Bhangal v. Hawaiian Electric Industries, Inc. et al

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United States District Court
Northern District of California
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
BHAPINDERPAL S. BHANGAL, et al.,
Plaintiffs,
v.
HAWAIIAN ELECTRIC INDUSTRIES,
INC., et al.,
Defendants.
Case No. 3:23-cv-04332-JSC
ORDER RE: MOTION FOR
PRELIMINARY APPROVAL
Re: Dkt. No. 118
Plaintiffs in this federal securities class action allege Hawaiian Electric Industries, Inc.
(“HEI”) and its top officials misled investors to believe the utility was taking appropriate action to
mitigate wildfire risk. The Court previously dismissed the action with leave to amend. (Dkt. No.
92.1) Following amendment, Defendants again moved to dismiss and the parties reached a class
action settlement while that motion was pending. (Dkt. Nos. 93, 106, 116.) Plaintiffs’ unopposed
motion for preliminary approval of the class action settlement is now pending before the Court.
(Dkt. No. 118.) Having considered the briefing, including the supplemental briefing, and having
had the benefit of oral argument on February 26, 2026, the Court GRANTS the motion for
preliminary approval.
BACKGROUND
The Court assumes the parties’ familiarity with the factual and procedural background and
incorporates its prior discussion by reference. (Dkt. No. 92 at 1-8.)
1 Record citations are to material in the Electronic Case File (“ECF”); pinpoint citations are to the
ECF-generated page numbers at the top of the documents.
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THE SETTLEMENT AGREEMENT
A. The Settlement Class
The Agreement defines the Settlement Class as “all persons and entities other than
defendants who purchased or otherwise acquired HEI securities between February 28, 2019 and
September 4, 2023, both dates inclusive, and were damaged thereby.” (Dkt. No. 119-1, Settlement
Agreement at ¶ 1(ww).) The Settlement Class excludes (1) Defendants; (2) current and former
HEI officers and directors; (3) Individual Defendants’ immediate family; (4) all subsidiaries and
affiliates of the Company and the subsidiary directors and officers; (5) any persons, firms, trusts,
corporations, officers, directors, and entity in which any defendant has a controlling interest; (6)
the legal representative of any excluded party; and (7) anyone who properly excludes themselves
by filing a valid and timely request for exclusion. (Id.)
B. Payment Terms
Under the Settlement Agreement, Defendants will pay $47,750,000 (“Settlement Fund”).
(Dkt. No. 119-1, Settlement Agreement at ¶ 1(vv).) The following amounts may be deducted from
the Settlement Fund:
1. Notice and Administration Costs: $335,585.31 (Id. at ¶ 8; Dkt. No. 118 at 31);
2. Litigation Expenses: up to $500,000 (Dkt. No. 119-1 at ¶ 8; Dkt. No. 118 at 30);
3. Attorneys’ Fees: 33% of the Settlement Fund: ($15,666,750); (Dkt. No. 119-1 at ¶
8; Dkt. No. 118 at 29-30);
4. Compensatory Award for the Lead Plaintiff under 15 U.S.C. § 78u-4(a)(4) of up to
$10,000 (Dkt. No. 121 at 4-5); and
5. Taxes which includes “(i) all federal, state and/or local taxes of any kind (including
any interest or penalties thereon) on any income earned by the Settlement Fund; (ii)
the expenses and costs incurred by Plaintiffs’ Counsel in connection with
determining the amount of, and paying.” (Dkt. No. 119-1 at ¶ 1(bb).)
The remaining amount, the “Net Settlement Amount” will be divided in pro rata share
among authorized claimants pursuant to a specified plan of allocation. (Id. at ¶ 19.)
