case5:06-cv-05208-jf document169 filed03/15/11...

Case5:06-cv-05208-JF Document169 Filed03/15/11 Page1 of 6

1 GEORGE A. RILEY (S.B. No. 118304)ROBERT D. TRONNES (S.B. No. 209835)

2 VIVI T. LEE (S.B. No. 247513)O’MELVENY & MYERS LLP

3 Two Embarcadero Center28th Floor

4 San Francisco, California 94111-3828Telephone: (415) 984-8700

5 Facsimile: (415) 984-8701E-Mail: [email protected]

6 [email protected]@omm.com

7Attorneys for Defendant APPLE INC.

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9 UNITED STATES DISTRICT COURT

10 NORTHERN DISTRICT OF CALIFORNIA

11 SAN JOSE DIVISION

12 IN RE APPLE INC. SECURITIES Case No. C06-05208-JFLITIGATION

13 CLASS ACTION

14 THIS DOCUMENT RELATES TO: APPLE INC.’S SUBMISSION IN

15 ALL ACTIONSSUPPORT OF FINAL APPROVAL OFSETTLEMENT AND PLAN OF

16ALLOCATION

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APPLE’S SUBMISSION ISO FINALAPPROVAL - C06-05208-JF


1 I. INTRODUCTION

2 At the February 25, 2011 Settlement Fairness Hearing, the Court requested the parties

3 provide an update on March 15, 2011 regarding the claims processing and total amount of

4 Recognized Claims. Based on information provided by the Claims Administrator, Apple believes

5 the Net Settlement Fund will be exhausted. Theodore Frank states he has no objection to the

6 Settlement if the Net Settlement Fund is exhausted. (1/21/11 Frank Obj. 2:1-2.)

7 Apple also wishes to inform the Court of a late objection submitted by purported Class

8 Member Geoffrey H. Wood. (Lee Second Supp. Decl., Ex. A.) Mr. Wood’s objection,

9 postmarked February 22, 2011, is both untimely and without merit.

10 Because the Settlement and Plan of Allocation are fair, reasonable and adequate, Apple

11 respectfully requests the Court grant final approval.

12 II. CLAIMS PROCESSING

13 As of March 14, 2011, the Claims Administrator has received more than 76,000 Proofs of

14 Claim and has preliminarily processed more than 64,000 of those Proofs of Claim. (Epiq Third

15 Supp. Decl. ¶¶ 4, 15-17.) 1 Epiq has estimated that the 64,000 processed claims represent more

16 than $48 million in value of Recognized Claims. (Id. ¶¶ 4, 17.) The claims processing has not

17 yet been completed, but Apple expects the claims will clearly exhaust the $16.5 million in the Net

18 Settlement Fund.

19 III. THE NOTICE PROGRAM

20 As discussed in Apple’s briefs in support of final approval of the Settlement and the

21 Claims Administrator’s declarations, the Claims Administrator mailed the Notice and Proof of

22 Claim to 5,804 known banks, brokers and other nominees and directed the institutions to

23 (i) forward the Notice directly to Class Members or (ii) provide a list of names or pre-printed

24 labels to the Claims Administrator to provide notice of the Settlement to potential Class

25 Members. (Epiq Third Supp. Decl. ¶ 5.) The Claims Administrator directed the institutions to

26 complete their research within 14 days in accordance with the Amended Preliminary Approval

27 1 The Third Supplemental Declaration of Claims Administrator is attached to the Declaration of

28 Michael Barry.APPLE’S SUBMISSION ISO FINAL

APPROVAL - C06-05208-JF


1 Order. (Id.) The notice program instituted by the Claims Administrator constitutes the best

2 notice practicable under the circumstances, even though some institutions did not comply with the

3 Claims Administrator’s instructions.

4 On December 9, 2010, in the original mailing to banks, brokers and nominees, the Claims

5 Administrator mailed the Notice and Proof of Claim to TD Ameritrade. (Epiq Third Supp. Decl.

6 ¶ 6.) The Claims Administrator also sent the notice package to TD Ameritrade electronically and

7 followed up by phone and email to encourage TD Ameritrade to complete its research for the

8 notice process. (Id.) Despite these repeated instructions, TD Ameritrade did not provide the

9 Claims Administrator with an electronic list of the names and addresses of potential Class

10 Members until February 28, 2011. (Id.) The Claims Administrator completed the mailing based

11 on TD Ameritrade’s data on March 4, 2011. ( Id.)

