, heirs, executors, administrators,
successors, affiliates and assigns, and each of them (the
“Released Parties as defined in paragraph A.1.x of the
Stipulation of Settlement), from all Released Claims as
defined in paragraph A.1.w of the Stipulation of Settlement.
The Released Claims are: (1) any and all claims, actions or
causes of action, rights or liabilities, including Unknown
Claims, which have existed, exist, or may in the future exist
against any Released Party by reason of any matter, cause or
thing whatsoever, arising out of, or relating to the offer,
purchase, acquisition, sale, transfer, retention or exchange of
67a
Appendix B
Southeast Securities, by a Class Member; and (ii) any and al]
claims, actions, causes of action, rights or liabilties, including
Unknown Claims, which a Class Member had, has, or may in
the future have that are or could have been alleged in the
Litigation arising out of, or relating to any acts, omissions, or
failures to act of any of the Released Parties, individually or in
their capacities as officers, directors, shareholders,
employees, agents, consultants, attorneys, auditors,
accountants, representatives, insurers, reinsurers, actuaries,
underwriters, commercial or investment bankers, investors,
affiliates, independent contractors, associates, and/or
advisors of Southeast. This release, however, is conditioned
upon the Court’s approval of the Settlement and upon the
Settlement becoming effective.
68a
Appendix B
VII. STATEMENT OF CLAIM
Name(s) of
Beneficial Owner(s)
Street No.
and Street:
City: State:__ Zip Code:___-
Country: Telephone Number:___-
TaxpayerI.D.No.: -__ OR Social Security Number:__-__-__
_Individual _Corporation _Estate _Other (specify)
Area Telephone No.(work) Area Telephone No. (home)
Record Owner’s Name (if different from Beneficial Owner
listed above)
A. Claimant(s) made the follwing purchases of
Southeast’s publicly traded securities during the Class Period.
All references to purchase dates relate to trade dates, not
settlement dates. (If you have acquired any Southeast common
stock that had been purchased during the Class Period by gift,
inheritance, or operation law, you are to report this transaction
as if you acquired the stock at the same time asnd at the same
cost as the person who purchased such security):
Appendix B
Purchase
Price
Date(s) of Per Share/ Aggregate
Purchase (List Debenture Cost
Chrono- (excluding excluding
Type logically) Number commission, commission,
of Month/Day/ of Shares/ taxes and taxes and
Security Year Debentures fees) fees)
- - ae $
* * &
(indicate with an asterisk ( *) any transaction held in the name
of the record owners(s) listed above.)
B. Of the shares listed in Section VII.A above,
Claimant(s) sold the follwing Southeast publicly traded
securities during the Class Period. (All references to sale dates
relate to trade dates, not settlement dates ):
Selling Amount
Price Realized
Date(s) of Per Share/ (aggregate
Sale (List Debenture proceeds
Chrono- Number (excluding excluding
Type logically) of Shares/ commission, commission,
of Month/Day/ Debentures taxes and taxes and
Security Year Sold fees) fees)
are Me $
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Appendix B
VIII. SUBSTITUTE FORM W-9
Request for Taxpayer Identification Number. Enter
taxpayer identification number below for the Beneficial
Owner(s). For most individuals, this your Social Security
number. The Internal Revenue Service requires such taxpayer
identification number. If you fail to furnish the correct
taxpayer identification, 31% of the interest portion of your
distributive share of the Settlement Funds will b
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