Merckvytorinsecuritieslitigation.com
Case 2:08-cv-02177-DMC-JAD Document 333-2 Filed 07/02/13 Page 1 of 51 PageID: 21577
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
IN RE MERCK & CO., INC.
Civil Action No. 08-2177 (DMC) (JAD)
VYTORIN/ZETIA SECURITIES LITIGATION
JOINT DECLARATION OF DANIEL L. BERGER
AND SALVATORE J. GRAZIANO IN SUPPORT OF
(I) LEAD PLAINTIFFS' MOTION FOR FINAL APPROVAL OF CLASS ACTION
SETTLEMENT AND PLAN OF ALLOCATION, AND (II) CO-LEAD
COUNSEL'S MOTION FOR AN AWARD OF ATTORNEYS' FEES AND
REIMBURSEMENT OF LITIGATION EXPENSES
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TABLE OF CONTENTS
THE OUTSTANDING RECOVERY ACHIEVED . 3
PROSECUTION OF THE ACTION . 6
FACTUAL BACKGROUND OF THE ACTION. 6
THE PROSECUTION OF THE ACTION . 8
Co-Lead Counsel's Pre-Filing Investigation And Preparation Of The Complaint . 8
The Consolidated Class Action Complaint . 9
Defendants' Motion To Dismiss The Consolidated Class Action Complaint . 9
Lead Plaintiffs Secure Leave To Amend The Complaint . 10
Lead Plaintiffs' Motion to Certify the Class . 10
a) Class Discovery .10
b) Class Certification Briefing And Order .14
Lead Plaintiffs' Extensive Fact Discovery Efforts . 15
Extensive Expert Discovery . 20
Defendants' Motion For Summary Judgment . 22
The Parties' Extensive Pretrial Order . 23
Daubert Motions . 24
Motions
In Limine . 24
Trial Preparation And Other Pretrial Motions . 25
RISKS REGARDING LIABILITY AGAINST DEFENDANTS . 26
RISKS ATTENDANT TO TRIAL . 28
THE PARTIES' SETTLEMENT NEGOTIATIONS . 29
PLAN OF ALLOCATION . 31
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LEAD PLAINTIFFS' COMPLIANCE WITH THE COURT'S ORDER REQUIRING ISSUANCE OF NOTICE OF THE SETTLEMENT TO CLASS MEMBERS AND CLASS REACTION TO DATE . 33
CO-LEAD COUNSEL'S MOTION FOR ATTORNEYS' FEES AND REIMBURSEMENT OF LITIGATION EXPENSES . 35
AN AWARD OF FEES UP TO 28% WOULD BE FAIR AND REASONABLE . 36
A Lodestar Cross-Check Confirms The Reasonableness Of Co-Lead Counsel's Fee Application . 37
THE QUALITY OF CO-LEAD COUNSEL'S REPRESENTATION . 38
The Excellent Results Obtained From Co-Lead Counsel's Efforts . 39
The Court's Observations As To The Quality Of Co-Lead Counsel's Work . 39
The Standing And Expertise Of Co-Lead Counsel . 40
Standing And Caliber Of Defense Counsel . 40
THE RISKS AND UNIQUE COMPLEXITIES OF THE LITIGATION . 40
The Risks Undertaken By Co-Lead Counsel In Pursuing This Action . 40
The Risks Of Contingent Litigation . 41
AWARDS IN SIMILAR CASES . 42
THE REACTION OF THE CLASS TO THE FEE APPLICATION . 43
REIMBURSEMENT OF THE REQUESTED LITIGATION EXPENSES IS FAIR AND REASONABLE . 43
CONCLUSION . 47
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DANIEL L. BERGER and SALVATORE J. GRAZIANO declare as follows:
I, Daniel L. Berger, am a director of the law firm of Grant & Eisenhofer, P.A.
("G&E"). I am a member of the bars of the State of New York, the Southern and Eastern
Districts of New York, and the Third, Sixth, Seventh, and Ninth Circuits. I have been admitted
to appear
pro hac vice before this Court in the above-captioned action (the "Action"). I have
personal knowledge of the matters set forth herein based on my participation in the prosecution
and settlement of the claims asserted on behalf of the Class (defined below) in the Action.
