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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: Chapter 11
ARCTIC SENTINEL, INC. [f/k/a Fuhu, Case No. 15-12465-CSS (Jointly Administered) Inc.], et al.,1 Hearing Date: December 15, 2020 at 1:00 p.m. (ET) Debtors. Objection Deadline: November 30, 2020 at 4:00 p.m. (ET)
NOTICE OF MOTION OF SCOTT MILLER AND JAMES E. GRIFFIN IV TO (1) APPROVE THE TERMS OF STIPULATION OF SETTLEMENT AND (2) APPROVE THE DISTRIBUTION OF FUNDS INCLUDING AWARD OF ATTORNEYS FEES AND COSTS
PLEASE TAKE NOTICE that on November 16, 2020, Scott Miller (“Miller”) and James E. Griffin IV (“Griffin”) whom this Court previously appointed as representatives of the Class as further defined below (“Class Representatives”) filed the Motion for Approval of Stipulation of Settlement and Award of Attorneys Fees and Costs (the “Motion”) with the United States
Bankruptcy Court for the District of Delaware, 824 North Market Street, 3rd Floor, Wilmington, Delaware 19801 (the “Bankruptcy Court”). A copy of the Motion is attached hereto. PLEASE TAKE FURTHER NOTICE that objections and responses to the relief requested in the Motion, if any, must be in writing and filed with the Bankruptcy Court on or before November 30, 2020 at 4:00 p.m. (prevailing Eastern Time). PLEASE TAKE FURTHER NOTICE that at the same time you must also serve a copy of the response or objection upon counsel to the moving parties, the Class Representatives:
Gutride Safier LLP, 100 Pine Street, Suite 1250, San Francisco, CA 94111, Attn: Adam Gutride.
1 The debtors, together with the last four digits of each debtor’s tax identification number, are: Arctic Sentinel, Inc. [f/k/a Fuhu, Inc.] (7896); Arctic Sentinel Holdings, Inc. [f/k/a Fuhu Holdings, Inc.] (9761); Arctic Sentinel Direct, Inc. [f/k/a Fuhu Direct, Inc.] (2180); and Sentinel Arctic, Inc. f/k/a Nabi, Inc.] (4119) (collectively, the “Debtors”).
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PLEASE TAKE FURTHER NOTICE THAT IF YOU FAIL TO RESPOND IN ACCORDANCE WITH THIS NOTICE, THE COURT MAY GRANT THE RELIEF REQUESTED BY THE MOTION WITHOUT FURTHER NOTICE OR HEARING. PLEASE TAKE FURTHER NOTICE THAT A HEARING TO CONSIDER THE RELIEF SOUGHT IN THE MOTION WILL BE HELD ON DECEMBER 15, 2020, AT 1:00 P.M. (PREVAILING EASTERN TIME) BEFORE THE HONORABLE CHRISTOPHER S. SONTCHI AT THE UNITED STATES BANKRUPTCY COURT, 824 NORTH MARKET STREET, 5TH FLOOR, COURTROOM NO. 6, WILMINGTON, DELAWARE 19801.
Dated: November 16, 2020 FOX ROTHSCHILD LLP
/s/ Seth A. Niederman Seth A. Niederman (DE Bar No. 4588) 919 North Market Street, Suite 300 Wilmington, DE 19899 Telephone: (302) 654-7444 E-mail: [email protected]
- and - /s/ Adam Gutride Adam Gutride, California Bar No. 181446) (Admitted Pro Hac Vice) GUTRIDE SAFIER LLP 100 Pine Street, Suite 1250 San Francisco, CA 94111 Telephone: (415) 639-9090 Facsimile: (415) 449-6469 E-Mail: [email protected]
Counsel for Miller and Griffin
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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: Chapter 11
ARCTIC SENTINEL, INC. [f/k/a Fuhu, Case No. 15-12465-CSS
Inc.], et al.,1 (Jointly Administered)
Debtors. Hearing Date: December 15, 2020 at 1:00 p.m. (ET)
Objection Deadline: November 30, 2020 at 4:00 p.m. (ET)
MOTION OF SCOTT MILLER AND JAMES E. GRIFFIN IV TO (1) APPROVE THE TERMS OF STIPULATION OF SETTLEMENT AND (2) APPROVE THE DISTRIBUTION OF FUNDS INCLUDING AWARD OF ATTORNEYS FEES AND COSTS
Scott Miller (“Miller”) and James E. Griffin IV (“Griffin”), whom this Court previously appointed as representatives of the Class as further defined below (“Class Representatives”) hereby move this Court to (1) approve the terms of the Stipulation attached hereto as Exhibit 1
(“Stipulation”) between the Class Representatives and Certain Underwriters at Lloyd's
(“Underwriters”) subscribing to the Privacy, Cyber and Media Insurance Policy issued to Fuhu,
Inc. bearing Policy No. ESC00062426 (the “Media Policy”) and (2) approve the distribution of the funds to be paid by Underwriters under the Stipulation, including awarding fees and costs to the law firm of Gutride Safier LLP previously appointed by this Court to represent the Class
(“Class Counsel”).
1 The debtors, together with the last four digits of each debtor’s tax identification number, are: Arctic Sentinel, Inc. [f/k/a Fuhu, Inc.] (7896); Arctic Sentinel Holdings, Inc. [f/k/a Fuhu Holdings, Inc.] (9761); Arctic Sentinel Direct, Inc. [f/k/a Fuhu Direct, Inc.] (2180); and Sentinel Arctic, Inc. f/k/a Nabi, Inc.] (4119) (collectively, the “Debtors”). 1
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INTRODUCTION
The Stipulation arises out of the Court’s “Final Order Authorizing And Approving
Stipulation Resolving (1) Class Claim Of Scott Miller And James E. Griffin (Claim No. 177)
…,” of September 5, 2019. D.I. 1329 (“Class Settlement Order”). In the Class Settlement Order,
the Court (1) approved the assignment, to the Class, by Debtors Fuhu, Inc. and Fuhu Holdings,
Inc. (together, the “Fuhu Defendants”) of the Fuhu Defendants’ rights against the Underwriters
under the Media Policy (“Media Policy Assignment”), (2) approved notice to the Class, a copy
of which is available at D.I. 1327 at 36-43 of 60 (“Class Notice”), about how monies obtained
from the Underwriters would be distributed to the Class and to Class Counsel, id. at 41; see also
id. at 3-5 & 36-43 (explanation of notice plan), and (3) retained jurisdiction over “all matters
arising from or related to the interpretation, implementation or enforcement of the terms and
provisions of this Stipulation...” D.I. 1329 ¶ 13; 1329-1 ¶ 52.
