In re: Petrobras Securities Litigation ( 2019 )

18‐2708
In re: Petrobras Securities Litigation
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY
ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF
APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER
IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR
AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING TO A
SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit,
held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New
York, on the 5th day of September, two thousand nineteen.
PRESENT:
PETER W. HALL,
DEBRA ANN LIVINGSTON,
Circuit Judges,
JANE A. RESTANI,*
Judge.
IN RE: PETROBRAS SECURITIES LITIGATION
WILLIAM THOMAS HAYNES, AS TRUSTEE FOR THE
BENEFIT OF W THOMAS AND KATHERINE HAYNES
IRREVOCABLE TRUST FOR THE BENEFIT OF SARA L
HAYNES,
Objector‐Appellant,
v. No. 18‐2708
UNIVERSITIES SUPERANNUATION SCHEME LIMITED,
*Judge Jane A. Restani, of the United States Court of International Trade, sitting by
designation.
1
EMPLOYEES RETIREMENT SYSTEM OF THE STATE OF
HAWAII, NORTH CAROLINA DEPARTMENT OF STATE
TREASURER,
Plaintiffs‐Appellees,
AURA CAPITAL LTD., DIMENSIONAL EMERGING
MARKETS VALUE FUND, DFA INVESTMENT
DIMENSIONS GROUP INC., ON BEHALF OF ITS SERIES
EMERGING MARKETS CORE EQUITY PORTFOLIO,
EMERGING MARKETS SOCIAL CORE EQUITY
PORTFOLIO AND T.A. WORLD EX U.S. CORE EQUITY
PORTFOLIO, DFA INVESTMENT TRUST COMPANY, ON
BEHALF OF ITS SERIES THE EMERGING MARKETS
SERIES, DFA AUSTRIA LIMITED, SOLELY IN ITS
CAPACITY AS RESPONSIBLE ENTITY FOR THE
DIMENSIONAL EMERGING MARKETS TRUST, DFA
INTERNATIONAL CORE EQUITY FUND, AND DFA
INTERNATIONAL VECTOR EQUITY FUND BY
DIMENSIONAL FUND ADVISORS CANADA ULC
SOLELY IN ITS CAPACITY AS TRUSTEE, DIMENSIONAL
FUNDS PLC, ON BEHALF OF ITS SUB‐FUND EMERGING
MARKETS VALUE FUND, DIMENSIONAL FUNDS ICVC,
ON BEHALF OF ITS SUB‐FUND EMERGING MARKETS
CORE EQUITY FUND, SKAGEN AS, DANSKE INVEST
MANAGEMENT A/S, DANSKE INVEST MANAGEMENT
COMPANY, NEW YORK CITY EMPLOYEESʹ RETIREMENT
SYSTEM, NEW YORK CITY POLICE PENSION FUND,
BOARD OF EDUCATION RETIREMENT SYSTEM OF THE
CITY OF NEW YORK, TEACHERSʹ RETIREMENT SYSTEM
OF THE CITY OF NEW YORK, NEW YORK CITY FIRE
DEPARTMENT PENSION FUND, NEW YORK CITY
DEFERRED COMPENSATION PLAN, FORSTA AP‐
FONDEN, TRANSAMERICA INCOME SHARES, INC.,
TRANSAMERICA FUNDS, TRANSAMERICA SERIES
TRUST, TRANSAMERICA PARTNERS PORTFOLIOS, JOHN
HANCOCK VARIABLE INSURANCE TRUST, JOHN
HANCOCK FUNDS II, JOHN HANCOCK SOVEREIGN
BOND FUND, JOHN HANCOCK BOND TRUST, JOHN
HANCOCK STRATEGIC SERIES, JOHN HANCOCK
INVESTMENT TRUST, JHF INCOME SECURITIES TRUST,
JHF INVESTORS TRUST, JHF HEDGED EQUITY &