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C. Scope of Release
Any settlement class member who does not submit a timely request for exclusion releases:
all claims, actions, causes of action, demands, losses, rights, duties,
obligations, debts, sums of money, suits, contracts, agreements,
judgments, matters, issues, promises, damages and liabilities of every
nature and description, whether known or unknown, known claims or
Unknown Claims, whether arising under federal, state, common or
foreign law, that Plaintiffs, any other member of the Settlement Class,
or any other of Releasing Plaintiffs’ Parties: (i) asserted in any
complaint in this Action or (ii) could have asserted in any forum that
arise out of, are based on, or relate in any way to, directly or indirectly,
any of the allegations, acts, transactions, facts, events, matters,
occurrences, representations or omissions involved, set forth, alleged
or referred to, in the Action, or which could have been alleged in the
Action, or which arise out of, are based upon, or relate in any way,
directly or indirectly, to the purchase, acquisition, transfer, holding,
ownership, disposition or sale of HEI securities by any members of
the Settlement Class, and/or any disclosures, public filings,
registration statements, or other statements by any Defendant during
the Class Period, whether arising under federal, state, common or
foreign law.
(Id. at ¶ 1(pp).)
D. Notice
Plaintiffs selected Verita as the Claims Administrator following a competitive bidding
process. (Dkt. No. 118 at 30.) Verita intends to provide “direct mail notification to every investor
who is a member of the Class and who can be identified with reasonable effort” as well as “direct
email notification [] to hundreds of financial institutions that regularly monitor proposed securities
class action settlements.” (Dkt. No. 119-2, Cavallo Decl. at ¶ 5.) Notice will also be made by
publication on GlobeNewswire and by publication with the Depository Trust Corporation
(“DTC”) on the DTC Legal Notice System (“LENS”). (Id.at ¶¶ 13-14.)
According to Verita, there are two primary sources for identifying class members: (1)
through an issuer’s stock transfer agent, and (2) through nominees (the brokers, banks, and
institutions) that actually hold the securities for their clients’ benefit. (Dkt. No. 119-2 at ¶¶ 6-7.).
The vast majority of investors hold their securities through a nominee. (Id. at ¶ 6.) Verita will
thus send the Notice Packet to each entity included on its proprietary list of approximately 255
Nominee Holders, as well as to each financial institution registered with the U.S. Securities and
Exchange Commission (“SEC”) as a potential Nominee Holder. (Id. at ¶¶ 8-9.) For those
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investors identified by the nominees, Verita will provide direct mail notice. (Id. at ¶ 11.) Verita
estimates “the proposed notice program will provide notice to more than 95% of the investors that
are potential Settlement Class Members.” (Id. at ¶ 18.)
Verita will also create a website for posting downloadable copies of the notice packet,
claim form, and other information about the Settlement, and maintain a toll-free telephone number
for questions. (Id. at ¶¶ 16-17.)
E. Objections and Requests for Exclusion
Settlement Class Members can opt-out of the settlement by timely submitting a letter to the
Settlement Administrator requesting exclusion from the settlement. (Dkt. No. 119-1 at ¶ 1(ww).)
Settlement Class Members can also file a written objection to any part of the settlement and/or the
request for attorneys’ fees and costs. (Dkt. No. 121-1 at ¶ 73.)
DISCUSSION
The approval of a settlement is a multi-step process. At the preliminary approval stage, the
court should grant such approval only if it is justified by the parties’ showing that the court will
likely be able to (1) “certify the class for purposes of judgment on the proposal” and (2) “approve
the proposal under Rule 23(e)(2).” Fed. R. Civ P. 23(e)(B). If the court preliminarily certifies the
class and finds the settlement appropriate after “a preliminary fairness evaluation,” then the class
will be notified, and a final fairness hearing scheduled to determine if the settlement is fair,
adequate, and reasonable pursuant to Rule 23. Villegas v. J.P. Morgan Chase & Co., No. CV 09-
00261 SBA (EMC), 2012 WL 5878390, at *5 (N.D. Cal. Nov. 21, 2012).
I. CLASS CERTIFICATION
A court may preliminarily certify a settlement class if the prerequisites of Federal Rule of
Civil Procedure 23(a) have been met, and at least one of the requirements for Rule 23(b) have also
been met. See Fed. R. Civ. P. 23.