Prior to the Court’s Class Settlement Order, Class Notice was disseminated to the Class, which informed Class members of the Media Policy Assignment and of how any funds that might be obtained from the Underwriters (“Media Policy Proceeds”) would be distributed to the
Class and Class Counsel. D.I. 1327 at 36-43. The method of distribution described in the Class
Notice is further discussed below. No person objected. D.I. 1328. The Court then issued the
Class Settlement Order. D.I. 1329.
Subsequent to the Class Settlement Order, the Class and the Underwriters attended a
mediation and agreed to the Stipulation to resolve all claims that had been assigned to the Class
regarding the Media Policy against the Underwriters. In the Stipulation, the Underwriters agreed
to make a monetary payment of $1,800,000.00 for the benefit of the Class (“Media Policy
Settlement Fund”) in exchange for a release by the Class of claims against the Underwriters and
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of all of their agents, brokers, employees, officers, counsel, representatives, insurers, reinsurers,
corporate affiliates (including without limitation Lloyd’s of London, CFC Underwriting Limited
and all persons and entities listed on the declarations page of the Media Policy) (collectively, the
“Underwriter Parties”).
Class Counsel requests this Court now approve the Stipulation and further approve the
distribution of the Media Policy Settlement Fund pursuant to the terms of the Class Notice
previously approved by the Court, as follows: (i) $21,320.00 to the Claim Administrator for costs
associated with distribution of the funds to Class Members who previously submitted valid
claims (“Administration Costs”); (ii) attorneys’ fees to Plaintiffs’ Counsel in the amount of
$720,000, representing 40% of the Media Policy Settlement Fund; (iii) costs to Class Counsel in
the amount of $27,225.54, ; and (iv) pro rata payments to persons who previously filed valid
Class Settlement Claims, computed so that the amount paid for each Tablet reflected in a
Defective Tablet Claim (as defined below) shall be three times the amount paid for each Tablet
reflected in a Non-Defective Tablet Claim (as defined below).
JURISDICTION AND VENUE
1. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C. § 157. In
particular, because the Stipulation resolves disputes between the Class on one hand, and the
Underwriters for the Debtors on the other hand, and because this Court has previously
(1) certified the Class, (2) approved a settlement assigning to the Class the Fuhu Defendants’
rights against the Underwriters, and (3) retained jurisdiction over the implementation of that
Assignment, this Stipulation presents, at a minimum, core matters regarding the liquidation of
Estate assets under 28 U.S.C. § 157(b)(2)(O) and non-core matters that are otherwise related to this bankruptcy case pursuant to 28 U.S.C. § 157(b)(3). The Class Representatives and the
Underwriter Parties (collectively “Stipulating Parties”) have consented in the Stipulation to the 3
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Bankruptcy Court’s jurisdiction with respect to all matters arising from or related to the
interpretation, implementation, or enforcement of the terms and provisions of the Stipulation and
to adjudicate, if necessary, all disputes in connection therewith. See Exhibit 1 at ¶ 13. The
Stipulating Parties have also consented in the Stipulation to the entry of a final order on the
Stipulation by the Bankruptcy Court, if it is determined that the Bankruptcy Court, absent
consent of the parties, cannot enter a final order consistent with Article III of the U.S.
Constitution. See Del. Bankr. L. R. 9013-1(f).
2. Venue for this matter is proper in this district pursuant to 28 U.S.C. §§ 1408 and
1409.
BACKGROUND
3. On December 7, 2015, Fuhu Defendants filed voluntary petitions for relief under
chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware.
Subsequently, on December 11, 2015, Debtors Fuhu Direct, Inc., and Nabi, Inc. filed voluntary
petitions for relief under chapter 11 of the Bankruptcy Code.
4. On July 7, 2016, this Court entered an order approving a stipulation (the “July 7,
2016 Stipulation and Order”) among the Debtors, the Committee and the Class Representatives.
D.I. 667. The July 7, 2016 Stipulation and Order certified the Class for the limited purposes of
filing and liquidation of class proofs of claim in this Court and the distribution of funds, if
appropriate, to the Class members, Class Representatives and their counsel to the extent of their
respective entitlements thereto. D.I. 667-1 at ¶ 4. Miller and Griffin were jointly appointed as
representatives of the Class (the “Class”), defined as “All persons, who between July 3, 2010 and
September 30, 2015 purchased, in the United States, a Nabi 2, Nabi 2S, Nabi XD, Nabi Jr.
(including Nabi Jr. S) or Nabi DreamTab tablet (“Tablets”).” D.I. 667-1 at ¶ 4.
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5. On April 18, 2019, Saccullo Business Consulting, LLC, the Liquidating Trustee
(the “Liquidating Trustee”) of the Tablet Liquidating Trust (the “Liquidating Trust”) filed a motion for entry of preliminary and final orders pursuant to Section 105 of the Bankruptcy Code and Rules 7023 and 9019 of the Federal Rules of Bankruptcy Procedure authorizing entry into and approving a stipulation (“Class Settlement”) resolving certain claims among the Liquidating
Trust, the Class Representatives, and others. D.I. 1295. Among other things, the Class
Settlement resolved claims of the Class against the Liquidating Trust, as successor to the Fuhu
Defendants, arising out of the alleged false advertising, warranty violations, and unlawful trade practices with respect to the sale and service of the Tablets. See D.I. 1295 at 21-22.
6. The Class Settlement provided, inter alia, members of the Class would have the right to make claims for cash payments out of monies distributed to the Class from the
Liquidating Trust, with the amount of such payment capped at $30 for Tablets that were defective and $10 for Tablets that were not defective. D.I. 1329-1 at ¶ 15. The Class Notice explained that such recovery was reasonable in light of the expected best-case recovery at trial, as “Plaintiffs contend that, based on their experts’ analysis of the “cost to repair” the Tablets, each purchaser may be owed up to approximately $100.” D.I. 1329-1 at 76; see also D.I. 1295-4 at 5-13 (expert opinion).
7. The Class Settlement also explained that as further consideration for the settlement, the Liquidating Trust would make the Media Policy Assignment, as follows:
6. The Liquidating Trustee shall assign to the Class all its rights, claims and causes of action against the Underwriter Parties and all other persons and entities relating to or arising out of the Media Policy, including but not limited to statutory rights, contractual rights, and rights arising in tort or otherwise, relating to the Underwriter Parties’ duty to defend and indemnify the Fuhu Defendants, the Liquidating Trust, and their officers, directors, employees, affiliates or any other persons, and to settle and pay for the claims in the Class Action and the Class Claims…. The Liquidating Trustee and the Class are
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authorized to execute all necessary documents in connection with such assignment of such rights without needing to seek further approval from the Bankruptcy Court. D.I. 1329-1 at 19.