INCOME FUND, ABERDEEN EMERGING MARKETS
2
EQUITY FUND, ABERDEEN GLOBAL EQUITY & INCOME
FUND, ABERDEEN GLOBAL NATURAL RESOURCES
FUND, ABERDEEN INTERNATIONAL EQUITY FUND,
EACH A SERIES OF ABERDEEN FUNDS; ABERDEEN
CANADA EMERGING MARKETS FUND, ABERDEEN
CANADA SOCIALLY RESPONSIBLE GLOBAL FUND,
ABERDEEN CANADA SOCIALLY RESPONSIBLE
INTERNATIONAL FUND, ABERDEEN CANADA FUNDS
EAFE PLUS EQUITY FUND AND ABERDEEN CANADA
FUNDS GLOBAL EQUITY FUND, EACH A SERIES OF
ABERDEEN CANADA FUNDS, ABERDEEN EAFE PLUS
ETHICAL FUND, ABERDEEN EAFE PLUS FUND,
ABERDEEEN EAFF PLUS SRI FUND, ABERDEEEN
EMERGING MARKETS EQUITY FUND, AND ABERDEEN
GLOBAL EQUITY FUND, EACH A SERIES OF ABERDEEN
INTITUTIONAL C, ABERDEEN FULLY HEDGED
INTERNATIONAL EQUITIES FUND, ABERDEEN
INTERNATIONAL EQUITY FUND, ABERDEEN GLOBAL
ETHICAL WORLD EQUITY FUND, ABERDEEN GLOBAL
RESPONSIBLE WORLD EQUITY FUND, ABERDEEN
GLOBAL WORLD EQUITY DIVIDEND FUND, ABERDEEN
GLOBAL WORLD EQUITY FUND, ABERDEEN GLOBAL
WORLD RESOURCES EQUITY FUND, ABERDEEN
EMERGING MARKETS EQUITY FUND, ABERDEEN
ETHICAL WORLD EQUITY FUND, ABERDEEN MULTI‐
ASSET FUND, ABERDEEN WORLD EQUITY FUND,
ABERDEEN WORLD EQUITY IN, ABERDEEN LATIN
AMERICA EQUITY FUND, INC., ABERDEEN LATIN
AMERICA EQUITY FUND, INC., AAAID EQUITY
PORTFOLIO, ALBERTA TEACHERS RETIREMENT FUND,
AON HEWITT INVESTMENT CONSULTING, INC.,
AURION INTERNATIONAL DAILY EQUITY FUND, BELL
ALIANT REGIONAL COMMUNICATIONS INC., BMO
GLOBAL EQUITY CLASS, CITY OF ALBANY PENSION
PLAN, DESJARDINS DIVIDEND INCOME FUND,
DESJARDINS EMERGING MARKETS FUND, DESJARDINS
EMERGING MARKETS FUND, DESJARDINS GLOBAL ALL
CAPITAL EQUITY FUND, DESJARDINS OVERSEAS
EQUITY VALUE FUND, DEVON COUNTY COUNCIL
GLOBAL EMERGING MARKET FUND, DEVON COUNTY
COUNCIL GLOBAL EQUITY FUND, DGIA EMERGING
MARKETS EQUITY FUND L.P., ERIE INSURANCE
EXCHANGE, FIRST TRUST / ABERDEEN EMERGING
3
OPPORTUNITY FUND, GE UK PENSION COMMON
INVESTMENT FUND, HAMPSHIRE COUNTY COUNCIL
GLOBAL EQUITY PORTFOLIO, LONDON BOROUGH OF
HOUNSLOW SUPPERANNUATION FUND, MACKENZIE
UNIVERSAL SUSTAINABLE OPPORTUNITIES CLASS,
MARSHFIELD CLINIC, MOTHER THERESA CARE AND
MISSION TRUST, MTR CORPORATION LIMITED
RETIREMENT SCHEME, MYRIA ASSET MANAGMENT
EMERGENCE, M, NATIONAL PENSION SERVICE, AND
NPS TRUST ACTIVE 14, OHIO PUBLIC EMPLOYEES
RETIREMENT SYSTEM, WASHINGTON STATE
INVESTMENT BOARD, ABERDEEN LATIN AMERICAN
INCOME FUND LIMITED, ABERDEEN GLOBAL EX JAPAN
PENSION FUND PPIT, FS INTERNATIONAL EQUITY
MOTHER FUND, NN INVESTMENT PARTNERS B.V.,
ACTING IN THE CAPACITY OF MANAGEMENT, NN
INVESTMENT PARTNERS B.V., ACTING IN THE
CAPACITY OF MANAGEMENT COMPANY OF THE
MUTUAL FUND NN GLOBAL EQUITY FUND, NN
INVESTMENT PARTNERS B.V., ACTING IN THE
