Lead Plaintiff's Motion for Final Approval Of
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Case 1:18-cv-06965-JGK Document 136 Filed 04/01/21 Page 1 of 37 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK Case No. 1:18-CV-06965-JGK IN RE HELIOS AND MATHESON ANALYTICS, INC. SECURITIES CLASS ACTION LITIGATION DECLARATION OF SHANNON L. HOPKINS IN SUPPORT OF (1) LEAD PLAINTIFF’S MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT AND PLAN OF ALLOCATION AND FINAL CERTIFICATION OF SETTLEMENT CLASS, AND (2) LEAD COUNSEL’S MOTION FOR AN AWARD OF ATTORNEYS’ FEES, REIMBURSEMENT OF EXPENSES, AND INCENTIVE AWARDS TO LEAD PLAINTIFF Case 1:18-cv-06965-JGK Document 136 Filed 04/01/21 Page 2 of 37 TABLE OF CONTENTS I. PRELIMINARY STATEMENT ........................................................................................ 1 II. FACTUAL AND PROCEDURAL BACKGROUND........................................................ 6 A. Summary of the Claims and Allegations ............................................................................ 6 B. Procedural History .............................................................................................................. 8 C. Mediation and Settlement Negotiations ............................................................................ 13 III. SUMMARY OF THE SETTLEMENT, PLAN OF ALLOCATION, AND NOTICE PROGRAM ....................................................................................................................... 14 A. Summary of the Settlement Terms ................................................................................... 14 B. The Court Has Preliminarily Approved Settlement .......................................................... 15 C. Dissemination of Notice to the Class Was Adequate and Accomplished in Accordance with the Preliminary Approval Order ........................................................... 16 D. The Settlement is Fair, Reasonable, and Adequate........................................................... 20 E. The Plan of Allocation is Fair, Reasonable, and Adequate .............................................. 23 F. The Settlement Class Should be Finally Certified ............................................................ 24 IV. PLAINTIFF’S COUNSEL’S REQUEST FOR ATTORNEYS’ FEES AND EXPENSES IS REASONABLE AND SHOULD BE APPROVED ................................ 24 A. The Fee Application .......................................................................................................... 24 B. Plaintiffs’ Counsel’s Work and Expertise ......................................................................... 25 C. Standing and Caliber of Opposing Counsel ...................................................................... 28 D. The Risks of Contingent Litigation................................................................................... 28 E. The Reaction of the Settlement Class to the Requested Fee ............................................. 28 F. Payment of the Requested Expenses and Costs is Fair and Reasonable ........................... 29 V. LEAD PLAINTIFF’S REQUEST FOR AWARDS IS REASONABLE AND SHOULD BE APPROVED .............................................................................................. 30 VI. EXHIBITS ........................................................................................................................ 31 VII. CONCLUSION ................................................................................................................. 33 Case 1:18-cv-06965-JGK Document 136 Filed 04/01/21 Page 3 of 37 I, Shannon L. Hopkins, Esq., pursuant to 28 U.S.C. §1746, hereby declare as follows: 1. I am duly admitted to practice in New York and before this Court. I am a partner at the law firm of Court-appointed Lead Counsel Levi & Korsinsky, LLP (“L&K”), counsel of record for Lead Plaintiff Helios and Matheson Investor Group, comprised of George Hurst, Marcus Washington, Daniel Mercer, Juan Taveras, and Amit Katiyar (collectively, “Plaintiffs” or “Lead Plaintiff”), in the above-captioned securities class action (the “Action”).1 I respectfully submit this Declaration in support of (1) Lead Plaintiff’s Motion for Final Approval of Class Action Settlement and Plan of Allocation and Final Certification of Settlement Class, and (2) Lead Counsel’s Motion for an Award of Attorneys’ Fees, Reimbursement of Expenses, and Incentive Awards to Lead Plaintiff. On April 1, 2021, counsel for Defendants (defined below), Robert Horowitz, Esq., confirmed Defendants do not oppose Lead Plaintiff’s motion for approval of the Settlement and motion for an award of fees and reimbursement of expenses. 