8. This Court granted the motion for preliminary approval. D.I. 1301.
9. From May 31, 2019 through August 20, 2019, the Class Notice was provided to
members of the Class via website, print publication and direct email, and which pointed to a
detailed online notice for Class members of their rights. D.I. 1327 at ¶¶ 3, 6-13.
10. The Class Notice informed Class members, inter alia, how cash payments to them
would be computed based on (a) distributions from the Liquidating Trust and (b) additional
monies that might be obtained from the Underwriters, which would depend on whether their
Tablets were or were not defective:
If you timely file a valid claim that complies with the instructions on the claim form and in this notice, you will receive a cash payment. A claim can be filed for every Tablet purchased, even if the Tablet did not suffer from the defect. Each valid claim shall receive the same payment amount, except that the payment amount will be three times (3x) higher for claims where the Tablet suffered from a defect. The amount of the payment to each claimant will depend on (1) whether the tablet suffered from the defect, (2) how many other valid claims are filed; (3) how much money is actually received by the Class from the Trust and from Lloyd’s; and (4) how much of that money remains after payments are made to administer the settlement (including providing this notice) and to Plaintiffs and their lawyers (as approved by the Court). The maximum amount that will be paid on each claim out of the money received from the Trust is $30 per defective Tablet purchased, and $10 per each other Tablet purchased. The actual amount paid on each claim could be much lower than $30 per defective Tablet or $10 per other Tablet purchased. It also could possibly be higher than $30 per defective Tablet, or $10 per other Tablet purchased, if there are a small number of claims and/or a large recovery from Lloyd’s. D.I. 1327 at 41.
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11. The Class Notice also gave Class members additional information about how the
Liquidating Trustee’s rights under the Media Policy would be assigned to the Class, and about how monies received from the Underwriters would be distributed:
The liquidating trustee also has agreed to assign to the Class the Trust’s rights under a $1 million insurance policy issued by Lloyd’s of London. Lloyd’s refused to provide coverage to Fuhu for the Class claims, as it contended that that the policy does not apply. Plaintiffs’ Counsel and the liquidating trustee disagree with Lloyd’s position. Plaintiffs’ Counsel will be authorized to negotiate with Lloyd’s or file a lawsuit against Lloyd’s. Plaintiffs’ Counsel could try to obtain (1) reimbursement for the legal fees incurred by Fuhu in defending against the Class claim; (2) the $1 million policy limits; and (3) reimbursement for additional damages sustained by Fuhu because of Lloyd’s refusal to provide coverage when the Class lawsuit was filed. With respect to the additional damages, for example, Plaintiffs’ Counsel could try to argue that Lloyd’s should have to pay the Class $154 million, which was the amount of the Class claim allowed in the bankruptcy. There is no guarantee that any money will be obtained from Lloyd’s. If money is recovered from Lloyd’s, it will be added to the funds received by the Class from the Trust. The money received by the Class from Lloyd’s will be used to pay: (1) any additional costs of administering the settlement that are not covered by funds received from the Trust, (2) any additional attorneys’ fees, costs or incentives awarded by the Court, and (3) valid claims by Class members under this settlement. Id. at 40.
12. The Class Notice further informed Class members, inter alia, of the portion of monies that might be obtained from the Underwriters that would be distributed to Class Counsel:
If additional funds are received by the Class, for example, from a recovery from Lloyd’s, Plaintiffs’ lawyers may seek an additional award of their actual costs, plus attorneys’ fees not greater than 40% of the amount recovered. You will not be provided separate notice of any such application, although a copy of the application will be posted on the Settlement Website. Id. at 41.
13. At all times, all Class Representatives and all additional Plaintiffs have been represented by Class Counsel, Gutride Safier LLP.
14. No person objected to the Class Settlement Stipulation. D.I. 1328.
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15. During the claims period, (i) 13,571 valid claim forms were submitted for
defective Tablets, representing claims for a total of 19,716 Tablets and (“Defective Tablet
Claims”) (ii) 285 valid claim forms were submitted for non-defective Tablets, representing claims for 339 Tablets (“Non-Defective Tablet Claims”, and together with the Defective Tablet
Claims, the “Class Settlement Claims”). Declaration of Jay Geraci, filed herewith (“Geraci
Decl.”), at ¶ 2. Each Defective Tablet Claim was paid $30 per Tablet, and each Non-Defective
Tablet Claim was paid $10 per Tablet, out of funds distributed by the Liquidating Trust to the
Class Representatives pursuant to the Class Settlement Order. Id.
16. On September 5, 2019, the Court issued the Class Settlement Order granting final approval to the Class Settlement. D.I. 1329. As part of that Order, the Court awarded
$1,500,000.00 in attorneys’ fees and $232,281.85 in costs to Class Counsel, out of the funds to be paid to the Class from the Liquidating Trust.
17. On November 27, 2019, the Liquidating Trustee executed an acknowledgment of the assignment as required by the Class Settlement Order, a true and correct copy of which is attached hereto as Exhibit B to Exhibit 1.
18. In September 2020, the Class Representatives and the Underwriter Parties conducted a mediation, before former United States District Judge Gerard Rosen at JAMS
(“Judge Rosen”). As a result of the mediation, the Stipulating Parties reached a resolution of all claims by the Class regarding the Media Policy against the Underwriter Parties, as reflected in the Stipulation.
19. Under the Stipulation, the Underwriter Parties will pay $1,800,000.00 for benefit of the Class. As reflected in the previously approved Class Notice (D.I. 1327 at 40), if approved by this Court, the Media Policy Settlement Fund will be distributed as follows:
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1 To Claim Administrator: “Additional costs of administering $21,320.00 the settlement that are not covered by funds received from the Trust” D.I. 1327 at 40, 2 To Class Counsel: “any additional attorneys’ fees, costs or $747,725.54 incentives awarded by the Court”, id. 3 To Class Members: “valid claims by Class members under $1,030,954.46 this settlement”, id. $1,800,000.00 TOTAL
20. Based on the number of Tablets for which valid claims were filed, the estimated
total distribution for each group will be as follows:
Number Prior Additional Total of distribution Distribution Distribution per Tablets from Trust from Media Tablet Proceeds Policy (Estimated) per Tablet Settlement Fund per Tablet (Estimated) Non-Defective Tablet Claims 339 $10.00 $17.33 $27.33 Defective Tablet Claims 19,716 $30.00 $51.99 $81.99
Geraci Decl. ¶ 6 & Ex. A. Thus, the total recovery to each class member is a substantial portion
of the “best case” recovery asserted by Plaintiffs and their experts, of approximately $100 per
Defective Tablet. D.I. 1329-1 at 76; see also D.I. 1295-4 at 5-13 (expert opinion).