I, Salvatore J. Graziano, am a partner of the law firm of Bernstein Litowitz Berger
& Grossmann LLP ("BLB&G"). I am a member of the bars of the State of New York, the
Southern and Eastern Districts of New York, and the First, Second, Third, Ninth, and Eleventh
Circuits. I have been admitted to appear
pro hac vice before this Court in the above-captioned
Action. I have personal knowledge of the matters set forth herein based on my participation in
the prosecution and settlement of the claims asserted on behalf of the Class in the Action.1
G&E and BLB&G are the Court-appointed co-lead counsel ("Co-Lead Counsel")
for the Court-appointed lead plaintiffs Stichting Pensioenfonds ABP ("ABP"), International
Fund Management, S.A. (Luxemburg) ("IFM"), the Jacksonville Police and Fire Retirement
System ("Jacksonville"), and the General Retirement System of the City of Detroit ("Detroit")
(collectively, "Lead Plaintiffs") as well as the certified Class in this consolidated securities class
We respectfully submit this Joint Declaration in support of Lead Plaintiffs'
motion, pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, for final approval of the
1 Unless otherwise noted, capitalized terms shall have the meanings ascribed to them in the Stipulation and Agreement of Settlement, dated as of June 3, 2013 (the "Stipulation"), entered into by and among Lead Plaintiffs and Defendants. ECF No. 328-1.
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Settlement and the proposed plan for allocating the proceeds of the Settlement to eligible Class
Members (the "Plan of Allocation") and for an award of attorneys' fees and reimbursement of
litigation expenses. The Settlement will resolve the claims asserted in the Action on behalf of
the class that was certified by the Court. The certified class consists of all persons and entities
that purchased or acquired Merck &Co., Inc. ("Merck") common stock, or call options, and/or
sold Merck put options, during the period between December 6, 2006 through and including
March 28, 2008 (the "Class Period"), and who did not sell their stock and/or options on or before
January 14, 2008, and who were damaged thereby (the "Class").2 The Court preliminarily
approved the Settlement by its Order entered on June 6, 2013 (the "Preliminary Approval
The results achieved in this case, we believe, are exceptional and were the product
of arduous and protracted litigation, spanning nearly five years, which ended just weeks before
trial was set to begin. This Joint Declaration sets forth in detail how Co-Lead Counsel and the
Lead Plaintiffs were able to achieve this outstanding result on behalf of the Class.
We also respectfully submit this Joint Declaration in support of Co-Lead
Counsel's motion for an award of attorneys' fees from the $215 million cash payment plus
2 Excluded from the Class by definition are (a) Defendants; (b) members of the Immediate Families of the Individual Defendants; (c) the subsidiaries and affiliates of Defendants, as these terms are defined by the federal securities laws, including the 401 (k) plans of Merck and Schering; (d) any person or entity who was a partner, executive officer, director, or controlling person of Merck, M/S-P or Schering (including any of their subsidiaries or affiliates), or any other Defendants; (e) any entity in which any Defendant has a controlling interest; (f) Defendants' directors' and officers' liability insurance carriers, and any affiliates or subsidiaries thereof; and (g) the legal representatives, heirs, successors and assigns of any such excluded party. Also excluded from the Class are any persons and entities who submitted a request for exclusion in connection with the previously mailed Notice of Pendency of Class Action (the "Class Notice") as set forth in Appendix 1 to the Stipulation who do not opt back into the Class.
See ¶ 121 n.6,
infra.
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interest earned thereon (the "Settlement Fund") and reimbursement of litigation expenses in the
amount of $4,367,376.95 and Lead Plaintiffs' expenses of $109,865.31 (pursuant to Section
21D(a)(4) of the Private Securities Litigation Reform Act of 1995, 15 U.S.C. § 78u-4(a)(4)).
For the reasons set forth below and in the accompanying memoranda, Lead
Plaintiffs and Co-Lead Counsel respectfully submit that (i) the terms of the Settlement are fair,
reasonable and adequate in all respects and should be approved by the Court; (ii) the proposed
Plan of Allocation is fair and reasonable and should be approved by the Court; and (iii) the Fee
and Expense Application is supported by the facts and the law and should be granted in all
THE OUTSTANDING RECOVERY ACHIEVED
Lead Plaintiffs have succeeded in obtaining a recovery of $215,000,000.00 (the
"Settlement Amount") in cash for the Class. The proposed Settlement is an outstanding result
that would bring to a close nearly five years of contentious litigation between Lead Plaintiffs and
Defendants. If approved, this recovery is the third largest securities class action settlement
against a pharmaceutical company, the seventh largest within the Third Circuit, and among the
top 50 largest securities class actions.3 Thousands of Merck investors will benefit from this large
recovery and, as made clear below, it is particularly significant in light of the risks posed by trial.
As set forth in the Stipulation, in exchange for this payment, the proposed Settlement would
dismiss with prejudice all claims asserted by Lead Plaintiffs and the Class against Defendants
(defined below) and end the Action.
