Case 1:13-cv-06802-WHP Document 567 Filed 05/02/16 Page 1 of 17 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK THE DIAL CORPORATION, et al., Civil Action No. 13-cv-06802-WHP Individually and on behalf of Similarly Situated Companies, Plaintiffs, v. NEWS CORPORATION, et al., Defendants. DECLARATION OF STEVEN F. BENZ IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT Case 1:13-cv-06802-WHP Document 567 Filed 05/02/16 Page 2 of 17 I, Steven F. Benz, declare as follows: 1. I submit this declaration in support of preliminary approval of the settlement reached on behalf of the certified Class and Defendants News Corporation, News America, Inc., News America Marketing In-Store Services L.L.C., and News America Marketing FSI L.L.C. (collectively, “Defendants”). 2. I am a partner with the law firm of Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C. (“Kellogg Huber”), which is Co-Lead Counsel for the Class of plaintiffs certified by the Court on June 18, 2015. I am a member of good standing of the District of Columbia, Iowa, Maryland and Minnesota bars, and am admitted to practice before this Court pro hac vice. I have personal knowledge of the matters set forth in this declaration. I became involved in this case at its inception in 2011 and am closely familiar with all aspects of this case since that time. 3. Both Kellogg Huber and I personally have significant experience with antitrust litigation and class actions, including settlements thereof. Copies of my firm’s resume and my personal profile are annexed to this declaration as Exhibit A. 4. My colleague as Co-Lead Class Counsel, James T. Southwick, details the massive discovery that proceeded in this litigation in paragraph 5 of his declaration. Reviewing that discovery, defending Defendants’ motions for summary judgment and to exclude Plaintiffs’ experts, and litigating the parties’ motions in limine gave me a deep understanding of the strong and weak points in the Plaintiffs’ case. 5. After the Court denied the Defendants’ motion for summary judgment on January 15, 2016, Mr. Southwick and I began preliminary discussions with Daniel Kramer, a partner at Paul, Weiss, Rifkind, Wharton & Garrison, L.L.P., regarding a potential settlement of the class action. 1 Case 1:13-cv-06802-WHP Document 567 Filed 05/02/16 Page 3 of 17 6. After February 24, 2016, the Defendants notified Mr. Southwick and me of the individual Class Members who had settled pursuant to the Court’s November 16, 2015 Order. Mr. Southwick and I were then able to reevaluate the Class’s damages claims, excluding the claims of those who had settled with the Defendants, those who entered into arbitration clauses with the Defendants, and those whose claims may have been barred in part by contractual limitations clauses within their purchasing agreements with the Defendants. 7. As Mr. Southwick explains in paragraph 16 of his declaration, Plaintiffs prepared two alternate damages presentations: a core damages calculation based on the anticompetitive conduct alleged in the Fourth Amended Complaint and an adjusted version of the core damages calculation should the jury find that the guaranteed retailer payments the Defendants made to retailers after Valassis entered the market for third-party in-store promotions products were also anticompetitive. The adjusted version of the core damages calculation resulted in a higher damages value but had a lower chance of success. Mr. Southwick and I determined that, after February 24, 2016, the Class’s damages under the core calculation were $230 million and were $446 million under the adjusted version of the core calculation. 8. Based on these revised calculations, Mr. Southwick and I had continued discussions with Mr. Kramer. In the days before trial, the parties came closer to an agreement but could not reach a final agreement on the material terms of a settlement until February 29, 2016, the first day of the scheduled trial. Mr. Southwick, Mr. Kramer, David Pitofsky, News Corporation’s General Counsel, and I continued our discussions in the courthouse until we agreed on and signed the Terms Sheet that the Court recorded on the docket on March 1, 2016. 2 Case 1:13-cv-06802-WHP Document 567 Filed 05/02/16 Page 4 of 17 9. After several more weeks of negotiations, the parties agreed on and signed the Settlement Agreement on May 2, 2016. Mr. Southwick summarizes the key terms of the Settlement Agreement in paragraph 15 of his declaration. 10. The cash consideration for the settlement, $244 million, is 106% of the core damage calculation and 54% of the adjusted calculation. In my experience as a litigator in antitrust and class action cases, exceeding single damages is an excellent recovery for the Class in light of the risks of maintaining the case through judgment and appeal, both on the merits and with respect to class certification. 