RELIEF REQUESTED
21. By this Motion, the Stipulating Parties move this Court to approve the settlement among the Stipulating Parties, including the release of claims by the Class against the
Underwriter Parties, the award of attorneys’ fees and costs to Class Counsel and distribution of the Media Policy Settlement Fund to Class members.
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LEGAL BASIS FOR RELIEF REQUESTED
22. This Bankruptcy Court has authority to approve the Stipulation pursuant to
Bankruptcy Rule 9019. Key3Media Group, Inc. v. Puliver.com Inc. (In re Key3Media Group,
Inc.), 336 B.R. 87, 92 (Bankr. D. Del. 2005). Compromises, such as that set forth in the
Stipulation, “are favored in bankruptcy” because they “minimize litigation and expedite the administration of a bankruptcy case.” Myers v. Martin (In re Martin), 91 F.3d 389, 393 (3d Cir.
1996).
23. The Court also has authority to approve the Stipulation pursuant to Bankruptcy
Rule 7023 and Federal Rule of Civil Procedure 23(e)(2). In the July 7, 2016 Stipulation and
Order, the Court concluded that “it is appropriate for the Bankruptcy Court to apply Bankruptcy
Rule 7023,” and certified the Class pursuant to Rule 23. In the Class Settlement Order, the Court then approved assignment to the Class of the Debtors’ rights under the Media Policy and retained jurisdiction to hear all matters arising from or related to the interpretation, implementation or enforcement of the stipulation and order. D.I. 1329 at ¶ 13.
24. Under Federal Rule of Civil Procedure 23(e)(2), a court may approve a class action settlement that would bind class members “only after a hearing and on finding that it is fair, reasonable, and adequate.” Fed. R. Civ. P. 23(e)(2). In evaluating the fairness of a settlement, a court does not have to be convinced that the settlement is the best possible compromise, but only that the settlement “falls within the reasonable range of litigation possibilities.” In re Washington Mutual, Inc., 442 B.R. 314, 328 (Bankr. D. Del. 2011); In re
Coram Healthcare Corp., 315 B.R. 321, 330 (Bankr. D. Del. 2004); see also In re Worldcom,
Inc., 347 B.R. 123, 137 (Bankr. S.D.N.Y. 2006) (finding the bankruptcy court “need only
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‘canvass the issues’ to determine if the ‘settlement falls below the lowest point in the range of
reasonableness’“) (quoting In re Teltronics Serv., Inc., 762 F.2d 185, 189 (2d Cir. 1985)).
II. THE STIPULATION FALLS WELL WITHIN THE RANGE OF REASONABLENESS AND MEETS ALL OTHER REQUIREMENTS FOR APPROVAL
25. This Court already approved the assignment of the Media Policy to the Class and
also approved and the Class Notice that explained how proceeds from the Media Policy would be
distributed. ECR 1301, 1329. No parties or class members objected to the settlement. D.I. 1300,
1328.
26. Rule 23(e) requires the district court to consider whether:
(A) the class representatives and class counsel have adequately represented the class;
(B) the proposal was negotiated at arm’s length;
(C) the relief provided for the class is adequate, taking into account:
(i) the costs, risks, and delay of trial and appeal;
(ii) the effectiveness of any proposed method of distributing relief to the class, including the method of processing class-member claims;
(iii) the terms of any proposed award of attorney’s fees, including timing of payment; and
(iv) any agreement required to be identified under Rule 23(e)(3); and
(D) the proposal treats class members equitably relative to each other.
Fed. R. Civ. P. 23(e)(2).
27. Subparagraphs (a) and (b) of Rule 23 address the “procedural fairness” of the settlement, while subparagraphs (c) and (d) address “substantive fairness.” See Rule 23 (e)(2)
Advisory Committee Notes to 2018 Amendments. Somogyi v. Freedom Mortg. Corp., No. 17-
6546 (RMB/JS), 2020 U.S. Dist. LEXIS 194035, *12 (D.N.J., Oct. 20, 2020).
28. In this Circuit, courts apply an initial presumption of fairness where “(1) the settlement negotiations occurred at arm's length; (2) there was sufficient discovery; (3) the
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proponents of the settlement are experienced in similar litigation; and (4) only a small fraction of
the class objected,” In re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 535 (3d Cir. 2004)
(quoting In re Cendant Corp. Litig., 264 F.3d 201, 232 n.18 (3d Cir. 2001)).
29. Additional factors are considered to finally evaluate whether a settlement is fair and reasonable under Rule 23, under Girsh: “(1) the complexity, expense, and likely duration of
the litigation; (2) the reaction of the class to the settlement; (3) the stage of the proceedings and
the amount of discovery completed; (4) the risks of establishing liability; (5) the risks of
establishing damages; (6) the risks of maintaining the class action through trial; (7) the ability of
the defendants to withstand a greater settlement; (8) the range of reasonableness of the settlement
fund in light of the best possible recovery; and (9) the range of reasonableness of the settlement
fund to a possible recovery in light of all the attendant risks of litigation.” Girsh v. Jepson, 521
F.2d 153, 157 (3d Cir.1975).
30. “In most situations, unless the settlement is clearly inadequate, its acceptance and
approval are preferable to lengthy and expensive litigation with uncertain results.” 4 A Conte &
H. Newberg, Newberg on Class Actions, § 11:50 at 155 (4th ed. 2002).
A. The Settlement Merits Approval
31. This settlement meets all factors to apply the presumption of fairness and also
satisfies the Girsh factors for final approval.
32. First, the settlement was the product of arm’s length negotiations, as evidenced by
the fact that the parties negotiated the proposed settlement in good faith with the assistance of an
independent, experienced mediator, the Honorable Gerard Rosen (Ret.) of JAMS. Exhibit 1 at ¶
I; see Becker v. Bank of N.Y. Mellon Trust Co., N.A., 2018 U.S. Dist. LEXIS 214823, at *12
(E.D. Penn. Dec. 21, 2018) (finding settlement was product of arm’s length negotiations by
virtue of settlement conferences with judge). 12
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33. Second, discovery was more than sufficient to enable the parties to evaluate the
strengths and weaknesses of their positions. As explained more fully in the Declaration of Adam
Gutride filed herewith (“Gutride Decl.”), the Stipulating Parties engaged in extensive factual investigation regarding any and all claims that might have or could have been prosecuted by the
Class against the Underwriters with respect to the Media Policy, pursuant to the assignment of rights obtained from the Fuhu Defendants. Gutride Decl. at ¶ 8. This investigation included
interviews of the litigation counsel for the Fuhu Defendants who originally tendered to the
Underwriters the claims by the Class against the Fuhu Defendants, exchange of detailed legal
and factual memoranda between Class Counsel and counsel for the Underwriters, and multiple
sessions with Judge Rosen. Id. at ¶ 9.
