According to an article dated March 4, 2008, the district court approved the settlement on July 12, 2006, as reasonable considering the uncertain outcome and legal and factual questions (Sutton v. Bernard, 446 F.Supp.2d 814). The court held attorneys' fees would be awarded from the net settlement after expenses -- the net being $17,360,491.44. The district court, using the "degree of success" test, determined a fee of 15 percent of the net settlement, or $2,605,000, would be awarded, citing Hensley v. Eckerhart, 461 U.S. 424, 436, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), and relying upon the Private Securities Litigation Reform Act of 1995, 15 U.S.C. [sec] 78u-4(a)(6) (2007), as authority. The plaintiffs' counsel appealed. … Concluding the district court abused its discretion, [7th Circuit Judge Ann Claire] Williams stated: "A review of the shortcomings in the district court's methodology leads us to conclude that the court abused its discretion in awarding Counsel's fee percentage. The district court erroneously concluded that its fee determination was controlled by the `degree of success' achieved for the class. In addition, it did not factor into its assessment the value that the market would have placed on Counsel's legal services had its fee been arranged at the outset. Because the district court's fee award of 15 percent of the common fund is based on an erroneous conclusion of law, it must be vacated." The court vacated the district court's judgment and remanded for further proceedings.
According to the Order and Final Judgment signed by U.S. District Judge John F. Grady on July 12, 2006, the settlement is approved and the complaint is dismissed with prejudice and without costs, except as provided in the Stipulation. The Plan of Allocation is also approved, and Plaintiffs’ Counsel is awarded 15% of the Net Settlement Fund, or the sum of $2,605,000 in fees, and $639,508.56 in reimbursement of expenses.
By the Notice of Proposed Settlement of Class Action dated January 24, 2005, a Settlement Fund consisting of $18,000,000 in cash, plus interest, has been established. A hearing will be held on April 6, 2005, to determine whether a proposed settlement as set forth in the Stipulation and Agreement of Settlement dated December 15, 2004, is fair, reasonable and adequate and to consider the proposed Plan of Allocation for the Settlement proceeds and the application of Plaintiffs’ Counsel for attorneys’ fees and reimbursement of expenses.
As summarized by the same Notice, by the order dated February 7, 2001 the Honorable John F. Grady, United States District Court for the Northern District of Illinois, consolidated the actions and appointed Lead Plaintiffs and Lead Plaintiffs’ Counsel. On May 3, 2001, the Lead Plaintiffs filed a Consolidated Amended Class Action Complaint (the “Complaint”), on behalf of all persons who purchased or acquired the securities of marchFIRST during the period commencing March 23, 2000 through November 20, 2000 (the “Class Period”) against Robert F. Bernard, Robert T. Clarkson, and Bert B. Young (the “Defendants”). Due to its bankruptcy, marchFIRST was not named as a defendant in the Complaint. Defendants moved to dismiss the complaint on June 15, 2002. On August 6, 2001, Judge Grady denied the motion o dismiss and directed the Defendants to file an answer to the Complaint by August 28, 2001. On September 4, 2001 Lead Plaintiffs filed a Motion for Class Certification. Following extensive discovery and briefing on class certification, Judge Grady certified the class by Order dated December 17, 2001. The first of several discovery requests were served by Lead Plaintiffs on September 6, 2001. Discovery has been on-going and extensive. Lead Plaintiffs have requested, received, and reviewed hundreds of boxes of documents. In addition to this Action, other litigation was brought against the Defendants. The bankruptcy Trustee for the estate of marchFIRST instituted adversary proceedings in the bankruptcy court against the Defendants herein and other former officers and directors of marchFIRST.
The original class action lawsuit commenced charging marchFIRST and its chief executive officer with violations of Sections 10(b) and 20 of the Securities Exchange Act of 1934 and SEC Rule 10b-5. The complaint alleges that Defendants made a series of materially false and misleading statements in: press releases, statements to stock analysts, and SEC filings. The misrepresentations concerned: the Company's second quarter 2000 financial results; its improving business momentum, its ability to meet analyst expectations for third quarter performance, and the quality of its accounts receivables. As a result, marchFIRST's stock price was artificially inflated throughout the Class Period.
NOTE: On April 12, 2001, the Company filed for relief under Chapter 1 I of the Federal Bankruptcy Code. For this reason, marchFIRST has not been included as a named defendant in the consolidated complaint.