As discussed further below, Lead Plaintiffs obtained this substantial recovery for
the Class despite the significant risks inherent in complex securities class actions generally, and 3
See Exhibit A (http://www.issgovernance.com/files/private/SCASTop100Settlements_2H2012Rev01312013.pdf).
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the case-specific risks they faced in prosecuting the Action against Defendants. The Parties were
only three weeks from beginning the trial when they reached a settlement in principle. The
outcome of a jury trial, especially in a highly complex case such as this, can never be predicted
with reasonable certainty. Had Lead Plaintiffs prevailed at trial, there is no assurance that the
recovery would have been any greater than the proposed Settlement Amount. Further increasing
the uncertainty of the ultimate outcome, there are several instances of plaintiffs' verdicts in
securities fraud cases that were reversed by the trial court or on appeal.
Lead Plaintiffs not only had a clear understanding of the practical considerations
confronting them, but at the time the Settlement was agreed to, also understood the strengths and
weaknesses of the case through Co-Lead Counsel's extensive investigation, prosecution of the
case, and preparation for trial. In this respect, the Parties were in their final pre-trial preparations
when the Settlement was reached. In the nearly five years of extensive and hard-fought
litigation, Lead Plaintiffs engaged in comprehensive and vigorous litigation in which they,
inter
alia, (i) conducted a thorough investigation into the Class's claims; (ii) drafted a detailed
Consolidated Class Action Complaint; (iii) successfully opposed Defendants' motion to dismiss
the Complaint; (iv) successfully moved for class certification and opposed Defendants' effort to
seek appellate interlocutory review of the Court's order granting class certification; (v) engaged
in an extensive and diligent discovery program, including taking over fifty (50) depositions,
several of which were conducted overseas, and the production and review of more than twelve
million pages of documents; (vi) filed a Second Amended Consolidated Complaint based on
certain information uncovered during discovery (the "Complaint"); (vii) successfully opposed
Defendants' motion for summary judgment; and (viii) completed virtually all pre-trial
preparations, including the exchange of
Daubert motions, motions
in limine, bifurcation motions,
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and trial briefs, as well as completing a comprehensive joint Pretrial Order. Plaintiffs also
engaged in a two-day mock trial exercise, which provided them with extensive information as to
the risks they faced at trial.
The Settlement was accomplished through arm's–length settlement discussions
facilitated by several mediators over the course of several years. Experienced mediators
including Judge Layn Phillips and, ultimately, the court-appointed mediators, Jonathan Lerner
and Stephen Greenberg of the Pilgrim Mediation Group, assisted the parties to settle this case.
The settlement discussions included numerous in-person mediation sessions with detailed
presentations given by attorneys representing each side, focusing first on liability and
subsequently on damages, telephonic follow-up and in-person sessions, and face-to-face
meetings between representatives of each side over the course of several months. The Parties
reached an agreement in principle just weeks before trial, which was scheduled to begin on
March 4, 2013. Even after reaching the agreement in principle, we engaged in over three more
months of negotiations over the specific terms of the Stipulation.
As evidenced by the enormous effort and advocacy summarized above and
described in greater detail herein, by the time the Settlement was reached, Co-Lead Counsel had
a detailed and thorough understanding of the strengths and weaknesses of the case. We
unequivocally believe, based on our knowledge and understanding of the claims and defenses
asserted in this Action, that the $215 million Settlement is an outstanding result for the Class,
particularly when considered against the very substantial risk of a much smaller recovery – or,
even no recovery – after a trial of the Action, and the inevitable and lengthy appeals that would
have followed, assuming success at trial.
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As set forth in the attached declarations of J.G.H.C.M. Beris and J.A. Hendriks of
ABP, Lutz Schleidt of IFM, John Keane of Jacksonville, and John Riehl of Detroit, Lead
Plaintiffs endorse the Settlement.
See Exs. B, C, D, E.
For all of the reasons set forth herein, including the excellent result obtained and
the significant litigation risks, we respectfully submit that the Settlement and Plan of Allocation
are "fair, reasonable and adequate" in all respects, and that the Court should approve them
pursuant to Federal Rule of Civil Procedure Rule 23(e). For similar reasons, and for the
additional reasons set forth in Section II below, we respectfully submit that an award of
attorneys' fees up to the maximum amount of 28% of the settlement amount that the mediator
can recommend and the requested reimbursement of litigation expenses, including the requested
PSLRA awards to the Lead Plaintiffs, are also fair and reasonable, and should be approved.