34. Third, counsel for the Stipulating Parties are experienced in class action
litigation. Class Counsel weighed the risks inherent in establishing all the elements of their
claims in a trial, as well as the expense of trial and likely duration of post-trial motions and
appeals. Class Representatives agreed to settle this litigation on these terms based on their
careful investigation and evaluation of the facts and law relating to Class allegations and
consideration of the facts and views expressed by the mediator during the settlement
negotiations.
35. Fourth, there were no objections by Class members when the Class Notice
previously informed them (1) of the possible claims against the Underwriters, (2) of the $1
million policy limits under the Media Policy, (3) that “[t]here is no guarantee that any money
will be obtained from Lloyd’s,” (4) that “if money is recovered from Lloyd’s, it will be added to
the funds received by the Class from the Trust,” and (5) of how any such recoveries would be
distributed among Class members and Class Counsel. D.I. 1327 at 36-43.
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36. Fifth, the complexity, expense, and likely duration of the litigation strongly weighs in favor of settlement. This factor “captures the probable costs, in both time and money, of continued litigation.” Warfarin, 391 F.3d at 535-36 (citation omitted). The Underwriters asserted numerous defenses to liability for the claims under the Media Policy, including that the terms of the Media Policy did not provide coverage for the claims asserted by the Class against the Fuhu Defendants, that the claims were not properly tendered, and that there was no basis to reach or exceed the $1 million limit of liability under the Media Policy. Resolution of these issues would be expensive and complex.
37. Sixth, the settlement is justified after “survey[ing] the potential risks and rewards of proceeding to litigation in order to weigh the likelihood of success against the benefits of an immediate settlement.” Warfarin, 391 F.3d at 537. The settlement is reasonable in light of likely and best-case recovery, particularly given all the attendant risks of litigation. The $1.8 million recovery exceeds the aggregate limit of the Media Policy. Also, the total distribution for each valid claim, as a combined recovery from the Trust and the Underwriters, is approximately
$27.33 per non-Defective Tablet and $81.99 per Defective Tablet, which is a very substantial percentage of the “best case” recovery that Plaintiffs thought they might establish at trial of $100 per Defective Tablet. Geraci Decl., ¶ 7, Ex. A; D.I. 1329-1 at 76.
38. Because the factors weigh in favor of approval, the settlement is fair and reasonable under Rule 23.
B. Terms of Attorneys’ Fees
39. Class Counsel seeks an award of $720,000.00 in attorneys’ fees and $27,725.54 in costs.
40. On September 5, 2019, this Court approved the award of $1,500,000.00 in fees, plus $232,281.85 in expenses for a total of $1,732,281.35. D.I. 1331. The $1.5 million awarded
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fees was only a fraction (35%) of the more than $4,289,000.00 lodestar that Class Counsel had expended at that time.
41. Subsequently, Class Counsel have incurred an additional $27,725.54 in costs and $520,712.50 in lodestar prosecuting the claims against the Underwriter Parties. Gutride Decl. ¶¶ 11, 12, 14.
42. The Class Notice informed Class members that if additional funds were recovered from the Underwriters, the funds would be used to pay: (1) any additional costs of administering the settlement that are not covered by funds received from the Trust, (2) any additional attorneys’ fees, costs or incentives awarded by the Court, and (3) valid claims by Class members under this settlement. D.I. 1327 at 40. The Class Notice also informed Class members that “Plaintiffs’ lawyers may seek an additional award of their actual costs, plus attorneys’ fees not greater than 40% of the amount recovered. You will not be provided separate notice of any such application, although a copy of the application will be posted on the Settlement Website.” Id. at 41. As noted above, no person objected to the Class Settlement Stipulation. D.I. 1328 .
1. Legal Standard for Awarding Attorneys’ Fees 43. Federal Rule of Civil Procedure Rule 23(h) provides that “[i]n a certified class action, the court may award reasonable attorney’s fees and nontaxable costs that are authorized by law or by the parties’ agreement.” Fed. R. Civ. Proc. Rule 23(h). The Stipulation provides that Class Counsel may apply to the Court for payment of attorneys’ fees.
44. “In assessing attorneys’ fees, courts typically apply either the percentage-of- recovery method or the lodestar method.” In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 300 (3d Cir. 2005). The “percentage-of-recovery method is generally favored in common fund cases.”
45. “A district court should consider seven factors when analyzing a fee award in a common fund case: (1) the size of the fund created and the number of persons benefitted; (2) the presence or absence of substantial objections by members of the class to the settlement terms and/or fees requested by counsel; (3) the skill and efficiency of the attorneys involved; (4) the complexity and duration of the litigation; (5) the risk of nonpayment; (6) the amount of time
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devoted to the case by plaintiffs' counsel; and (7) the awards in similar cases.” Id. at 301.
46. When evaluating whether the percentage of recovery is reasonable, the Court first compares the actual award requested to other awards in comparable settlements; and then ensures that the award is consistent with what an attorney would have received if the fee were negotiated on the open market. In re Remeron Direct Purchaser Antitrust Litig., No. 03-0085, 2005 U.S. Dist. LEXIS 27013, *42-46 (D.N.J. Nov. 9, 2005); In re Ins. Brokerage Antitrust Litig., 297 F.R.D. 136, 155, 2013 U.S. Dist. LEXIS 108042, *108, 86 Fed. R. Serv. 3d (Callaghan) 654, 2013-2 Trade Cas. (CCH) P78,470, 2013 WL 3956378.
