Notable Class Action Settlements
In re Cendant Corporation Litigation (D.N.J.)
The >$3.3 billion in settlements, at the time they were reached, represented the largest amount by far recovered in a securities fraud class action; that amount still represents the third largest securities fraud settlement. Jeff developed the plan to allocate those proceeds among acquirers of:
​
I. The common stock of Cendant and its predecessor, CUC International, Inc., including stock acquired in exchange for HFS International common stock in the merger between HFS and CUC (which combined to form Cendant on December 17, 1997), the latter of which asserted claims under both the Securities Act and the Exchange Act;
​
II. Cendant and CUC common stock options; and
​
III. Three separate Cendant debt securities.
​
That plan, which addressed the accumulating artificial inflation that entered the market prices of each CUC and Cendant security with each successive materially misleading disclosure, the effects on the market for each security made by three partial corrective disclosures, and the superior strength of the Securities Act claims, was approved over objection and then upheld on appeal. Given the size of the recovery and the necessary complexity of the allocation plan, Jeff also implemented for the first time the following precautions designed to reduce the likelihood of claims administration errors going undetected until after distribution:
​
I. To gain assurance concerning claims processing accuracy, retaining a well-respected accounting firm to audit the results of the claims administration and to issue a report thereon that was filed with the court;
​
II. To address any issues that may be identified after initial distribution checks were mailed, designing the distribution plan to include a reserve equal to 35% of the net settlement fund;
​
III. To prevent challenges from occurring after the reserve was distributed, advising claimants that any disagreement with the check amount must be brought to the claims administrator’s attention by a date specified in the cover letter;
​
IV. To allow claimants to evaluate the amount of their checks, including with each check the amount of recognized loss and the pro rata amounts; and
​
V. To determine whether any class members submitted proofs of claim that had not been processed, published on the case website and in prominent publications two weeks after the initial distribution was conducted a notice that advised that a distribution had occurred and that anyone that had submitted a proof of claim but did not receive either a check or a notification that the claim was rejected must advise the claims administrator by a date set forth in the notice.
​
Several of those precautions, particularly the audit of the claims administrator, have become customary in the administrations of large settlements.
In re WorldCom Inc. Securities Litigation (S.D.N.Y.)
The $6.2 billion recovered still represents the second largest securities fraud class action settlement in U.S. history. Jeff developed the plan to allocate those proceeds, which involved four separate pools of settlement funds that resulted from the settlement of different claims (e.g., Securities Act and Exchange Act) asserted against different defendants, among class members that, during different class periods, purchased over 40 securities, such as common, preferred and tracking stock; bonds; notes; and derivatives issued by WorldCom and its predecessors. Here, too, he vetted and retained an independent accounting firm to audit the claims administrator’s results and conducted the distribution in stages.
In re Nortel Networks Corp. Securities Litigation (S.D.N.Y.).
The >$1.074 million settlement, which included $370,157,418 of cash and 314,333,875 shares of Nortel common stock that, as of June 30, 2006, had an aggregate market value of $704,107,880, resolved claims asserted under the U.S. securities laws and in two class actions pending in Canada on behalf of purchasers of Nortel common stock and call options, and of writers (sellers) of put options (the “Nortel II Actions”). Because a condition to the settlements of the Nortel II Actions was obtaining judicial, securities, regulatory and stock exchange approval of them and of a separate class action pending in the Southern District of New York and related actions in Ontario, Quebec and British Columbia on behalf of investors during an earlier time period (the “Nortel I Actions”), Jeff coordinated with Canadian class counsel in Ontario and Quebec in the Nortel II Actions, as well as with U.S. and Canadian class counsel in the Nortel I Actions, on all settlement provisions and documents, including the manner in which, and procedures for, Nortel’s issuance to class members of its common stock. The ~$1.143 million settlement of the Nortel I Actions included $438,667,428 of cash and 314,333,875 shares of Nortel common stock that, as of June 30, 2006, had an aggregate market value of $704,107,880. The total recovered was >$2.217 million, comprised of $808,824,846 of cash and 628,667,750 shares of Nortel common stock that, as of June 30, 2006, had an aggregate market value of $1,408,215,760.
Other Notable Settlements
Among the scores of settlements that Jeff managed are In re HealthSouth Bondholder Litigation (N.D. Ala.); In re Lucent Technologies, Inc. Securities Litigation (D.N.J.); Ohio Public Employees Retirement System v. Freddie Mac (S.D. Ohio); In re Refco, Inc. Securities Litigation (S.D.N.Y.); In re Williams Securities Litigation (N.D. Okla.); In re Bristol-Myers Squibb Securities Litigation (S.D.N.Y.); In re El Paso Corporation Securities Litigation (S.D. Tex.); and In re The Mills Corporation Securities Litigation (E.D. Va.).