PROSECUTION OF THE ACTION
FACTUAL BACKGROUND OF THE ACTION
This securities fraud class action was brought under the Securities Exchange Act
of 1934 ("Exchange Act"). The Exchange Act Claims were brought against Merck; Richard
Clark, Merck's Chief Executive Officer during the relevant period; Peter S. Kim, the President of
Merck Research Laboratories; a joint venture formed by Merck and Schering ("M/SP") to
develop and market the Vytorin drug at issue in the case; and Deepak Khanna, the General
Manager of that joint venture. Lead Plaintiffs alleged that Defendants violated the Exchange Act
by,
inter alia, failing to disclose during the Class Period material information concerning the
commercial prospects of Vytorin (a cholesterol-lowering drug that is a combination of a drug
developed by Merck (Zocor) and a drug developed by Schering (Zetia)), and especially the
results of a clinical trial known as ENHANCE that tested whether Vytorin was more effective
than Zocor alone in reducing the build-up of arterial plaque. Unlike the securities case against
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Merck's joint venture partner, Schering, the case against Merck did not include negligence-based
claims brought under the Securities Act of 1933.
The ENHANCE trial, jointly sponsored by Merck and Schering, compared
Vytorin and Zocor based on their ability to slow or reverse atherosclerosis, as measured by
changes in study subjects' carotid artery intima-media thickness ("cIMT") over the course of 24
months. Vytorin on average lowers patients' low density lipoprotein or "bad" cholesterol more
than Zocor. The hypothesis of the ENHANCE trial was that the more aggressive cholesterol-
lowering with Vytorin would lead to more beneficial changes in patients' cIMT.
Lead Plaintiffs alleged that more than a year before the ENHANCE results were
made public, Defendants conducted improper statistical analyses of ENHANCE trial results and
thereby determined that there was no difference in the change of cIMT between subjects
receiving Zocor and subjects receiving Vytorin. Lead Plaintiffs further alleged that Defendants
thereafter made materially false and misleading statements concerning the ENHANCE trial and
the commercial prospects of Vytorin and Zetia.
The material misstatements and omissions by Defendants, as set forth in the
Complaint, are alleged to have caused Merck's securities to trade at distorted prices during the
Class Period. Plaintiffs alleged that purchasers of Merck common stock and call options and
sellers of Merck put options at these distorted prices were damaged when the truth about
ENHANCE, and its implications for Merck's financial prospects, began to be disclosed in
January 2008. The price distortion caused by Defendants' statements and omissions was
allegedly removed through a series of partial disclosures made by Merck, by certain government
entities, and through news and analyst reports and press releases between January and March
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Defendants have denied all of Lead Plaintiffs' allegations and do not admit, as
part of this Settlement, to any wrongdoing.
THE PROSECUTION OF THE ACTION
Co-Lead Counsel's Pre-Filing Investigation And Preparation Of The
Complaint
Prior to filing the initial complaint, Co-Lead Counsel developed a plan to
coordinate a thorough investigation of Lead Plaintiffs' claims, preserve relevant discovery, and
access all relevant information from public and non-public sources. Both internal and external
investigators employed by Co-Lead Counsel initially gathered all responsive public information
concerning Lead Plaintiffs' claims. Marshaling these sources of information, Co-Lead Counsel
developed leads for potential additional witnesses and, in conjunction with Co-Lead Counsel in
the Schering matter, ultimately interviewed over 85 former Merck and Schering employees.
In addition to interviewing witnesses with helpful information, Co-Lead
Counsel's coordinated pre-filing investigation included, among other things, a detailed review
and analysis of (i) public filings with the SEC by Merck and Schering; (ii) research reports by
securities and financial analysts; (iii) transcripts of investor conference calls; (iv) publicly
available presentations by Merck and Schering; (v) press releases and media reports; (vi)
economic analyses of securities price movements and pricing data; (vii) publicly available legal
and Congressional actions involving both companies; and (viii) postings on a medical website
called Cafépharma.
In addition, prior to the filing of the complaint, Co-Lead Counsel retained and
consulted experts in cardiovascular medicine and in securities fraud damages to assist in
developing the claims that would ultimately be asserted.
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The Consolidated Class Action Complaint
On May 5, 2008, a class action complaint was filed against Merck and Clark in
the United States District Court for the District of New Jersey.
After various proceedings with respect to consolidation and appointment of a lead
plaintiff pursuant to the PSLRA, by Order dated July 2, 2008, Judge Dennis M. Cavanaugh
appointed ABP, IFM, Jacksonville and Detroit to serve as Lead Plaintiffs and approved their
selection of G&E and BLB&G to serve as Co-Lead Counsel. ECF No. 18.