Class actions must meet the following requirements for certification:
(1) the class is so numerous that joinder of all members is
impracticable; (2) there are questions of law or fact common to the
class; (3) the claims or defenses of the representative parties are
typical of the claims or defenses of the class; and (4) the
representative parties will fairly and adequately protect the interests
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of the class.
Fed. R. Civ. P. 23(a). In addition to meeting the requirements of Rule 23(a), a putative class action
must also meet one of the conditions outlined in Rule 23(b).
A. Rule 23(a)
The Rule 23(a) factors are satisfied.
First, the class is sufficiently numerous based on Plaintiffs’ experts’ estimate that
approximately 83.2 million shares were affected by Defendants’ conduct. (Dkt. No. 121-1, Nye
Decl. at ¶ 12.) See Malriat v. QuantumScape Corp., No. 3:21-CV-00058-WHO, 2022 WL
17974629, at *3 (N.D. Cal. Dec. 19, 2022) (“[C]ourts may infer that, when a corporation has
millions of shares trading on a national exchange, the numerosity requirement is met.”).
Second, the typicality requirement is satisfied. “The test of typicality is whether other
members have the same or similar injury, whether the action is based on conduct which is not
unique to the named plaintiffs, and whether other class members have been injured by the same
course of conduct.” A. B. v. Hawaii State Dep’t of Educ., 30 F.4th 828, 839 (9th Cir. 2022)
(cleaned up). Here, the claims of both Plaintiffs and Settlement Class Members arise from the
same set of circumstances—whether Defendants misled investors to believe the utility was taking
appropriate action to mitigate wildfire risk. Plaintiffs’ claims are therefore predicated on the same
or similar legal theories as those of the other Settlement Class Members.
Third, the commonality requirement is satisfied because there are common questions of
law and fact arising out of Defendants’ alleged representations. “The commonality requirement of
Rule 23(a)(2) requires plaintiffs seeking class certification to show that their claims depend upon a
common contention that is capable of classwide resolution—which means that determination of its
truth or falsity will resolve an issue that is central to the validity of each one of the claims in one
stroke.” A. B., 30 F.4th at 839 (cleaned up). Finally, adequacy exists because there is no evidence
Lead Plaintiff and Plaintiffs’ counsel have any conflicts of interest with the proposed class, or
Lead Plaintiff and Plaintiffs’ counsel will not vigorously prosecute the case on behalf of the class.
Lead Plaintiff Daniel Warren, the proposed class representative, and class counsel appear
to be adequate representatives of the class. Warren purchased, owned, or held HEI during the
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class period and his interests in demonstrating Defendants’ liability and maximizing possible
recovery are aligned with the absent class members. (Dkt. No. 58 at 3.) The Court previously
found class counsel, Pomerantz LLP, would fairly and adequately represent the class given their
significant experience in litigating securities class actions. (Dkt. No. 58.) The Court has no reason
to alter this view now when considering the Rule 23(g)(1)(A) factors.
The Court also concludes, at the preliminary approval stage, the Rule 23(b)(3) requirement
is satisfied. Under Rule 23(b)(3), the Court must find that “the questions of law or fact common to
class members predominate over any questions affecting only individual members, and that a class
action is superior to other available methods for fairly and efficiently adjudicating the
controversy.” Here, the Court finds predominance is satisfied because Plaintiffs’ claims arise from
the same representations. Further, the Court finds superiority is satisfied because the alternative
method to a class action likely involves “individual claims for a small amount of ... damages,”
resulting in most cases involving “litigation costs [that] dwarf potential recovery.” Hanlon, 150
F.3d at 1023.
* * *
Accordingly, the Court concludes that conditional certification of the class for settlement
purposes is proper.
