Case 2:11-md-02270-TON Document 25-2 Filed 09/30/13 Page 1 of 147 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA : IN RE: CERTAINTEED FIBER CEMENT : MDL DOCKET NO. 2270 SIDING LITIGATION : : _____________________________________ : This Motion relates to: : : ALL CASES : : DECLARATION OF MICHAEL MCSHANE IN SUPPORT OF PLAINTIFFS’ MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT Case 2:11-md-02270-TON Document 25-2 Filed 09/30/13 Page 2 of 147 I, Michael McShane, declare as follows: 1. I am an attorney admitted pro hac vice in this Court and am counsel of record for Plaintiffs and Co-Lead Counsel in this action. I have personal knowledge of the following and if called as a witness, I could and would testify under oath. 2. I submit this declaration in support of Plaintiffs’ motion for preliminary approval of class action settlement. 3. Attached hereto as Exhibit A is a true and correct copy of the Settlement Agreement reached between the parties in this action. Attached to the Settlement Agreement are its Exhibits 1 – 6: a. Exhibit 1. Claim Form b. Exhibit 2. Notices to Class c. Exhibit 3. Preliminary Approval Order d. Exhibit 4. Press Release e. Exhibit 5. Final Approval Order f. Exhibit 6. Opt-Out Form 4. Numerous actions were filed against Defendant CertainTeed by Class Counsel in 2010 relating to the premature failure and degradation of their Weatherboard Fiber Cement Siding manufactured since 1999. 5. On August 8, 2011, following a motion by Defendants before the United States Judicial Panel on Multidistrict Litigation, the JPML issued an order transferring all of the against CertainTeed to the U.S. District Court for the Eastern District of Pennsylvania. 6. On May 11, 2011, H. Laddie Montague and I were named Co-Lead Counsel by this Court. Case 2:11-md-02270-TON Document 25-2 Filed 09/30/13 Page 3 of 147 7. Class Counsel have conducted an extensive investigation of the facts and circumstances related to the MDL Litigation, including consulting experts, written discovery, deposition of parties, interviewing potential witnesses, conducting inspections of the properties of certain Named Plaintiffs and other Settlement Class Members, reviewing the information and evidence that they have obtained regarding the facts and circumstances alleged in the Complaint, and researching and studying the legal principles applicable to the issues of liability, damages, jurisdiction, and procedure involved in the cases. Based on discovery and investigation undertaken in this matter, Class Counsel has concluded that there are approximately 300,000 structures upon which the subject siding is installed. 8. While vigorously litigating this action, the parties were simultaneously engaged in settlement negotiations, including a two day mediation with Hon. James R. Melinson on June 26- 27, 2012. Following the mediation the parties held several in-person meetings regarding a possible settlement, engaged in numerous telephonic discussions and exchanged many written proposals prior to entering into the proposed settlement. 9. Settlement negotiations were conducted at arms-length and the parties had substantial disagreements on numerous aspects of the case including, inter alia, the manifestation of the defect, the sufficiency of the warranty, the warranty claims process, and the scope and type of remediation required. 10. Class Counsel evaluated the time and expense that will be necessary to prosecute these cases to final judgment, the delays that are likely before any judgment may be entered, and the uncertainty inherent in predicting the outcome of any complex litigation such as this and, based upon such evaluation, have concluded that further proceedings in these actions are likely to be protracted, complex and expensive, and that the outcome is highly uncertain. Class Counsel Case 2:11-md-02270-TON Document 25-2 Filed 09/30/13 Page 4 of 147 determined that this settlement is in the best interests of the class. 11. Following the agreement of the parties, Class Counsel engaged in a completive bidding process to select both a notice provider and a settlement claims administrator. Class Counsel selected BMC Group as the Notice Provider and Claims Administrator. The BMC Group’s Notice Plan and company resume is attached hereto as Exhibit B. The estimated cost of providing notice to the Class is $1,318,153, and the cost of Claim Administration will be approximately $521,000. I declare under the penalty of perjury under the laws of the United States that the foregoing is true and correct. Executed this 30th day of September 2013, at San Francisco, California. /s/ Michael McShane Michael McShane Case 2:11-md-02270-TON Document 25-2 Filed 09/30/13 Page 5 of 147 EXHIBIT A Case 2:11-md-02270-TON Document 25-2 Filed 09/30/13 Page 6 of 147 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA : IN RE: CERTAINTEED FIBER CEMENT : MDL DOCKET NO. 2270 SIDING LITIGATION : : _____________________________________ : This Agreement relates to: : : ALL CASES : : AGREEMENT OF COMPROMISE AND SETTLEMENT This Agreement of Compromise and Settlement (“Agreement”) dated as of September 30, 2013, is made between the Named Plaintiffs, on behalf of themselves and the Settlement Class defined below, and CertainTeed Corporation (“CertainTeed”), to settle and compromise the Litigation and to discharge the Released Persons as set forth herein. This Agreement includes the following exhibits: Exhibit 1. Claim Form Exhibit 2. Notices to Class Exhibit 3. Preliminary Approval Order Exhibit 4. Press Release Exhibit 5. Final Approval Order Exhibit 6. Opt-Out Form 1. DEFINITIONS 1.1. As used in this Agreement, the following terms shall have the following meanings: a. “Agreement” means this Agreement and all Exhibits attached to it. Page 1 of 37 Case 2:11-md-02270-TON Document 25-2 Filed 09/30/13 Page 7 of 147 b. “CAFA Notice” means the notice to be sent by the Claims Administrator on behalf of CertainTeed to appropriate federal and state officials pursuant to the requirements of the Class Action Fairness Act of 2005, 28 U.S.C. § 1715(b) (“CAFA”). c. “CertainTeed” or “Defendant” means Defendant CertainTeed Corporation and any of its subsidiaries, affiliates, parent companies, successors, predecessors, assigns or divisions, and any current or former officer, director, employee or shareholder of CertainTeed. d. “Claimant” means a Settlement Class Member who submits a Claim Form under the terms of this Agreement. e. “Claim Form” means the Claim Form (Exhibit 1) and any supporting documentation. f. “Claims Administrator” means BMC Group, who shall provide Notice to the Settlement Class and administer the Claims Program as set forth herein. g. “Claims Program” means the program set forth in Sections 6.1 through 6.31. h. “Claims Package” means a completed Claim Form, photographs, and other documents as required under the Claims Program or which are submitted in support of a Claim. i. “Claims Submission Period” means the time period of six (6) years from the Effective Date of this Agreement during which time Settlement Class Members may submit Claim Forms in accordance with the Claims Program. j. “Class Counsel” means the law firms appointed by the Court to represent the Class. k. “Class Notice” means the Notices of Proposed Class Action Settlement to be sent to the Settlement Class, pursuant to the terms of the Court’s Preliminary Approval Order. The Class Notices shall be substantially in the forms attached as Exhibit 2 to this Agreement. l. “Class Period” means the time period from January 1, 1999 through September 30, 2013. m. “Effective Date” means either: (a) the date of the Final Approval Order of this Agreement by the Court if no objections are timely filed; (b) the expiration date of the time for filing notice of any appeal from the Final Approval Order by the Court if objections are filed but no appeal is filed; or (c) if an appeal is filed, the latest of (i) the date of final affirmance of that Order, (ii) the expiration of the time for a petition for writ of certiorari to review the Order if affirmed and, if the certiorari is granted, the date of final affirmance of the Order following review pursuant to that grant; or (iii) the date of final dismissal of any appeal from the Order or the final dismissal of any proceeding on certiorari to review the Order that has the effect of confirming the Order. n. “Eligible Claim” means a claim by a Settlement Class Member for which the Settlement Class Member has demonstrated that Qualifying Damage exists and the claim is not deemed ineligible for any other reason as set forth in this Agreement. o. “Final Approval Hearing” means the hearing required by Federal Rule of Civil Procedure 23(e), following appropriate notice to the Settlement Class and an opportunity for Settlement Class Members to exclude themselves from the Settlement Class or file objections to all or part of the Agreement, at which time the Parties will request the Court to approve the fairness, reasonableness and adequacy of the terms and conditions of the proposed Settlement Agreement and to enter a Final Approval Order. Page 2 of 37 Case 2:11-md-02270-TON Document 25-2 Filed 09/30/13 Page 8 of 147 p. “Final Approval Order” means the order to be entered by the Court following the Final Approval Hearing. q. “Independent Claims Reviewer” means an independent third-party administrator to handle appeals under the Claims Program as set forth in Sections 5 and 6. r. “Independent Inspector” means a third-party inspector chosen by the Claims Administrator and Lead Counsel to conduct inspections of Settlement Class Member’s Siding as set forth in Sections 6.18 and 6.20.