Luminent Mortgage Capital, Inc. Securities Litigation 07-CV-04073

Case 3:07-cv-04073-PJH Document 173 Filed 04/15/2009 Page 1 of 17 1 Joseph J. Tabacco, Jr. (SBN 75484) E-mail: [email protected] 2 Nicole Lavallee (SBN 165755) E-mail: [email protected] 3 BERMAN DeVALERIO 425 California Street, Suite 2100 4 San Francisco, California 94104 Telephone: (415) 433-3200 5 Facsimile: (415) 433-6382 6 Local Counsel 7 Richard W. Cohen (admitted pro hac vice) E-mail: [email protected] 8 Barbara J. Hart (admitted pro hac vice) E-mail: [email protected] 9 David C. Harrison (admitted pro hac vice) E-mail: [email protected] 10 LOWEY DANNENBERG COHEN & HART, P.C. One North Broadway, Suite 509 11 White Plains, New York 10601-2310 Telephone: (914) 997-0500 12 Facsimile: (914) 997-0035 13 Lead Counsel for Lead Plaintiff and the Putative Class 14 15 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA 16 17 18 IN RE LUMINENT MORTGAGE CAPITAL, C 07-04073 PJH INC. SECURITIES LITIGATION 19 CLASS ACTION DECLARATION OF DAVID C. 20 This Document Relates To: HARRISON IN SUPPORT OF APPLICATION FOR FINAL 21 ALL ACTIONS APPROVAL OF SETTLEMENT, 22 THE NOTICE, THE PLAN OF ALLOCATION AND AWARD OF 23 ATTORNEYS' FEES AND REIMBURSEMENT OF EXPENSES 24 Date: April 29, 2009 25 Time: 9:00 a.m. Place: Courtroom 5, 17th Floor 26 Judge: Hon. Patricia J. Hamilton 27 28 {2031 / DECL 100094899.DOC v4} DECLARATION OF DAVID C. HARRISON (07-4073 PJH) Case 3:07-cv-04073-PJH Document 173 Filed 04/15/2009 Page 2 of 17 1 A. Introduction 2 1. I am a member of the firm of Lowey Dannenberg Cohen & Hart, P.C. ("LDCH" or 3 "Lead Counsel"), counsel for Lead Plaintiff Allen Dayton, The Southern Improvement Co. and 4 VSA, Inc. (collectively, "Lead Plaintiff') and the Settlement Class, which this Court preliminarily 5 certified in its Order Preliminarily Approving Settlement and Providing For Notice filed January 6 20, 2009 (the "Notice Order"). 7 2. 1 submit this declaration in support of the Application of Lead Plaintiff for Final 8 Approval of Settlement, the Notice, and the Plan of Allocation (the "Settlement Application"), 9 and the Application for the Award of Attorneys' Fees and Reimbursement of Expenses (the "Fee 10 Application") (together, the "Applications"). Specifically, this declaration sets forth the efforts 11 undertaken on behalf of Lead Plaintiff since entry of the Notice Order to provide notice to 12 members of the putative class and to assist them in submitting proofs of claim or otherwise 13 responding to the proposed Settlement. I also summarize below the history of the litigation and 14 the factors which warrant approval of the Applications. 15 3. I have been actively involved in all aspects of this litigation, including settlement 16 negotiations. I have personal knowledge of the matters set forth in this declaration and the facts 17 set forth in the Application and attest to their accuracy. 18 4. On January 14, 2009, my partner Barbara Hart and I attended the preliminary 19 approval hearing before this Court. In support of that application, Lead Counsel made a 20 comprehensive submission that included declarations from (1) myself and the other counsel 21 involved in the prosecution of this class action (the "Action"); (2) Lead Plaintiff Allen Dayton, 22 endorsing the Applications; (3) Lead Plaintiff's financial expert, Michael Marek of Financial 23 Markets Analysis LLC ("FMA" ); and (4) the Claims Administrator, Thomas R. Glenn of 24 Complete Claim Solutions, LLC ("CCS") with respect to the plan for providing notice to the 25 members of the Settlement Class; as well as a supporting Memorandum of Points and Authorities 26 (Dkt. Nos. 157-160). In addition, defendants made a submission in support of the proposed 27 settlement (Dkt. No. 161). 28 5. These submissions give a detailed recitation of the history of the litigation; the {2031 / DECL / 00094899.DOC v4} DECLARATION OF DAVID C. HARRISON (07-4073 PJH) Case 3:07-cv-04073-PJH Document 173 Filed 04/15/2009 Page 3 of 17 1 comprehensive, expert-assisted investigation into the facts and law in connection with the filing 2 of the Consolidated Class Action Complaint and in response to the arguments raised by 3 defendants in their motions to dismiss and at the mediation; the complex and substantial risks 4 Lead Plaintiff faced in prosecuting these securities claims; the extensive arm's-length 5 negotiations over several months which led to the $8.0 million Settlement after a full-day 6 mediation; the factors which support the fairness and reasonableness of the Settlement, the 7 proposed Plan of Allocation and the Class Notice; and a detailed discussion of the time charges 8 and expenses (with supporting documentation) incurred by Lead Counsel, and the law firms that 9 assisted Lead Counsel, in litigating these claims on a wholly contingent basis. In compliance 10 with this Court's Standing Order for Securities Class Action Settlements (the "Standing Order"), I 11 will not repeat the facts and arguments made in prior submissions. 