II. PRELIMINARY APPROVAL OF THE SETTLEMENT AGREEMENT
Federal Rule of Civil Procedure 23(e) provides “[t]he claims, issues, or defenses of a
certified class—or a class proposed to be certified for purposes of settlement—may be settled ...
only with the court’s approval.” Fed. R. Civ. P. 23(e). “The purpose of Rule 23(e) is to protect the
unnamed members of the class from unjust or unfair settlements affecting their rights.” In re
Syncor ERISA Litig., 516 F.3d 1095, 1100 (9th Cir. 2008). So, before a district court approves a
class action settlement, it must conclude the settlement is “fundamentally fair, adequate and
reasonable.” In re Heritage Bond Litig., 546 F.3d 667, 674–75 (9th Cir. 2008).
In determining whether a class action settlement agreement meets this standard, the court
may consider some or all of the following factors:
(1) the strength of the plaintiff’s case; (2) the risk, expense,
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complexity, and likely duration of further litigation; (3) the risk of
maintaining class action status throughout the trial; (4) the amount
offered in settlement; (5) the extent of discovery completed and the
stage of the proceedings; (6) the experience and views of counsel; (7)
the presence of a governmental participant; and (8) the reaction of the
class members to the proposed settlement.
Roes, 1-2 v. SFBSC Mgmt., LLC, 944 F.3d 1035, 1048 (9th Cir. 2019) (cleaned up). Whether a
settlement agreement has been negotiated before a class has been certified or after, the court must
also undertake an additional search for more “subtle signs that class counsel have allowed pursuit
of their own self-interests and that of certain class members to infect the negotiations.” Briseño v.
Henderson, 998 F.3d 1014, 1023 (9th Cir. 2021). The Ninth Circuit has identified three such
signs:
1) when counsel receive a disproportionate distribution of the
settlement, or when the class receives no monetary distribution
but class counsel are amply rewarded;
2) when the parties negotiate a “clear sailing” arrangement providing
for the payment of attorneys' fees separate and apart from class
funds, which carries the potential of enabling a defendant to pay
class counsel excessive fees and costs in exchange for counsel
accepting an unfair settlement on behalf of the class; and
3) when the parties arrange for fees not awarded to revert to
defendants rather than be added to the class fund.
In re Bluetooth Headset Prod. Liab. Litig., 654 F.3d 935, 947 (9th Cir. 2011) (internal quotation
marks and citations omitted).
Courts may preliminarily approve a settlement and notice plan to the class if the proposed
settlement: (1) appears to be the product of serious, informed, non-collusive negotiations; (2) does
not grant improper preferential treatment to class representatives or other segments of the class;
(3) falls within the range of possible approval; and (4) has no obvious deficiencies. In re Lenovo
Adware Litig., No. 15-MD-02624-HSG, 2018 WL 6099948, at *7 (N.D. Cal. Nov. 21, 2018)
(citation omitted).
A. Whether the Settlement is Fair, Adequate, and Reasonable
1. Settlement Process
The first factor concerns “the means by which the parties arrived at settlement.” Harris v.
Vector Mktg. Corp., No. C-08-5198 EMC, 2011 WL 1627973, at *8 (N.D. Cal. Apr. 29, 2011). To
approve a proposed settlement, a court must be satisfied the parties “have engaged in sufficient
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investigation of the facts to enable the court to intelligently make ... an appraisal of the
settlement.” Acosta v. Trans Union, LLC, 243 F.R.D. 377, 396 (C.D. Cal. 2007). Courts thus have
“an obligation to evaluate the scope and effectiveness of the investigation plaintiffs’ counsel
conducted prior to reaching an agreement.” Id. The settlement here was reached after extensive
investigation and following intensive negotiations at three full-day mediation sessions with an
experienced mediator. (Dkt. No. 121-2, Van Decl. at ¶¶ 7-9.)
This factor thus weighs in favor of preliminary approval.
2. Lack of Preferential Treatment
The Court next considers whether the Settlement Agreement provides preferential
treatment to any class member. The Ninth Circuit has instructed district courts to be “particularly
vigilant” for signs counsel have allowed the “self-interests” of “certain class members to infect
negotiations.” In re Bluetooth, 654 F.3d at 947.