CAPACITY OF MANAGEMENT COMPANY OF THE
MUITUAL FUND NN HOOG DIVIDEND AANDELEN
FONDS, NN INVESTMENT PARTNERS B.V., ACTING IN
THE CAPACITY OF MANAGEMENT COPMANY OF THE
MUTUAL FUND NN INSTITUTIONEEL DIVIDEND
AANDELEN, NN INVESTMENT PARTNERS
LUXEMBOURG S.A., ACTING IN THE CAPACITY OF
MANAGEMENT COMPANY SICAV AND ITS SUB‐FUNDS,
AND NN (L) SICA, FOR AND ON BEHALF OF NN (L)
EMERGING MARKETS HIGH DIVIDEND, NN (L) FIRST,
AURA CAPITAL LTD., WGI EMERGING MARKETS
FUND, LLC, BILL AND MELINDA GATES FOUNDATION
TRUST, BOARD OF REGENTS OF THE UNIVERSITY OF
TEXAS SYSTEM, TRUSTEES OF THE ESTATE OF BERNICE
PAUAHI BISHOP, DBA KAMEHAMEHA SCHOOLS,
LOUIS KENNEDY, INDIVIDUALLY AND ON BEHALF OF
ALL OTHERS SIMILARLY SITUATED, KEN NGO,
INDIVIDUALLY AND ON BEHALF OF ALL OTHER
SIMILARLY SITUATED, CITY OF PROVIDENCE,
INDIVIDUALLY AND ON BEHALF OF ALL OTHER
SIMILARLY SITUATED,
HANDELSBANKEN FONDER AB,
PUBLIC EMPLOYEE RETIREMENT SYSTEM OF IDAHO,
PETER KALTMAN, INDIVIDUALLY AND ON BEHALF OF
4
ALL OTHERS SIMILARLY SITUATED,
UNION ASSET
MANAGEMENT HOLDING AG, JONATHAN MESSING,
INDIVIDUALLY AND ON BEHALF OF ALL OTHER
SIMILARLY SITUATED,
Plaintiffs,
v.
MARIANGELA MOINTEIRO TIZATTO, JOSUE
CHRISTIANO GOME DA SILVA, DANIEL LIMA DE
OLIVEIRA, JOSE SERGIO GABRIELLI, SILVIO SINEDINO
PINHEIRO, PAULO ROBERTO COSTA, JOSE CARLOS
COSENZA, RENATO DE SOUZA DUQUE, GUILLHERME
DE OLIVEIRA ESTRELLA, JOSE MIRANDA FORMIGL
FILHO, MARIA DAS GRACAS SILVA FOSTER, ALMIR
GUILHERME BARBASSA, SERVIO TULIO DA ROSA
TINOCO, PAULO JOSE ALVES, GUSTAVO TARDIN
BARBOSA, ALEXANDRE QUINTAO FERNANDES,
MARCOS ANTONIO ZACARIAS, CORNELIS FRANCISCUS
JOZE LOOMAN, SANTANDER INVESTMENT SECURITIES
INC., BANCO VOTORANTIN NASSAU BRANCH,
PETROLEO BRASILEIRO S.A. PETROBRAS, BB
SECURITIES LTD., THEODORE MARSHALL HELMS,
PETROBRAS GLOBAL FINANCE B.V., PETROBRAS
AMERICA INC., JOSE RAIMUNDO BRANDA PEREIRA,
CITIGROUP GLOBAL MARKETS INC., JP MORGAN
SECURITIES LLC, MORGAN STANLEY & CO. LLC,
MITSUBISHI UFJ SECURITIES (USA), INC., HSBC
SECURITIES (USA) INC., MERRILL LYNCH, PIERCE,
FENNER & SMITH INCORPORATED, STANDARD
CHARTERED BANK, BANK OF CHINA (HONG KONG)
LIMITED, BANCO BRADESCO BBI S.A., BANCA IMI,
S.P.A., SCOTIA CAPITAL (USA) INC.,
PRICEWATERHOUSECOOPERS AUDITORES
INDEPENDENTES, ITAU BBA USA SECURITIES, INC.,
Defendants.
Appearing for Objector‐Appellant: ANNA ST. JOHN (Theodore H. Frank, Adam E.
Schulman, on the brief), Competitive Enterprise
5
Institute, Center for Class Action Fairness,
Washington, DC.
Appearing for Plaintiffs‐Appellees: JEREMY A. LIEBERMAN (Emma Gilmore, Brenda
Szydlo, Jennifer Banner Sobers, on the brief),
Pomerantz LLP, New York, NY.
