Challenging The Settlement

Judge Vaughn Walker of the N.D. of Cal. has often expressed skepticism about attorneys’ fees payments in securities class actions. So the parties in the Chiron case may not have been surprised when he denied preliminary approval of their $30 million settlement agreement on the grounds that the attorneys’ fees request was excessive. Milberg Weiss had asked for $7.5 million or 25% of the settlement, which Judge Walker found resulted in a lodestar of between 8 and 10. More noteworthy, however, is that the court’s opinion reportedly also: (a) expressed concern over the pending criminal charges against Milberg Weiss; (b) questioned whether the lead plaintiff was an adequate class representative given its approval of the attorneys’ fees request; and (c) suggested that defense counsel, which represents some individuals in connection with the Milberg Weiss-related criminal probes, may have had an incentive not to look too closely at the adequacy issue. The Recorder and Reuters have articles on the decision.