Case 4:12-cv-04677-YGR Document 127 Filed 11/13/17 Page 1 of 34 1 ROBBINS GELLER RUDMAN & DOWD LLP 2 CHRISTOPHER P. SEEFER (201197) DANIEL J. PFEFFERBAUM (248631) 3 Post Montgomery Center One Montgomery Street, Suite 1800 4 San Francisco, CA 94104 Telephone: 415/288-4545 5 415/288-4534 (fax) [email protected] 6 [email protected] 7 LABATON SUCHAROW LLP JONATHAN GARDNER 8 MICHAEL P. CANTY ROGER W. YAMADA 9 140 Broadway New York, New York 10005 10 Telephone: 212/907-0700 212/818-0477 (fax) 11 [email protected] [email protected] 12 [email protected] 13 Lead Counsel for Plaintiffs 14 UNITED STATES DISTRICT COURT 15 NORTHERN DISTRICT OF CALIFORNIA 16 In re UBIQUITI NETWORKS, INC. ) Master File No. 12-cv-04677-YGR SECURITIES LITIGATION ) 17 ) CLASS ACTION ) 18 ) JOINT DECLARATION OF JONATHAN This Document Relates To: ) GARDNER AND DANIEL J. 19 ) PFEFFERBAUM IN SUPPORT OF LEAD ALL ACTIONS. ) PLAINTIFFS’ MOTION FOR FINAL 20 ) APPROVAL OF CLASS ACTION ) SETTLEMENT AND PLAN OF 21 ALLOCATION AND LEAD COUNSEL’S MOTION FOR AN AWARD OF 22 ATTORNEYS’ FEES AND PAYMENT OF EXPENSES 23 24 25 26 27 28 MASTER FILE NO. 12-CV-04677-YGR JOINT DECLARATION OF JONATHAN GARDNER AND DANIEL J. PFEFFERBAUM Case 4:12-cv-04677-YGR Document 127 Filed 11/13/17 Page 2 of 34 1 We, JONATHAN GARDNER and DANIEL J. PFEFFERBAUM, declare as follows 2 pursuant to 28 U.S.C. §1746: 3 1. Jonathan Gardner is a partner of the law firm of Labaton Sucharow LLP 4 (“Labaton Sucharow”) and Daniel J. Pfefferbaum is a partner of the law firm of Robbins Geller 5 Rudman & Dowd, LLP (“Robbins Geller”). Labaton Sucharow and Robbins Geller serve as 6 court-appointed Lead Counsel for Lead Plaintiffs Bristol County Retirement System (“Bristol 7 County”) and Inter-Local Pension Fund GCC/IBT (“Inter-Local”) (together, “Lead Plaintiffs”).1 8 We have been actively involved in prosecuting and resolving the Action, are familiar with its 9 proceedings, and have personal knowledge of the matters set forth herein based upon our 10 supervision and participation in all material aspects of the Action. 11 2. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, we submit this 12 declaration in support of Lead Plaintiffs’ Motion for Final Approval of Class Action Settlement 13 and Plan of Allocation as well as Lead Counsel’s Motion for an Award of Attorneys’ Fees and 14 Payment of Litigation Expenses. Both motions have the full support of Lead Plaintiffs. See 15 Declaration of Lawrence C. Mitchell on Behalf of Inter-Local Pension Fund GCC/IBT and 16 Declaration on Behalf of Bristol County Retirement System, attached hereto as Exhibits 1 and 2 17 respectively.2 18 I. PRELIMINARY STATEMENT 19 3. Lead Plaintiffs have succeeded in obtaining a recovery for the Settlement Class in 20 the amount of $6,800,000, in cash, which has been deposited in an interest-bearing escrow 21 account for the benefit of the Settlement Class. As set forth in the Stipulation, in exchange for 22 this payment, the proposed Settlement resolves all claims asserted by Lead Plaintiffs and the 23 Settlement Class in the Action and all Released Claims against the Released Defendant Parties. 24 25 1 All capitalized terms not otherwise defined herein have the same meaning as that set forth in the Stipulation and Agreement of Settlement, dated as of August 4, 2017 (the “Stipulation”, 26 ECF No. 113-1). 2 Citations to “Exhibit” or “Ex.___” herein refer to exhibits to this Declaration. For clarity, 27 exhibits that themselves have attached exhibits will be referenced as “Ex. __-__.” The first numerical reference refers to the designation of the entire exhibit attached hereto and the second 28 numerical reference refers to the exhibit designation within the exhibit itself. MASTER FILE NO. 12-CV-04677-YGR 1 JOINT DECLARATION OF JONATHAN GARDNER AND DANIEL J. PFEFFERBAUM Case 4:12-cv-04677-YGR Document 127 Filed 11/13/17 Page 3 of 34 1 4. The case has been vigorously litigated from its commencement in September 2 2012 through the execution of the Stipulation. The Settlement was achieved only after Lead 3 Counsel, inter alia, as detailed herein: (i) conducted a thorough and wide-ranging investigation 4 concerning the allegedly fraudulent misrepresentations/omissions made by Defendants; 5 (ii) prepared and filed a detailed Consolidated Amended Complaint for Violations of the Federal 6 Securities Laws (the “CAC”); (iii) researched and drafted an omnibus opposition to Defendants’ 7 comprehensive motions to dismiss the CAC; (iv) prevailed, in part, on their appeal to the Ninth 8 Circuit Court of Appeals (the “Ninth Circuit”) of the Court’s order granting Defendants’ motions 9 to dismiss the CAC; (v) prepared and filed a detailed Consolidated Second Amended Complaint 10 for Violations of the Federal Securities Laws (the “SAC”) following the Ninth Circuit’s Opinion 11 and remand; and (vi) engaged in thorough mediation efforts, which included the review of 12 approximately 60,000 pages of core documents produced prior to mediation, the exchange of 13 comprehensive mediation statements, and a full-day mediation session. At the time the 14 Settlement was reached, Lead Counsel had a thorough understanding of the strengths and 15 weaknesses of the Parties’ positions. 