12 6. At the January 14 hearing, the Court approved the form of notice subject to certain 13 modifications. On January 20, 2009, the Court entered the Notice Order, which included a 14 timetable for sending notice and scheduled a hearing on final approval for April 29, 2009. 15 Pursuant to the Notice Order, beginning on February 9, 2009, the Claims Administrator, CCS, 16 mailed notice (the "Class Notice") to over 21,000 potential Class members, broker-dealers and 17 nominees. A summary notice was also published nationally in The Wall Street Journal on 18 February 17, 2009. See Exhibits A and B to the Affidavit of Peter M. Craig dated April 15, 2009 19 (the "Craig Aff."), attached as Exhibit 1 hereto. 20 7. The Class Notice advised Class members of their rights with respect to the 21 Settlement, including the option to object or opt out of the settlement by the April 9, 2009 22 deadline. By giving Class members 60 days after the initial mailing of the notice to decide how 23 to respond, consistent with the Court's instructions in the Standing Order, Lead Plaintiff allowed 24 sufficient time for a Class member to receive notice through a second round of mailing and to 25 timely respond to the notice in the event he or she wished to opt out or object. Craig Aff. ¶ 12 26 and Exhibit C thereto. 27 8. Lead Plaintiff has also worked with its Claims Administrator in setting up a 28 webpage (www.LuminentSecuritiesSettlement.cone) which contains the Notice and Proof of DECLARATION OF DAVID C. HARRISON {20311 DEC.100094899.DOC v4} 2 (07-4073 PJH) Case 3:07-cv-04073-PJH Document 173 Filed 04/15/2009 Page 4 of 17 1 Claim, and a toll-free number for all verbal communications necessary to the administration of 2 the Settlement. 3 9. The Settlement has been very well received. No objections have been filed to the 4 Settlement, Plan of Allocation, or request for attorneys' fees and expenses as of the April 9, 2009 5 deadline, and only two requests for exclusion were received. See Craig Aff. ¶M 15-16 and Ex. D 6 thereto. 7 10. Moreover, I am pleased to report that as of April 14, 2009, 1,927 proofs of claim 8 have been received by the Claims Administrator. The fact that a substantial number of Class 9 members have already submitted claims eight weeks before the June 9, 2009 deadline attests to 10 both the effectiveness of the notice program and the apparent enthusiasm of Class members to 11 receive the benefits of the Settlement. Typically, large numbers of proofs of claim are submitted 12 just prior to the claims deadline. It is therefore likely that the current amount of claims represent 13 only a small fraction of the claims that will ultimately be filed by the June 9, 2009 deadline. See 14 Craig Aff. T 14. 15 11. As discussed below, Lead Counsel and Lead Plaintiff believe that the Applications 16 should be approved as fair and reasonable. Since its appointment as Lead Counsel, LDCH and 17 the law firms that assisted LDCH have expended approximately 3,500 hours vigorously 18 investigating, litigating and mediating this case in this Court and in Luminent's Bankruptcy 19 proceedings without any payment or guaranty thereof. Given the substantial $8.0 million 20 recovery achieved for Class members in the face of formidable litigation risks, and the substantial 21 expenditures of time and expenses made by counsel on a wholly contingent basis, we believe that 22 Lead Counsel's request for approximately 25% of the Settlement Fund and reimbursement of 23 $105,302.15 in expenses is fair and reasonable. 24 12. The requested fees are consistent with the 25% benchmark established in the Ninth 25 Circuit and applied by this Court. See Rosenburg v. International Business Machines 26 Corporation, C06-00430-PJH, Slip op. at 1 (N.D. Cal. Jul. 12, 2007) (attached hereto as Exhibit 27 2) ("This Court approves an attorneys' fee award ... to Class Counsel based on this Circuit's 25 28 percent benchmark") (citing Vizcaino v. Microsoft Corp., 290 F.2d 1043, 1047 (9 `h Cir. 2002); DECLARATION OF DAVID C. HARRISON {2031 / DECL 100094899.DOC v4} 3 (07-4073 PJH) Case 3:07-cv-04073-PJH Document 173 Filed 04/15/2009 Page 5 of 17 1 Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370 (9th Cir. 1993); Six Mexican Workers v. Az. 2 Citrus Growers, 904 F.2d 1301 (9th Cir.

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