12 Claims administrators in securities class actions must rely on nominees to notify potential

13 class members. Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1374 (9th Cir. 1993); Silber v.

14 Mabon, 18 F.3d 1449, 1452 (9th Cir. 1994). Notice provided to class members’ nominees is

15 sufficient “even if brokerage houses fail to timely forward the notice to the beneficial owners.”

16 Fidel v. Farley, 534 F.3d 508, 514 (6th Cir. 2008). Due process is satisfied as long as the “class

17 as a whole had notice adequate to flush out whatever objections might reasonably be raised.”

18 Torrisi, 8 F.3d at 1375. The Claims Administrator made reasonable efforts to give notice to

19 potential Class Members through a national publication, a national wire service, direct mailings, a

20 website and toll-free number, and by contacting nominees. As of March 14, 2011, Epiq has

21 mailed a total of 1,365,734 copies of the Notice and Proof of Claim to potential Class Members or

22 their banks, brokers or other nominees. (Epiq Third Supp. Decl. ¶ 7.) As a result, over 76,000

23 Proofs of Claim have been submitted to date; 27,353 visitors have accessed the website; and

24 5,091 callers have called the toll-free number. (Id. ¶¶ 10, 12, 15.) Five purported Class Members

25 have also submitted objections to the Settlement. The Claims Administrator’s compliance with

26 the Court-approved notice program satisfies all statutory and due process requirements.

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- 2 - APPLE’S SUBMISSION ISO FINALAPPROVAL - C06-05208-JF


1 IV. THE UNTIMELY WOOD OBJECTION

2 The Claims Administrator received an objection postmarked February 22, 2011—well

3 after the January 21, 2011 deadline for objections—from purported Class Member Geoffrey H.

4 Wood. (Epiq Third Supp. Decl. ¶ 14 & Attachment D.) Mr. Wood acknowledges that he failed

5 to file his objection in a timely manner and does not explain why he is submitting his objection

6 late. (Id.) The Claims Administrator mailed the Notice to Mr. Wood on January 7 and again on

7 January 11. (Epiq Third Supp. Decl. ¶ 14.) Mr. Wood did not serve his objection on Apple’s

8 counsel and did not provide required information regarding his stock transactions. (Lee Second

9 Supp. Decl. ¶ 3 & Ex. A.) Accordingly, Mr. Wood has waived any objections he may have to the

10 Settlement. (See Amended Preliminary Approval Order ¶¶ 14-15; Notice §§ 36-37.)

11 Even if Mr. Wood’s untimely and improper objection is considered, the objection does not

12 show the Settlement is unfair, unreasonable or inadequate. Mr. Wood’s arguments have no merit.

13 • Required documentation: Mr. Wood contends that requiring Claimants to submit

14 documentation verifying their Apple stock transactions is unreasonable because it is

15 impractical to keep documents over a ten-year period. Courts, however, routinely

16 require documentation of stock transactions in securities class actions to ensure the

17 validity and accuracy of submitted claims. See In re Wireless Facilities, Inc. Sec.

18 Litig., 253 F.R.D. 630, 650-51 (S.D. Cal. 2008) (requiring documentation to verify

19 stock transactions); In re Cendant Corp. Prides Litig., 189 F.R.D. 321, 328 (D.N.J.

20 1999) (requiring documentation to verify “each claimant is truly a member of the

21 settlement class”).

22 • Economic recovery: Mr. Wood argues the economic recovery is insufficient to restore

23 the economic loss to the Class. As Apple explained in its briefs in support of the

24 Settlement, the Settlement is fair, reasonable and adequate to the Class in light of the

25 substantial barriers plaintiffs face to maintain their claims and to recover damages.

26 (Apple Mem. ISO Prelim. Approval 13-21; Apple Mem. ISO Final Approval 8-14.)