The only preferential treatment is Plaintiffs’ request for up to $10,000 in compensatory
awards for Lead Plaintiff Mr. Warren under 15 U.S.C. § 78u-4(a)(4). (Dkt. No. 123 at ¶ 3.2)
Under this section, representative plaintiffs may recover “reasonable costs and expenses (including
lost wages) directly relating to the representation of the class.” See 15 U.S.C. § 78u-4(a)(4). The
Court will defer ruling on the appropriateness of this award until final approval. At this stage,
there is no indication the award in general constitutes “preferential treatment” such that it would
defeat preliminary approval.
3. Range of Possible Approval
The third factor the Court considers is whether the settlement is within the range of
possible approval. To evaluate whether the settlement amount is adequate, “courts primarily
consider plaintiffs’ expected recovery balanced against the value of the settlement offer.” Lenovo,
2018 WL 6099948, at *8. This requires the Court to evaluate the strength of Plaintiffs’ case.
The Settlement Agreement provides for a Settlement Fund of $47,750,000. (Dkt. No. 119-1,
2 While Plaintiffs indicated at the hearing they intended to seek the award on behalf of all the
named Plaintiffs, Mr. Van’s supplemental declaration clarifies they only intend to seek it for Mr.
Warren. (Dkt. No. 123 at ¶ 3.)
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Settlement Agreement at ¶ 1(vv).) Plaintiffs’ supplemental briefing includes a declaration from
their expert, Zachary Nye, who estimates total possible damages of $1.716 billion based on 83.2
million shares having been affected by Defendants’ conduct. (Dkt. No. 121-1, Nye Decl. at ¶ 12.)
The Settlement Agreement thus provides a recovery of approximately 2.8% of estimated damages.
(Dkt. No. 121-2, Van Decl. at ¶ 18.) Plaintiffs’ counsel attests this amount is “well within the
range of reasonableness, and substantially exceeds the median settlement amount in securities
class actions settling in 2024.” (Id. at ¶ 18 (citing Dkt. No. 121-2 at, Ex. A (Edward Flores and
Svetlana Starykh, Recent Trends in Securities Class Action Litigation: 2024 Full-Year Review, at
27 (Fig. 24) (NERA Jan. 22, 2025) (“NERA Report”) (indicating (median recovery in securities
class actions in 2024 was approximately 1.2% of estimated damages)).) Plaintiffs’ counsel also
attests this result is “more than double the 1.3% median settlement value for settlements where
losses were in comparable damage estimate category ($1 billion-$4.999 billion).” (Dkt. No. 121-
2, Van Decl. at ¶ 18 (citing Ex. A at 26 (Fig. 23)).)
Given the risks of continued litigation and the uncertain viability of Plaintiffs’ legal claims
given the settlement was reached while the motion to dismiss was pending, the Court concludes
this factor also weighs in favor of preliminary approval.
4. Fairness of Supplemental Agreement
The Court must also review the fairness of the parties’ confidential Supplemental
Agreement. (Dkt. No. 119-1 at ¶ 35.) The existence of a termination option triggered by the
number of class members who opt out of the settlement does not by itself render the Settlement
unfair. See, e.g., Hefler v. Wells Fargo & Co., No. 16-CV-05479-JST, 2018 WL 6619983, at *7
(N.D. Cal. Dec. 18, 2018). At the Court’s request, the parties submitted the confidential
Supplemental Agreement under seal. And having reviewed it, the Court finds the termination
provision does not impact the fundamental fairness of the Settlement Agreement.
5. Obvious Deficiencies
Finally, the Court considers whether there exist any obvious deficiencies in the settlement
agreement. Harris, 2011 WL 1627973, at *8. Here, while the Court initially highlighted some
concerns regarding the Settlement Agreement, Plaintiffs’ supplemental submissions address these
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concerns such that the Court finds no obvious deficiencies that would preclude preliminary
approval. (Dkt. Nos. 121, 123.)