2. I have personally participated in, overseen, and monitored the prosecution of this Action, and have otherwise been kept informed of developments in this litigation by attorneys working with me and under my supervision. Thus, if called upon, I can testify to the matters set forth herein. I. PRELIMINARY STATEMENT 3. After over two years of adversarial litigation which included a full-day mediation before a highly-experienced mediator, David Murphy, Esq. (“Mr. Murphy” or “Mediator”) and subsequent vigorous negotiations facilitated by Mr. Murphy resulting in his personal recommendation to settle the Action, Lead Plaintiff reached an agreement memorialized in the 1 Unless otherwise noted, all capitalized terms not defined herein shall have the same meaning ascribed to them in the Stipulation and Agreement of Settlement dated December 11, 2020 (ECF No. 126-1, the “Stipulation” or “Stip”). 1 Case 1:18-cv-06965-JGK Document 136 Filed 04/01/21 Page 4 of 37 Stipulation (the “Settlement”) that provides for an immediate payment of $8,250,000 in cash (the “Settlement Amount”) for resolution of all claims against defendants Theodore Farnsworth (“Farnsworth”), Stuart Benson (“Benson”), and Mitch Lowe (“Lowe,” and with Farnsworth and Benson, the “Individual Defendants”), which the Court preliminarily approved on December 23, 2020. ECF No. 128 (the “Preliminary Approval Order”). 4. While Lead Plaintiff and Lead Plaintiff’s Counsel believe that the allegations in the Third Amended Class Action Complaint (ECF No. 92, “TAC”) have substantial merit,2 they submit that the Settlement represents an excellent result for the Settlement Class. For the reasons set forth below, Lead Plaintiff and its counsel believe that the Settlement is fair, reasonable and adequate and thus final approval of the Settlement and Plan of Allocation and final certification of the Settlement Class is warranted and that the application of an award of attorneys’ fees and expenses should be granted. 5. The Settlement is the result of over two years of hard-fought litigation and extensive investigation by Lead Counsel. This investigation included, among other things, review and analysis of: (i) press releases, news articles, transcripts, and other public statements issued by or concerning Helios, MoviePass, and the Individual Defendants; (ii) research reports issued by financial analysts concerning Helios’s business; (iii) Helios’s filings with the U.S. Securities and Exchange Commission (“SEC”); (iv) docket entries from civil actions involving Defendants filed in courts around the country, including filings in the Bankruptcy; (v) documents concerning regulatory actions involving Defendants, including records received pursuant to the state of New York’s Freedom of Information Law; (vi) review of the complaint filed in the Bankruptcy Trustee’s derivative action, which cite internal Company documents that support the 2 “Plaintiffs’ Counsel” refers to Lead Counsel L&K and additional counsel Bragar Eagel & Squire, P.C. (“BES”). 2 Case 1:18-cv-06965-JGK Document 136 Filed 04/01/21 Page 5 of 37 claims asserted in this Action; (vii) other publicly available information and data concerning Helios, its securities, and the markets and prices therefor; (viii) the statements of confidential witnesses who were former employees and officers of Helios and/or MoviePass; and (ix) the applicable law governing the claims and potential defenses in this action. 6. Further, Lead Counsel consulted with damages experts and researched and drafted an extensive mediation statement that addressed liability, damages, coverage defenses, the Trustee’s claims against Defendants, and all other legal and factual considerations pertinent to the case. Lead Counsel gave a presentation to the Individual Defendants and their insurance carriers and participated in a question and answer session in which the parties exchanged frank assessments of the strengths and weaknesses of Lead Plaintiff’s case. After the parties exchanged mediation statements, Lead Counsel thoroughly reviewed and analyzed the assertions and authorities within the statements produced by the Individual Defendants and separate mediations statements submitted by their carriers, and the parties exchanged reply statements before participating in a full-day mediation with Mr. Murphy. The mediation ended without an agreement to settle, yet Lead Counsel and Defendants persisted with negotiations in the following weeks through Mr. Murphy. The parties agreed to a mediator’s proposal to resolve all claims in the Action on October 5, 2020. The proposed Settlement is the result of arm’s-length negotiations between and among well-informed, highly experienced counsel, and mitigates the serious risks posed by further litigation, including the very real risk that sources of settlement funding would be depleted. 7. In view of the foregoing, there is no question that the Settlement is the result of negotiations by counsel who possessed