27 Plaintiffs’ claims were likely to be dismissed before trial because they are time-barred

28 by the five-year statute of repose for Section 10(b) claims. Additionally, plaintiffs



1 cannot meet the stringent pleading standards for fraud claims mandated by the Private

2 Securities Litigation Reform Act (“PSLRA”) and Fed. R. Civ. P. 9(b) or plead or

3 prove loss causation. Even if plaintiffs can overcome all of these hurdles and prevail

4 at trial, the PSLRA will still severely limit any recovery.

5 • Public benefit: Mr. Wood contends the Settlement does not benefit the public. He

6 appears to oppose class actions generally as a waste of taxpayers’ resources. Filing an

7 objection to this Settlement, however, is not the proper avenue to raise those issues.

8 The relevant consideration in approving class action settlements is the benefit to the

9 class, not the general public. See Officers for Justice v. Civil Service Comm’n of City

10 & Cnty of San Francisco, 688 F.2d 615, 625 (9th Cir. 1982) (citing factors relevant to

11 final approval). Moreover, approval of this Settlement would benefit the public by

12 conserving the Court’s resources and advancing corporate reforms.

13 • Average per share recovery estimate: Mr. Wood contends Lead Plaintiffs’ Counsel’s

14 estimate of a $0.07 average per share recovery is misleading because actual recovery

15 is dependent on the number of submitted claims. The average per share recovery set

16 forth in the Notice is mandated by the PSLRA and Ninth Circuit precedent. See 15

17 U.S.C. § 78u-4(a)(7)(A); In re Veritas Software Corp. Sec. Litig., 496 F.3d 962, 971

18 (9th Cir. 2007). Moreover, the Notice addresses Mr. Wood’s purported concern about

19 the calculation by expressly stating that “Plaintiffs’ Lead Counsel believes that the

20 average per share recovery will be greater than $0.07 because typically fewer than

21 100% of eligible shareholders elect to participate in securities class action

22 settlements.” (Notice § 1.) The Notice further explains that each Claimant’s actual

23 recovery “will depend on a number of factors, including (i) when during the Class

24 Period [the Claimant] purchased shares of Apple common stock; (ii) the purchase

25 price paid for the shares; (iii) whether the shares were held at the end of the Class

26 Period or sold during the Class Period; (iv) if sold, when the shares were sold and the

27 amount received; and (v) the number of Recognized Claims.” (Id. § 24.)

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1 V. CONCLUSION

2 Based on the foregoing, Apple respectfully requests the Court finally approve the

3 Settlement and Plan of Allocation.

4 Dated: March 15, 2011 O’MELVENY & MYERS LLP

5By: /s/ George A. Riley

6 George A. Riley

7 Attorneys for Defendant

8Apple Inc.

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Case5:06-cv-05208-JF Document169-1 Filed03/15/11 Page1 of 6

1 GEORGE A. RILEY (S.B. No. 118304)ROBERT D. TRONNES (S.B. No. 209835)

2 VIVI T. LEE (S.B. No. 247513)O’MELVENY & MYERS LLP

3 Two Embarcadero Center28th Floor

4 San Francisco, California 94111-3828Telephone: (415) 984-8700

5 Facsimile: (415) 984-8701E-Mail: [email protected]

6 [email protected]@omm.com

7Attorneys for Defendant APPLE INC.

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10 UNITED STATES DISTRICT COURT

11 NORTHERN DISTRICT OF CALIFORNIA

12 SAN JOSE DIVISION

13 IN RE APPLE INC. SECURITIES Case No. C06-05208-JFLITIGATION

14 CLASS ACTION

15 SECOND SUPPLEMENTALTHIS DOCUMENT RELATES TO: DECLARATION OF VIVI LEE IN

16 ALL ACTIONS SUPPORT OF FINAL APPROVAL OF

17SETTLEMENT AND PLAN OFALLOCATION

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SECOND SUPP. LEE DECL.C06-05208-JF


1 SECOND SUPPLEMENTAL DECLARATION OF VIVI LEE

2 I, VIVI LEE, declare as follows:

3 1. I am an attorney duly licensed before all of the courts of the State of California and

4 the United States District Court for the Northern District of California. I am an associate in the

5 law firm of O’Melveny & Myers LLP, counsel of record for defendant Apple Inc. (“Apple”). I

6 make this second supplemental declaration in support of the Motion for Final Approval of Class

7 Action Settlement and Plan of Allocation. I have personal knowledge of the matters stated herein

8 and, if called upon, could competently testify thereto.