* * *
Having weighed the relevant factors, the Court preliminarily finds the settlement
agreement is fair, reasonable, and adequate, and GRANTS preliminary approval.
III. PROPOSED PLAN OF ALLOCATION
The Court also must preliminarily approve the Plan of Allocation. The court’s review of
the distribution plan is governed by the same legal standards that apply to the approval of a
settlement: the plan must be fair, reasonable, and adequate. See, e.g., In re Citric Acid Antitrust
Litig., 145 F. Supp. 2d 1152, 1154 (N.D. Cal. 2001). “A settlement in a securities class action case
can be reasonable if it fairly treats class members by awarding a pro rata share to every Authorized
Claimant, but also sensibly makes interclass distinctions based upon, inter alia, the relative
strengths and weaknesses of class members' individual claims and the timing of purchases of the
securities at issue.” Hampton v. Aqua Metals, Inc., No. 17-CV-07142-HSG, 2021 WL 4553578, at
*10 (N.D. Cal. Oct. 5, 2021) (internal quotation omitted). “[C]ourts recognize that an allocation
formula need only have a reasonable, rational basis, particularly if recommended by experienced
and competent counsel.” Id.
The plan of allocation provides the damages will be distributed in pro rata shares among
the Settlement Class Members on a per share basis. (Dkt. No. 119-1 at ¶¶ 8, 19; Dkt. No. 121-1,
Nye Decl. at ¶ 14 (stating the plan of allocation “calculates each Claimant’s Recognized Loss for
each HEI share purchased or otherwise acquired during the Settlement Class Period, as well as
their pro rata share of the Net Settlement Fund.”.) Mr. Nye attests “the average recovery per
affected share [a]s approximately $0.57, before accounting for fees and expenses.” (Dkt. No. 121-
1, Nye Decl. at ¶ 13.) If the Court approves all of Plaintiffs’ proposed deductions for fees, costs,
and the service award for the Class Representative, this would reduce the price per share by $0.20.
(Id.)
The Court concludes the Plan of Allocation treats the class members fairly and
preliminarily approves it.
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IV. CLASS NOTICE PLAN
For any class certified under Rule 23(b)(3), class members must be afforded “the best
notice that is practicable under the circumstances, including individual notice to all members who
can be identified through reasonable effort.” Fed. R. Civ. P. 23(c)(2)(B). Such notice must clearly
state the following:
(i) the nature of the action; (ii) the definition of the class certified; (iii)
the class claims, issues, or defenses; (iv) that a class member may
enter an appearance through an attorney if the member so desires; (v)
that the court will exclude from the class any member who requests
exclusion; (vi) the time and manner for requesting exclusion; and (vii)
the binding effect of a class judgment on members under Rule
23(c)(3).
Fed. R. Civ. P. 23(c)(2)(B). “Notice is satisfactory if it generally describes the terms of the
settlement in sufficient detail to alert those with adverse viewpoints to investigate and to come
forward and be heard.” Churchill Vill., L.L.C. v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004)
(cleaned up).
In response to the Court’s concerns, Plaintiffs submitted a second revised long-form notice
and revised short-form notice. (Dkt. No. 123-4; Dkt. No. 123-6.) The revised notices comply
with the notice requirements under Rule 23(c). The long-from notice describes the allegations and
claims in plain language, defines the Settlement Class, includes contact information for Class
Counsel and the Settlement Administrator, and summarizes the settlement amount. (Dkt. No. 123-
4.) The revised long-form notice also describes the Plan of Allocation and the options available to
class members, including instructions for requesting exclusion from the settlement and filing an
objection. The revised long-form notice also informs class members that receiving a share of the
class settlement will release certain claims against certain parties and informs class members they
may appear at the final fairness hearing in person or through an attorney. It directs class members
to a website with more information. Finally, the revised notice adequately advises Settlement
Class Members about how they can review Class Counsel’s motion for attorneys’ fees and costs
prior to the final approval hearing and that Lead Plaintiff Mr. Warren will seek up to a $10,000
compensatory award under 15 U.S.C. § 78u-4(a)(4). See In re Mercury Interactive Corp. Sec.