47. In the Third Circuit, “[t]here is no consensus on what percentage of a common fund is reasonable, although several courts in this circuit have observed that percentage of recovery fee awards generally range from 19% to 45%, with 25% being typical.” Haught v. Summit Res., LLC, No. 1:15-cv-0069, 2016 U.S. Dist. LEXIS 45054, at *29 (M.D. Pa. Apr. 4, 2016). The Third Circuit does recognize, however, that a reasonable percentage bears an “inverse relationship” to the size of the fund, meaning that “percentage awards generally decrease as the amount of recovery increases,” and vice versa. Id. (quoting In re Prudential, 148 F.3d 283, 339 (3d Cir. 1998). In large class action settlements involving more than $10 million dollars, attorneys’ fees are often limited to 25% of the settlement value “in order to prevent a windfall to counsel.” Erie Cnty. Retirees Ass'n v. Cnty. of Erie, 192 F.Supp.2d 369, 381 (W.D.Pa. 2002). However, “[f]ee awards ranging from thirty to forty-three percent have been awarded in cases with funds ranging from $400,000 to $6.5 million, funds which are comparatively smaller than many.” Haught v. Summit Res., LLC, No. 1:15-cv-0069, 2016 U.S. Dist. LEXIS 45054, at *30 (M.D. Pa. Apr. 4, 2016) see also Gilbert v. Prudential-Bache Secur., Inc., Civil Action No. 83- 1513, 1987 U.S. Dist. LEXIS 1225, at *6-7 (E.D. Pa. Feb. 18, 1987) (approving fee equal to “35% of the total recovery” where it amounted to only half of counsel’s lodestar and where “counsel are not subject to criticism for having obtained only a [small] recovery”); In re Greenwich Pharmaceutical Sec. Litig., 1995 U.S. Dist. LEXIS 5717, *19 (E.D. Pa. April 25, 1995) (“cases with smaller settlement funds often include attorneys’ fee awards that exceed the
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median of 25 percent”). Similarly, under California law, many cases have found that between 30% and 50% of the common fund is an appropriate range when the settlement fund is less than ten million, see Van Vranken v. Atl. Richfield Co., 901 F. Supp. 294, 297-98 (N.D. Cal. 1995) (collecting cases). 48. When awarding fees as a percentage of the common fund a court is permitted, but
not required, to “cross-check” the amount of the award against the lodestar. In re Rite Aid Corp.
Sec. Litig., 396 F.3d 294, 305-07 (3d Cir. 2005). “The lodestar award is calculated by
multiplying the number of hours reasonably worked on a client’s case by a reasonable hourly
billing rate for such services based on the given geographical area, the nature of the services
provided, and the experience of the attorneys.” Id. at 305. “Generally, a reasonable hourly rate is to be calculated according to the prevailing market rates in the relevant community.” Rode v.
Dellarciprete, 892 F.2d 1177, 1183 (3d Cir. 1990). “When a court applies the lodestar method to award fees in a class action case that involves a fee-shifting statute, there is a strong presumption that the lodestar represents the ‘reasonable’ fee, for class counsel’s work.” Dungee v. Davison
Design & Dev., Inc., 674 F. App'x 153, 156 (3d Cir. 2017).
2. Class Counsel’s Requested Fee is Reasonable
49. Here, the requested 40% fee is reasonable and should be awarded. The Class has received notice of the 40% fee award and did not object (D.I. 1328), and the settlement fund is
less than $2 million, which is “comparatively smaller than many.” Haught v. Summit Res.,
LLC, No. 1:15-cv-0069, 2016 U.S. Dist. LEXIS 45054, at *30 (M.D. Pa. April 4, 2016); see
also Howes v. Atkins, 668 F. Supp. 1021 (E.D. Ky. 1987) (court awarded 40 percent of $ 1
million recovery). The Class Members have already received distributions, will receive
additional distributions, and because of the small fund, there is not a danger of providing Class
Counsel with a windfall that would accompany a “megafund.” See In re Greenwich
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Pharmaceutical Sec. Litig., 1995 U.S. Dist. LEXIS 5717, *19. The 40% fee amount is also
within the range of privately negotiated contingent fees. “Attorneys regularly contract for contingent fees between 30% and 40% with their clients in non-class, commercial litigation.” In re Remeron Direct Purchaser Antitrust Litig., 2005 U.S. Dist. LEXIS 27013 at *46. See, e.g., In re Ikon Office Solutions, Inc.,194 F.R.D. 166, 194 (E.D. Pa. 2000); In re Orthopedic Bone
Screws Prods. Liab. Litig., No. 97-381, 2000 U.S. Dist. LEXIS 15980 at *7 (E.D. Pa. Oct. 23,
2000); Durant v. Traditional Invest., Ltd., No. 88-9048, 1992 U.S. Dist. LEXIS 12273 at *7 n.7
(S.D.N.Y. Aug. 12, 1992). Thus, the award is consistent with negotiated fee arrangements in comparable litigation. Continental Illinois Sec. Litig., 962 F.2d at 573 (stating that the judge must try to simulate the market “by obtaining evidence about the terms of retention in similar suits, suits that differ only because, since they are not class actions, the market fixes the terms”).
50. The fee award is also justified by a cross-check to Class Counsel’s lodestar.
Through the date of this application, that lodestar is at least $520,712.50. See Declaration of
Adam Gutride, filed herewith (“Gutride Decl.”) at ¶¶ 11, 12. To date, Class Counsel have received only $1,500,000.00 in fees, which was awarded under the Class Settlement Order. Id.
Thus, even if the full requested additional $720,000.00 is awarded, the total fee paid to Class
Counsel ($2,200,000.00) will be only 46% of Class Counsel’s total lodestar.
51. As previously recognized by this Court, Class Counsel charges reasonable rates
that are commensurate with market rates charged by others with similar skills and experience.
D.I. 1331 at 1-2. The Court already approved Class Counsel’s lodestar through July 30, 2019 of
$4,289,000.00. See D.I. 1331 at ¶¶ 2-3; 1323 at ¶ 15. The lodestar for the additional work done since the prior fee application is calculated using the firm’s standard 2020 rates, which for the attorneys involved range from $625 to $1050 per hour. Gutride Decl. at ¶¶ 11-12. Use of the
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standard 2020 rate is appropriate because the work was performed in 2019 and 2020 and because
of the deferred and highly contingent nature of counsel’s compensation. See LeBlanc Sternberg
v. Fletcher, 143 F.3d 748, 764 (2nd Cir. 1998) (“[C]urrent rates, rather than historical rates,
should be applied in order to compensate for the delay in payment….”) (citing Missouri v.
Jenkins, 491 U.S. 274, 283-84 (1989)); In re Washington Pub. Power Supply Sys. Sec. Litig., 19
F.3d 1291, 1305 (9th Cir. 1994) (“The district court has discretion to compensate delay in
payment in one of two ways: (1) by applying the attorneys’ current rates to all hours billed
during the course of litigation; or (2) by using the attorneys’ historical rates and adding a prime
rate enhancement.”).
52. Far from any “upward” or “positive” multiplier, Class Counsel’s requested fee
results in a fractional (a.k.a. “negative” or “downward”) multiplier of 0.46. “This negative
multiplier confirms the reasonableness of the requested fee award.” In re N.J. Tax Sales
Certificates Antitrust Litig., Civil Action No. 12-1893 (MAS) (TJB), 2016 U.S. Dist. LEXIS
137153, at *44 (D.N.J. Sep. 30, 2016); see also In re Ins. Brokerage Antitrust Litig., 579 F.3d
241, 284 (3d Cir. 2009) (“The lodestar multiplier that the District Court calculated was less than
one and thus reveals that Class Counsel's fee request constitutes only a fraction of the work that
they billed in conjunction with the Zurich Settlement Agreement. Even assuming there was some
inflation of the hours billed in relation to the Zurich Settlement or some duplicative work
involved in the total hours count, a significant adjustment would have to be made to the hours
calculation before the lodestar multiplier (here, a fraction) would even begin to approach one.”).