11. In addition to exceeding single damages, the Settlement Agreement provides for what I consider to be excellent structural relief. As Mr. Southwick notes in paragraph 17 of his declaration, the structural relief addresses the principal issues with the Defendants’ retailer contracts that Plaintiffs assert are anticompetitive. The structural relief may permit a competitor to enter the marketplace for third-party in-store promotions, which I believe will lower prices for all Class Members in the future. 12. In addition to providing the Defendants with a release of claims, the Settlement Agreement also provides for an agreement to arbitrate antitrust, competition or similar claims for five years and covenants not to sue regarding the structural relief and the relief underlying the claims in this litigation. Like Mr. Southwick, I believe that these concessions were necessary to achieve the significant monetary and structural relief for the Class. 13. Plaintiffs’ Counsel propose to distribute the settlement fund, after fees and costs that the Court may award, to Class Members who return a Proof of Claim form on a proportional basis to their dollar purchases of in-store promotions products from the Defendants during the Class Period. If there are uncashed checks, a second proportional distribution will be made to 3 Case 1:13-cv-06802-WHP Document 567 Filed 05/02/16 Page 5 of 17 those Class Members who did cash the first-round checks. Like Mr. Southwick, I believe that this distribution is fair and reasonable under the circumstances. 14. I also agree with Mr. Southwick that another opt-out period is not appropriate for the reasons he provides in paragraph 18 of his declaration. Dated: May2,2016 Steven F. Benz t Co-Lead Class Counsel 4 Case 1:13-cv-06802-WHP Document 567 Filed 05/02/16 Page 6 of 17 Exhibit A Case 1:13-cv-06802-WHP Document 567 Filed 05/02/16 Page 7 of 17 KELLOGG, HUBER, HANSEN, TODD, EVANS & FIGEL, P.L.L.C. Sumner Square Suite 400 1615 M Street, N.W. Washington, D.C. 20036 (202) 326-7900 Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C. was formed in the spring of 1993 by law school classmates Michael Kellogg, Peter Huber, and Mark Hansen (Harvard ’82). The firm has grown rapidly since then. It now includes 33 Partners, 31 Associates, 3 Of Counsel, 17 Staff Attorneys, and 10 Paralegals and Researchers. Our practice is focused on trials and appeals in federal and state courts across the United States and before federal agencies. This litigation builds on the experience of the firm’s partners as lawyers at the Department of Justice and elsewhere in the federal government and in other endeavors. Michael Kellogg, Mark Hansen, Chris Todd, Reid Figel, Jim Webster, and Wan Kim served as Assistant United States Attorneys; Michael Kellogg and David Frederick served as Assistants to the Solicitor General; Rebecca Beynon served as Deputy General Counsel at the Office of Management and Budget and as a Special Assistant to the President; Wan Kim served as the Assistant Attorney General for the Civil Rights Division; and Courtney Simmons Elwood served as an Associate Counsel to the President, Deputy Counsel to the Vice President, and Deputy Chief of Staff to the Attorney General. Geoff Klineberg served as the Counselor on International Law in the Office of the Legal Adviser at the Department of State. And Sean Lev recently returned to the firm after serving as General Counsel of the Federal Communications Commission as well as Acting General Counsel and Deputy General Counsel for Environment & Nuclear Programs at the Department of Energy. Michael Kellogg and Peter Huber wrote a leading treatise on federal telecommunications law; Peter Huber wrote the landmark Department Case 1:13-cv-06802-WHP Document 567 Filed 05/02/16 Page 8 of 17 of Justice report on the breakup of AT&T and is a leading author and speaker on telecommunications and tort reform; David Frederick wrote a leading treatise on Supreme Court advocacy; Chris Todd served as a member of the Iran-Contra prosecution team; John Thorne was Senior Vice President and Deputy General Counsel at Verizon Communications Inc. where he headed Verizon’s competition and intellectual property practice groups. Our Lawyers The firm’s partners have been lead counsel in more than 100 federal and state trials and appeals, and have argued more than 45 cases before the Supreme Court of the United States. The firm was founded with the conviction that able young lawyers can assume substantial responsibility at an early point in their careers for matters at both the trial and the appellate stages. We believe that this benefits both our clients, who receive cost-effective service from highly motivated attorneys, and the attorneys, who experience the satisfaction of practice.