Litig., 618 F.3d 988, 995 (9th Cir. 2010) (holding class members must “have an opportunity to
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oppose class counsel’s fee motion”).
In sum, these procedures appear sufficient to ensure that Settlement Class Members
receive adequate notice of the settlement and an opportunity to opt-out or object. Accordingly, the
Revised Notices and notice plan support preliminary approval.
V. ATTORNEYS’ FEES AND COSTS
Rule 23(h) provides for an award of attorneys’ fees and costs in a certified class action
where it is “authorized by law or by the parties’ agreement.” Fed. R. Civ. P. 23(h). However,
“courts have an independent obligation to ensure that the award, like the settlement itself, is
reasonable, even if the parties have already agreed to an amount.” Bluetooth, 654 F.3d at 941.
Where a settlement produces a common fund for the benefit of the entire class, courts have
discretion to employ either the lodestar method or the percentage-of-recovery method to determine
whether the requested fees are reasonable. In re Mercury, 618 F.3d at 992. The Ninth Circuit has
established a benchmark of 25 percent of the common fund for attorneys’ fees calculations under
the latter method. See Powers v. Eichen, 229 F.3d 1249, 1256 (9th Cir. 2000) (“We have ...
established twenty-five percent of the recovery as a ‘benchmark’ for attorneys' fees calculations
under the percentage-of-recovery approach.”). Although “[a] district court may depart from the
benchmark ..., it must be made clear by the district court how it arrives at the figure ultimately
awarded.” Id. at 1256-57.
“The lodestar figure is calculated by multiplying the number of hours the prevailing party
reasonably expended on the litigation (as supported by adequate documentation) by a reasonable
hourly rate for the region and for the experience of the lawyer.” Bluetooth, 654 F.3d at 941. The
resulting figure may be adjusted upward or downward to account for several factors, “including
the quality of representation, the benefit obtained for the class, the complexity and novelty of the
issues presented, and the risk of nonpayment.” Id. at 941-42 (internal quotation marks and citation
omitted). The party requesting fees bears the burden “of submitting billing records to establish that
the number of hours it requested are reasonable,” Gonzalez v. City of Maywood, 729 F.3d 1196,
1202 (9th Cir. 2013), as well as “produc[ing] satisfactory evidence—in addition to the attorneys’
own affidavits—that the requested rates are in line with those prevailing in the community for
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similar services by lawyers of reasonably comparable skill, experience and reputation,” Camancho
v. Bridgeport Fin., Inc., 523 F.3d 973, 980 (9th Cir. 2008) (internal quotation marks and citation
omitted). The Ninth Circuit recommends that whether the lodestar or percentage-of-recovery
method is used, the district court perform a cross-check using the other method to confirm the
reasonableness of the fee (e.g., if the percentage-of-recovery method is applied, a cross-check with
the lodestar method will reveal if the amount requested is unreasonable in light of the hours
reasonably expended). See Bluetooth, 654 F.3d at 944-45.
The Settlement Agreement provides Class Counsel will file a motion for attorneys’ fees
and costs, but is silent as to the amount. (Dkt. No. 119-1 at ¶ 14.) In their motion for preliminary
approval, Plaintiffs state they intend to seek an award of attorneys’ fees of up to 33.33% of the
Settlement Fund ($15,915,075). (Dkt. No. 118 at 30.) The motion does not state counsel’s
lodestar but explains if this amount were “granted in full, such an award would result in a lodestar
multiplier of between approximately 3.5 and 4.5.” (Id.) The motion also indicates Plaintiffs
intend to “seek reimbursement of up to $500,000 for their reasonable litigation expenses.” (Id.)