9 2. Attached hereto as Exhibit A is a true and correct copy of an objection from

10 purported Class Member Geoffrey H. Wood, dated February 18, 2011, and postmarked February

11 22, 2011.

12 3. To my knowledge, as of March 15, 2011, no attorney for Apple has received a

13 service copy of Mr. Wood’s objection in accordance with the terms of the Notice and the

14 Amended Preliminary Approval Order.

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16 I declare under penalty of perjury under the laws of the United States of America that the

17 foregoing is true and correct. Executed this 15th day of March 2011 at Menlo Park, California.

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19 /s/ Vivi Lee

20Vivi Lee

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SECOND SUPP. LEE DECL.C06-05208-JF


Exhibit A


Claims AdministratorIn re Apple Inc. Securities LitigationP. O. Box 6809Portland, OR 97228-6809

Dear Sirs: February 18, 2011

I am a member of the class of this questionable litigation by reason of the fact that myfamily and I owned approximately 180 shares of Apple Stock at various times during theperiod in question—August 24, 2001 and September 30, 2006. (71533,34,35,36)

However, since I may not have standing to object as a class member, I oppose thislitigation as a member of the public for the following reasons:

1. The safekeeping of documents for a period of over 10 years is impractical and notpracticed or recommended by any customary investment or tax standard today.Requiring accurate records more than five years old to participate in thissettlement is unreasonable and shows poor judgment and practice by a FederalAppeals Court.

2. Approving a case from these facts where the economic recovery and benefit to theclass is estimated to be $0.07 per share is sheer legal fiction. Since the two mainpurposes for class action lawsuits seems to be missing here – that of penalizingthe defendant and restoring economic loss to the class, the only benefit here seemsto be to the lawyers and judges who have kept this fiction alive. If it could beshown that the class itself and not just the lead plaintiff (NYCERS) wereeconomically benefited to any significant degree 1 this action, this class actionmight have some validity. This case fails in this regard.

3. The public is really not interested in repairing the contrived woes of a highlysophisticated investor such as NYCERS at minimal shareholder expense.Therefore, the Court of Appeals should be mindful of spending taxpayer timeapproving a case with such limited recovery benefits for the public, botheconomic and social.

4. For a class action to be valid and confer benefits to the public a class actionlawsuit must have some connection to public reality and public benefit; it must beclear in its solution for the class and it must be easily documented and submittedby the class. This case seems to fail in most of these areas. For example, all actionby members of the class, the exclusion date, proof date and objection date shouldall be executable through the same cutoff date. The convenience of the court orattorneys is secondary here.

5. This case has been heard, tried and re-tried by lower courts with the sameoutcome—dismissal—probably because of its limited benefit to the class.

6. Denying approval of this settlement would actually benefit the class by a greatereconomic degree than the 7-cent estimated recovery through the court system: Toargue that past shareholders have no other way to recover damages is more fiction.


7. Estimates of class recovery are highly dependent on the final number in the class.Any estimate is likely to be highly misleading in a case where the recovery isperceived by the class to be economically irrelevant as it is in this case. At $0.07per share, most members of the class would just as soon waive their right to thispenurial recovery and enjoy the benefits as a current shareholder, avoiding thecompounded cost of litigation and the unreasonable annoyance of documentationand submission.

For all of the above reasons, the Ninth Circuit should deny approval of this class actionallowing all present shareholders to benefit from the elimination of legal waste.

In spite of my failure to file this objection in a timely manner, the points made here are material and should still be heard as hart of the discussion. It is awards like these thatdrive • bli to question the role of trivial class action lawsuits in our society.

Si ereGeoffrey H. Wood2760 Baker StreetSan Francisco, CA 94123

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2760 Baker-StreetSan Francisco, CA 94123

Claims AdministratorIn re Apple Inc., Securities LitigationP. O. Box 6809Portland, OR 97228-6809

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