16 5. Further, as discussed below, Lead Plaintiffs retained experts to analyze loss 17 causation issues and estimate potential damages. Lead Plaintiffs’ consulting damages experts 18 have estimated maximum aggregate damages for the class of approximately $19 million. The 19 $6.8 million Settlement, therefore, represents a recovery of approximately 35% of Lead 20 Plaintiffs’ consulting expert’s estimated damages—an exceptional recovery in light of the 21 countervailing legal and factual arguments and litigation risks. See, e.g., In re Omnivision 22 Techs., Inc., 559 F. Supp. 2d 1036, 1042 (N.D. Cal. 2008) ($13.75 million settlement yielding 23 6% of potential damages was “higher than the median percentage of investor losses recovered in 24 recent shareholder class action settlements”); see also Notice of Motion and Motion for Final 25 Approval of Class Action Settlement and Plan of Allocation and Memorandum of Points and 26 Authorities in Support Thereof (“Settlement Brief”), §III.B.4. 27 6. In choosing to settle, Lead Plaintiffs and Lead Counsel took into consideration the 28 significant risks associated with advancing the remaining 1993 Act claims alleged in the SAC, as MASTER FILE NO. 12-CV-04677-YGR 2 JOINT DECLARATION OF JONATHAN GARDNER AND DANIEL J. PFEFFERBAUM Case 4:12-cv-04677-YGR Document 127 Filed 11/13/17 Page 4 of 34 1 well as the duration and complexity of the legal proceedings that remained ahead. As discussed 2 in more detail in Section VII, infra, the Settlement was achieved in the face of vigorous 3 opposition by Defendants who would have, had the Settlement not been reached, continued to 4 raise serious arguments concerning, among other things, the alleged material falsity of statements 5 and omissions in the Registration Statement and Prospectus for the October 14, 2011 initial 6 public offering (“IPO”). Additionally, Lead Plaintiffs had not yet moved for class certification 7 and there was a risk that the Court would not certify the class. Further, Lead Plaintiffs faced 8 additional trial-related risks. Issues relating to causation and damages would likely have come 9 down to an inherently unpredictable and hotly disputed “battle of the experts,” with Defendants’ 10 experts likely rejecting Lead Plaintiffs’ experts’ model and opinions. Accordingly, in the 11 absence of a settlement, there was a very real risk that the Settlement Class could have recovered 12 nothing or an amount significantly less than the negotiated Settlement. 13 7. With respect to the proposed Plan of Allocation, as discussed in further detail 14 below and in Section IV of the Settlement Brief, the proposed Plan of Allocation was developed 15 with the assistance of one of Lead Plaintiffs’ consulting damages experts, and provides for the 16 fair and equitable distribution of the Net Settlement Fund to Settlement Class Members who 17 submit Claim Forms that are approved for payment. 18 8. With respect to the Fee and Expense Application, as discussed in Lead Counsel’s 19 Memorandum of Law in Support of Motion for an Award of Attorneys’ Fees and Payment of 20 Litigation Expenses (“Fee Brief”), the requested fee of 25% of the Settlement Fund is fair both to 21 the Settlement Class and to Lead Counsel, and warrants the Court’s approval. This fee request is 22 consistent with the Ninth Circuit’s “benchmark” for common fund cases; within the range of fee 23 percentages frequently awarded in this type of action; and, under the particular facts of this case, 24 justified in light of the benefits that Lead Counsel conferred on the Settlement Class, the risks 25 they undertook, the quality of their representation, the nature and extent of the legal services, and 26 the fact that Lead Counsel pursued the case at their financial risk. 27 28 MASTER FILE NO. 12-CV-04677-YGR 3 JOINT DECLARATION OF JONATHAN GARDNER AND DANIEL J. PFEFFERBAUM Case 4:12-cv-04677-YGR Document 127 Filed 11/13/17 Page 5 of 34 1 II. SUMMARY OF LEAD PLAINTIFFS’ CLAIMS 2 9. Ubiquiti designs, manufactures, and sells broadband wireless solutions 3 worldwide. SAC ¶¶2. The Company offers a portfolio of wireless networking products and 4 solutions, including systems, high performance radios, antennas, and management tools designed 5 for wireless networking and other applications in the unlicensed radio frequency spectrum. Id. 6 10.