Plaintiffs shall submit a motion for attorneys’ fees, including declarations and detailed
billing records, so the Court may determine an appropriate lodestar figure, and to allow Settlement
Class Members the opportunity to object to the requested fees. See In re Mercury, 618 F.3d at 995
(holding that class members must “have an opportunity to oppose class counsel’s fee motion”
before the deadline for filing objections set forth in the class notice). Counsel shall also submit
detailed information in support of their request for $500,000 in litigation expenses so the Court
can determine whether such costs are reasonable expenses incurred for the benefit of the class.
VI. CLASS REPRESENTATIVE AWARDS
Finally, Plaintiffs intend to seek up to $10,000 for Lead Plaintiff Mr. Warren under 5
U.S.C. § 78u-4(a)(4). (Dkt. No. 123 at ¶ 3.) As the Court noted in its request for supplemental
briefing, Section § 78u-4(a)(4) awards allow a representative to recover “reasonable costs and
expenses (including lost wages) directly relating to the representation of the class.” See 15 U.S.C.
§ 78u-4(a)(4). Thus, any request for compensation must be supported by declarations or other
evidence supporting the lost wages and any other costs as expenses.
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CONCLUSION
For the reasons stated above, the Court GRANTS preliminary approval of the class action
settlement as follows:
1. This action is provisionally certified as a class action, for settlement purposes only,
pursuant to Federal Rule of Civil Procedure 23. The Court preliminarily certifies the
following Settlement Class:
all persons and entities other than defendants who purchased or
otherwise acquired HEI securities between February 28, 2019 and
September 4, 2023, both dates inclusive, and were damaged thereby.
2. The Court preliminarily appoints Pomerantz LLP as Class Counsel for the Settlement
Class.
3. The Court preliminarily appoints Lead Plaintiff Daniel Warren as Class Representative for
the Settlement Class.
4. The Court approves the appointment of Huntington National Bank as the Escrow Agent to
manage the Settlement Fund for the benefit of the Settlement Class.
5. The Court approves and appoints Verita as the Settlement Administrator to supervise and
administer the notice procedure and the processing of claims, and approves the payment of
reasonable administration costs to the Settlement Administrator from the proceeds of the
Settlement, not to exceed $500,000 without further Court order prior to the Effective Date.
6. Within 20 days of entry of this Order, the Settlement Administrator shall:
a. Mail potential Settlement Class Members at the addresses set forth in the
shareholder transfer records provided by the Company, or who otherwise may be
identified through further reasonable effort, (i) the Notice, and (ii) Proof of Claim.
b. Post the Notice and Proof of Claim on the Settlement Administrator's website.
c. Publish the Summary Notice in GlobeNewswire.
d. Provide notice to the nominees as set forth in the Cavallo Declaration (Dkt. No.
119-2.).
7. Plaintiffs shall file a copy of the Notice and Claim Form within 10 days of dissemination
of notice.
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8. Class Counsel shall file a motion for attorneys’ fees and costs by May 21, 2026.
9. The deadline for class members to submit a Claim Form shall be June 25, 2026.
10. The deadline for class members to submit a Request for Exclusion shall be June 25, 2026.
11. The deadline for class members to object to the Settlement Agreement and/or Class
Counsel’s motion for attorneys’ fees and costs shall June 25, 2026.
12. Plaintiffs shall file their Motion for Final Approval by July 30, 2026. The motion for final
approval shall address the final approval guidelines in the Northern District of California’s
Procedural Guidance for Class Action Settlements, available at
https://cand.uscourts.gov/forms/procedural-guidance-for-class-action-settlements/, in the
order the guidelines are presented on the website. As reflected in the Guidance, the Court
will require a post-distribution accounting within 21 days after the distribution of
settlement funds.
13. The parties shall appear before this Court for a final approval hearing on August 13, 2026
at 9:00 a.m. via Zoom video.
IT IS SO ORDERED.
Dated: March 3, 2026
JACQUELINE SCOTT CORLEY
United States District Judge
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