And, even where the requested fee is a large percentage of the recovery, where “the multiplier is less than 1 (a ‘negative lodestar’) . . . we are satisfied that a lodestar cross-check confirms that the requested fee percent is fair and reasonable.” In re Auto. Refinishing Paint Antitrust Litig.,
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2008 U.S. Dist. LEXIS 569, at *18-19 (E.D. Pa. Jan. 3, 2008); see also Castro v. Sanofi Pasteur
Inc., No. 11-7178 (JMV)(MAH), 2017 U.S. Dist. LEXIS 174708, at *27 (D.N.J. Oct. 20, 2017)
(“Because the lodestar cross-check results in a negative multiplier, it provides strong evidence
that the requested fee is reasonable.”); In re Fasteners Antitrust Litig., No. 08-md-1912, 2014
U.S. Dist. LEXIS 9990, at *21 (E.D. Pa. Jan. 27, 2014) (same). California courts are in accord.
E.g., Schuchar dt v. Law Office of Rory W. Clark, 314 F.R.D. 673, 690-91 (N.D. Cal. 2016)
(holding negative lodestar multiplier to be indication of reasonableness of fee request).
53. It is particularly appropriate to compensate GSLLP in the amount requested
because it continued to vigorously litigate on behalf of the Class even after the bankruptcy
petition, when most similarly situated lawyers would have given up, and it eventually obtained
an excellent recovery for Class members. See Gutride Decl. ¶ 4.
3. Class Counsel Should Be Awarded Costs
54. “Counsel for a class action is entitled to reimbursement of expenses that were
adequately documented and reasonably and appropriately incurred in the prosecution of the class
action.” Hegab v. Family Dollar Stores, Inc., 2015 U.S. Dist. LEXIS 28570, *39, 2015 WL
1021130 (D.N.J. March 9, 2015) (citing Abrams v. Lightolier Inc., 50 F.3d 1204, 1224-25 (3d
Cir. 1995)).
55. Class Counsel requests that, in addition to reasonable attorneys’ fees, the Court
grant its application for reimbursement of $27,725.54 in additional costs and expenses it has
incurred in connection with the prosecution of the claims agains the Underwriter Parties. The
expenses incurred are itemized in the Gutride Declaration. Gutride Decl. at ¶ 12. These expenses
are in addition to the $232,281.85 in expenses previously awarded by the Court in connection
with the Class Settlement
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56. The itemized costs include: fees to Judge Rosen for acting as mediator with
Underwriters; costs paid to local counsel; and online research and printing expenses. Id. These
types of expenses are reasonable litigation expenses incurred for the benefit of the class. See
Harris v. Marhoefer, 24 F.3d 16, 19 (9th Cir. 1994) (noting that a prevailing plaintiff may be
entitled to costs including, among other things, “postage, investigator, copying costs, hotel bills,
meals,” and messenger services). Moreover, these costs are reasonably proportionate to the
amount of attorneys’ fees when compared to similar settlements. See, e.g., Thomas v. Magnachip
Semiconductor Corp., No. 14-cv-01160-JST, 2018 U.S. Dist. LEXIS 82801, at *14 ((N.D. Cal.
May 15, 2018) (awarding in fees $1.55 million and $795,401.42 in expenses); Ruiz v. XPO Last
Mile, Inc., No. 3:05-CV-02125 JLS (KSC)) 2017 U.S. Dist. LEXIS 209361, at *30 (S.D. Cal.
Dec. 20, 2017) (awarding $246,889.98 in costs).
C. Approval of Administration Fees and Cy Pres Recipient
57. The Court previously approved the appointment of KCC as the administrator to provide the Class Notice and issue monetary distributions to Class Members (“Claim
Administrator”). D.I. 1301 at ¶ 6. KCC will continue to act in that role to distribute to Class
Member the proceeds from the Media Policy Settlement Fund. Geraci Decl. ¶ 1. KCC has computed that its costs of making the second distribution will be $21,320.00. Id. at 5.
58. Checks issued to Class members are valid for 180 days. Checks previously
mailed to distribute monies received from the Tablet Liquidating Trust will be valid until March
2021. Geraci Decl. ¶ 4. Checks to distribute the Media Policy Settlement Fund will likely be
mailed in January 2021 and valid until July 2021. Id. All checks that are returned undeliverable
will be remailed if an updated address can reasonably be found by the Claim Administrator.
Nevertheless, it is reasonable to anticipate that some number of checks will not be delivered, or
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that some checks, although delivered, will not be negotiated by the recipient with in the 180-day period.
59. When monies paid to Class members out of a class settlement fund remain unclaimed, it is typical practice for such funds to be paid cy pres to an appropriate charitable organization. A cy pres remedy is appropriate to put unclaimed funds to “[their] next best compensation use, e.g., for the aggregate, indirect, prospective benefit of the class.” Nachshin v.
AOL, LLC, 663 F.3d 1034, 1038 (9th Cir. 2011) (citing Masters v. Wilhelmina Model Agency,
Inc., 473 F.3d 423, 436 (2d Cir.2007)).
60. “[D]irect distributions to the class are preferred over cy pres distributions.” In re
Baby Prods., 708 F.3d at 173. However, “a district court does not abuse its discretion by approving a class action settlement agreement that includes a cy pres component directing the distribution of excess settlement funds to a third party to be used for a purpose related to the class injury” and “[i]nclusion of a cy pres provision by itself does not render a settlement unfair, unreasonable, or inadequate.” Id. at 172-73.
61. In determining whether a settlement containing a cy pres provision is fair, reasonable, and adequate, the Third Circuit has held that “a district court may consider, among other things, the number of individual awards compared to both the number of claims and the estimated number of class members, the size of the individual awards compared to claimants’ estimated damages, and the claims process used to determine individual awards.” Id. at 174.
62. Here, the Media Policy Settlement Fund will be distributed to the over 13,000
Class Members who filed claims for nearly 20,000 defective tablets and 339 non-defective tablets. See Geraci Decl. at ¶ 6. The only monies that will not be distributed will be as a result
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of checks returned as undeliverable, or those checks that are not processed within 180 days.I
Thus, the award to a cy pres recipient will not hinder the benefit to the class, and will likely
represent a small percentage of total settlement funds. See In re Baby Prods., 708 F.3d at 174.