Appeal from an order of the United States District Court for the Southern District
of New York (Rakoff, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the order entered on August 16, 2018, is AFFIRMED in part and
VACATED in part and the case is REMANDED for further proceedings.
Objector‐Appellant William Thomas Haynes, as trustee for the benefit of the W.
Thomas and Katherine Haynes Irrevocable Trust for the benefit of Sara L. Haynes,
appeals from an order of the district court granting in part and denying in part his
application for attorneys’ fees. Haynes objected to both the district court’s certification
of the settlement class in this case and certain aspects of class counsel’s request for
attorneys’ fees. The district court overruled all of Haynes’s certification objections and
found most of his fee objections unhelpful. But the district court did reduce class
counsel’s fee award by approximately $46 million based on Haynes’s objection that
Plaintiffs improperly classified certain costs. Haynes then sought $199,400 in attorneys’
fees based on his objections. The district court awarded $11,731.65 in fees, which,
according to the district court, represented a reasonable fee for the hours spent on
6
Haynes’s one successful objection. See generally In re Petrobras Sec. Litig., 320 F. Supp. 3d
597, 599–602 (S.D.N.Y. 2018). This appeal follows. We assume the parties’ familiarity
with the underlying facts, the procedural history of the case, and the issues on appeal.
A district court’s fee award is reviewed for abuse of discretion. See Goldberger v.
Integrated Res., Inc., 209 F.3d 43, 47 (2d Cir. 2000). This Court has recognized the “valuable
and important role” of objectors, holding that objectors are “entitled to an allowance as
compensation for attorneys’ fees and expenses where a proper showing has been made
that the settlement was improved as a result of their effort.” See White v. Auerbach, 500
F.2d 822, 828 (2d Cir. 1974). “Ordinarily the trial judge has broad discretion in deciding
whether, and in what amount, attorneys’ fees should be awarded, since he is in the best
position to determine whether the participation of objectors assisted the court and
enhanced the recovery.” Id. However, judges can still abuse this broad discretion where
they make errors of law. See Kickham Hanley P.C. v. Kodak Ret. Income Plan, 558 F.3d 204,
209 (2d Cir. 2009).
This appeal all boils down to parsing. That is, should the district court have looked
only to Haynes’s successful objection when calculating a reasonable attorneys’ fee? Both
sides appear to agree that we have not required a different lodestar analysis when the fee
seeker is an objector rather than a party to the underlying litigation. But both latch on to
different language from Hensley v. Eckerhart, 461 U.S. 424 (1983), concerning the
appropriate attorneys’ fee here. Haynes insists that “[w]here a[n] [objector] has obtained
7
excellent results, his attorney should recover a fully compensatory fee.” See id. at 435.
Plaintiffs, on the other hand, contend that Haynes’s objections were “based on different
facts and legal theories” such that his “work on [the] unsuccessful [objections] cannot be
deemed to have been expended in pursuit of the ultimate result achieved,” and “therefore
no fee may be awarded for services on the unsuccessful [objections].” See id. at 434–35
(internal quotation marks omitted).
Haynes has the short end of the stick in one respect. He invites us to adopt a level
of generality that would broadly frame the relevant issue as “protecting the class.” We
decline to do so and conclude that Haynes’s objections to the certification of the
settlement class (subclass issues) are unrelated to his objections to Plaintiffs’ attorneys’
fees (improper billing practices). We therefore affirm the aspects of the district court’s
order which denied fees for his unsuccessful objections to the settlement.
However, we are not sure that Haynes’s fee objections are as unrelated as Plaintiffs
would have it. In Hensley, the Court noted that “[t]here is no precise rule or formula for
making [the] determination” whether a plaintiff’s claims are or are not related. Id. at 436.
But the Court stated that where a party’s “claims for relief . . . involve a common core of
facts or will be based on related legal theories,” a “fee award should not be reduced
simply because the plaintiff failed to prevail on every contention raised in the lawsuit.”
Id. at 435. Indeed, “[l]itigants in good faith may raise alternative legal grounds for a
8
desired outcome, and the court’s rejection of or failure to reach certain grounds is not a
sufficient reason for reducing a fee.” Id.