63. Class Representatives propose Public Citizen as cy pres recipient for unclaimed funds. Public Citizen is a nonprofit consumer advocacy organization that champions the public interest. The organization is committed to protecting consumers both through advocating for strong policies (see Public Citizen Guide to Fighting Price Gouging During the Covid-19
Pandemic Emergency, https://www.citizen.org/article/public-citizen-guide-to-fighting-price- gouging/ (last accessed 11/13/20)) and through assisting in important litigation that strengthens consumers abilities to hold companies liable for violating their rights (see, e.g., Respondent’s
Brief in Opposition, Kimberly-Clark Corp., et al., v. Davidson, U.S. S.Ct. No. 18-304,
(addressing standing of consumers to see injunctive relief against false advertising);
Respondent’s Brief in Opposition, AT&T Mobility LLC, et al., v. McArdle, U.S. S.Ct. No. 19-
1078 (addressing enforceability of arbitration provisions that bar public injunctions).2 Thus,
there is a substantial nexus between the use of residual funds and the goals of the lawsuit to
protect consumers’ rights in the face of fraud and misrepresentation.
WHEREFORE, the Class Representatives respectfully request that the Bankruptcy
Court enter an order substantially in the form annexed hereto as Exhibit 2 granting the Motion and approving the Stipulation and the distribution of the Media Policy Settlement Fund as requested herein.
I In addition, there is an anticipated $44.75 residual that will remain after apportioning the Media Policy Settlement Fund, because distributions are rounded to the nearest penny. 2 These briefs may be accessed, respectively, at https://mkus3lurbh3lbztg254fzode-wpengine.netdna- ssl.com/wpcontent/uploads/brief_in_opposition_to_petition_for_cert.pdf and https://mkus3lurbh3lbztg254fzode- wpengine.netdna-ssl.com/wp-content/uploads/McArdle-Brief-in-Opposition.pdf. 23
Case 15-12465-CSS Doc 1481 Filed 11/16/20 Page 24 of 24
Dated: November 16, 2020
FOX ROTHSCHILD LLP
/s/ Seth A. Niederman Seth A. Niederman (DE Bar No. 4588) 919 North Market Street, Suite 300 Wilmington, DE 19899 Telephone: (302) 654-7444 E-mail: [email protected]
- and - /s/ Adam Gutride Adam Gutride, California Bar No. 181446) (Admitted Pro Hac Vice) GUTRIDE SAFIER LLP 100 Pine Street, Suite 1250 San Francisco, CA 94111 Telephone: (415) 639-9090 Facsimile: (415) 449-6469 E-Mail: [email protected]
Counsel for Scott Miller and James E. Griffin IV, Class Representatives
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EXHIBIT 1 Case 15-12465-CSS Doc 1481-1 Filed 11/16/20 Page 2 of 117
IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
Chapter 11 In re: Case No. 15-12465-CSS ARCTIC SENTINEL, INC. [f/k/a 1 Fuhu, Inc.], et al., (Jointly Administered) Debtors.
STIPULATION OF SETTLEMENT BETWEEN SCOTT MILLER AND JAMES E. GRIFFIN AND CERTAIN UNDERWRITERS AT LLOYD'S
Scott Miller (“Miller”) and James E. Griffin IV (“Griffin”), collectively, the class
representatives (the “Class Representatives”), and Certain Underwriters at Lloyd's
(“Underwriters”) subscribing to the Cyber, Privacy, and Media Insurance Policy bearing Policy
No. ESC00062426 (the “Media Policy”) issued to Fuhu, Inc. and Fuhu Holdings, Inc. (together,
the “Fuhu Defendants”) for the period November 9, 2013 to November 9, 2014, hereby enter
into this stipulation (the “Stipulation”) and agree as follows:
RECITALS
I. BACKGROUND
A. This Stipulation arises out of the Court’s Final Order Authorizing And
Approving Stipulation Resolving (1) Class Claim Of Scott Miller And James E. Griffin (Claim
No. 177) …, of September 4, 2019 [Bankruptcy Court Docket No. 1329], a true and correct copy
of which is attached hereto as Exhibit A [“Class Settlement Order”]. All capitalized terms shall,
if not defined in this Stipulation, have the meanings assigned in the Class Settlement Order and
1 The Debtors, together with the last four digits of each Debtor’s tax identification number, are: Arctic Sentinel, Inc. [f/k/a Fuhu, Inc.] (7896); Arctic Sentinel Holdings, Inc. [f/k/a Fuhu Holdings, Inc.] (9761); Arctic Sentinel Direct, Inc. [f/k/a Fuhu Direct, Inc.] (2180); and Sentinel Arctic, Inc. f/k/a Nabi, Inc.] (4119).
1.
176220675 v4 Case 15-12465-CSS Doc 1481-1 Filed 11/16/20 Page 3 of 117
in Exhibit 1 to the Class Settlement Order, entitled Stipulation Resolving (1) Class Claim Of
Scott Miller And James E. Griffin (Claim No. 177) …, [Dkt. 1329-1] (“Class Settlement
Stipulation”). For avoidance of doubt, Underwriters and all of their agents, brokers, employees,
officers, counsel, representatives, insurers, reinsurers, corporate affiliates (including without
limitation Lloyd’s of London, CFC Underwriting Limited and all persons and entities listed on
the declarations page of the Media Policy) shall be referred to collectively herein as the
“Underwriter Parties.” The Underwriter Parties and the Class Representatives shall be referred
to collectively as the “Stipulating Parties” or separately as a “Stipulating Party.”
B. In the Class Settlement Order, the Court approved the Class Settlement
Stipulation among, inter alia, the Class Representatives and Saccullo Business Consulting, LLC,
the Liquidating Trustee (the “Liquidating Trustee”) of the Tablet Liquidating Trust (the
“Liquidating Trust”). The Class Settlement Stipulation provided, inter alia, that purchasers of
certain Nabi® brand tablets (“Tablets”) who were members of the Class would have the right to
make claims for cash payments out of monies distributed to the Class from the Liquidating Trust,
with the amount of such payment dependent in part on whether the Tablet had suffered from a
defect.2 The Class Settlement Stipulation further provided, inter alia, for an assignment of all
rights, claims, and/or causes of action relating to, arising out of, and/or regarding the Media
Policy (“Media Policy Assignment”) as follows:
6. The Liquidating Trustee shall assign to the Class all its rights, claims and causes of action against the Underwriter Parties and all other persons and entities relating to or arising out of the Media Policy, including but not limited to statutory rights, contractual rights, and rights arising in tort or otherwise, relating to the Underwriter Parties’ duty to defend and indemnify the Fuhu
2 The Court had certified the Class and appointed the Class Representatives by way of a Stipulation and Order dated July 7, 2016 [Dkt. No.. 667)].. 2.