Here, it seems to us that many of Haynes’s fee objections may in fact “involve a
common core of facts,” all relating to Plaintiff’s alleged overbilling, use of foreign
attorneys, and other case‐related factual questions. For instance, as to both Plaintiffs’
Brazilian attorneys and its domestic attorneys, Haynes argued that Plaintiffs made the
same mistake: they did not submit a fee request at cost for nonlegal work. Haynes
contended, then, that there was a recognizable pattern and method of overbilling across
Plaintiffs’ attorneys. Similarly, Haynes argued that Plaintiffs did not submit sufficient
billing summaries as to any of its attorneys. These links between Haynes’s fee objections
suggest to us a potential common core of facts. Unfortunately, it is impossible for us to
properly apply the relevant standard of review—abuse of discretion—because the district
court entirely failed to explain its thought process on this point. It did not explain
whether it simply did not consider if all the arguments made in Haynes’s objection were
sufficiently related to justify a larger fee award, or whether it did consider it but decided
that the arguments were not sufficiently related. Moreover, the district court did not
explain how or whether it took account of Hensley’s directive that, when awarding
attorneys’ fees, judges must exercise their discretion in accordance with the principle that
“[t]he most critical factor is the degree of success obtained.” Id. at 436.
9
In general, we require district courts to provide a “concise but clear explanation of
its reasons” for excluding time from an award of attorneys’ fees. Id. at 437. This
requirement that a court ‘state its reasons for excluding . . . hours as specifically as
possible” is crucial “in order to permit meaningful appellate review.” Gierlinger v.
Gleason, 160 F.3d 858, 876 (2d Cir. 1998) (internal quotation marks omitted). We therefore
vacate and remand for the district court to fully explain whether, and why, it deemed
Haynes’s various arguments so separate as to warrant being “viewed as a series of
discrete claims.” Hensley, 461 U.S. at 435.
Similarly, with respect to the district court’s denial of Haynes’s request for fees for
“all inclusive” activities—that is, satisfying the class notice requirements, preparing for
the fairness hearing, and responding to discovery requests—we are unable to properly
evaluate the district court’s decision based on the current record. We have not directly
opined on whether such activities, in which an objector’s participation is necessary to
enable him to pursue his objections at all, should be considered when determining a
reasonable attorneys’ fee for the objector. The only case cited by the parties that is on
point is another Center for Class Action Fairness (“CCAF”) objection case out of the
Northern District of California. See In re Transpacific Passenger Air Transp. Antitrust Litig.,
No. 07‐5634, 2015 WL 4776946 (N.D. Cal. Aug. 13, 2015). In that case, the district court
had overruled all of CCAF’s objections to the settlement and found most of its fee
objections unhelpful, yet the court nonetheless awarded CCAF 90% of its lodestar. Id. at
10
*1 & n.1. The court noted that CCAF had admitted that it spent “very little” time
identifying the issue on which it raised a successful objection but had “argu[ed]
persuasively that it would have been quite impossible for Ms. Yang to raise the Rule
23(h)(1) violation with the Court if her attorneys had not spent the initial 200+ hours
preparing a timely objection and defending Ms. Yang from . . . discovery.” Id. at *2
(second alteration in original) (internal quotation marks omitted).
So too here. It is undisputed that Haynes was subject to discovery if he chose to
participate as an objector. See Notice of Settlement at 27, In re Petrobras Secs. Litig., 320 F.
Supp. 3d 597 (No. 14‐cv‐9662), ECF No. 789‐2 (“If you object to either the Settlement or
the requested reimbursement of expenses, you subject yourself to the jurisdiction of the
District Court in this matter and consent to being deposed in your district of residence
and producing in advance of a deposition any responsive documents to a discovery
request prior to the Settlement Hearing. If you refuse to comply with the relevant
discovery described above your objection will be deemed invalid.”). The district court
therefore reasonably could have concluded that it “would have been quite impossible”
for Haynes to raise his successful objection without hours spent on those preliminary
matters. See Transpacific, 2015 WL 4776946, at *2. The court also may have decided that
the hours billed were unreasonable. But we do not know because the district court did
11
not say.1 We therefore also vacate this aspect of the district court’s order and remand for
further proceedings.
We have considered Haynes’s remaining arguments and find them to be without
merit. The order of the district court is AFFIRMED in part and VACATED in part, and
the case is REMANDED for further proceedings consistent with this order.
FOR THE COURT:
CATHERINE O’HAGAN WOLFE, Clerk of Court
1 Plaintiffs insist that the fault is Haynes’s for failing adequately to quantify the hours
spent on these “all inclusive” activities. See Appellee Br. at 52–57. Perhaps so, but again,
the district court gave no indication that it even considered these activities when
determining a reasonable fee award.
12