On October 6, 2008, Lead Plaintiffs filed a 216-page Consolidated Class Action
Complaint against Merck and Clark. ECF No. 24.
Defendants' Motion To Dismiss The Consolidated Class Action
Complaint
On December 12, 2008, Defendants moved to dismiss the Consolidated Class
Action Complaint, supported by a 40-page brief that attached nineteen exhibits totaling over 600
pages. ECF No. 40-1. Defendants argued, among other things, that the misstatements and
omissions alleged by Lead Plaintiffs were immaterial as a matter of law, that Defendants'
conduct had not caused Lead Plaintiffs' losses, and that Lead Plaintiffs had not adequately
pleaded Defendants' scienter.
On February 2, 2009, Lead Plaintiffs filed their opposition to Defendants' motion
to dismiss, arguing among other things that Lead Plaintiffs had pleaded materially false and
misleading statements, loss causation, and scienter. ECF No. 47.
On April 9, 2009, Defendants filed their reply brief in further support of their
motion to dismiss. ECF No. 58.
On September 2, 2009, the Court issued an Opinion and entered and Order
denying Defendants' motion to dismiss in its entirety. ECF No. 64; ECF No. 65.
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Lead Plaintiffs Secure Leave To Amend The Complaint
On June 3, 2011, Lead Plaintiffs filed a Motion For Leave To Amend, attaching a
copy of a proposed First Amended Consolidated Class Action Complaint. ECF No. 150, 150-1.
On June 20, 2011, Defendants filed a limited opposition to this motion, objecting
to the inclusion of several statements attributed to confidential witnesses. ECF No. 156.
On August 23, 2011, while the motion for leave to amend was pending, Lead
Plaintiffs filed a letter with the Court attaching a "revised" proposed amended complaint. ECF
By Order dated February 7, 2012, the Court granted Lead Plaintiffs' Motion For
Leave To Amend, ECF No. 206, and on February 9, 2012, Lead Plaintiffs filed a Second
Amended Consolidated Complaint. ECF No. 208. Defendants answered the Second Amended
Complaint on February 23, 2012. ECF No. 214.
Lead Plaintiffs' Motion to Certify the Class
a) Class Discovery
On February 1, 2011, the Court issued an order setting a schedule for, among
other things, class certification discovery and class certification briefing. ECF No. 120.
The motion for class certification was vigorously contested and entailed extensive
discovery, much of which occurred before the filing of the motion. On April 12, 2010, in
anticipation of Lead Plaintiffs' motion for class certification, Merck commenced extensive
discovery by serving Lead Plaintiffs with document requests and interrogatories related to class
issues. Defendants' discovery requests were extremely broad and included 48 separate requests
for documents and 8 interrogatories.
In response to Defendants' discovery requests, Lead Plaintiffs produced
thousands of pages of documents, including account statements, investment guidelines, and
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investment manager reports. Co-Lead Counsel reviewed all of these documents for relevance
Defendants then deposed six Rule 30(b)(6) representatives of the various Lead
Plaintiffs. Co-Lead Counsel defended each of these depositions.
Defendants deposed two witnesses from Jacksonville: John Keane and Richard
Cohee, on February 8, 2011 in New York, NY. These witnesses testified concerning
Jacksonville's investment decisions, including the decision to invest in Merck, the allegations in
the Complaint, and Jacksonville's decision to seek Lead Plaintiff status.
Defendants deposed two witnesses from IFM: Lutz Schleidt and Simon Boll,
who were deposed on February 17, 2011 in New York, NY. These witnesses testified
concerning IFM's investment decisions, including the decision to invest in Merck, the allegations
in the Complaint, and IMF's decision to seek Lead Plaintiff status.
Defendants deposed Deirdre Ypma of ABP on May 13, 2011 in New York. Ms.
Ypma testified concerning ABP's investment decisions, including the decision to invest in
Merck, the allegations in the Complaint, and ABP's decision to seek Lead Plaintiff status.
Defendants deposed Walter Stampor of Detroit on March 29, 2011 in New York,
NY. Mr. Stampor testified concerning Detroit's investment decisions, including the decision to
invest in Merck, the allegations in the Complaint, and Detroit's decision to seek Lead Plaintiff
Defendants also sought discovery from the external investment advisers and
portfolio managers that purchased Merck stock on Lead Plaintiffs' behalf during the Class
Period. It is common for public pension funds to diversify their investment strategy by
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apportioning their capital among a number of investment managers, who usually specialize in
different asset classes –
e.g., equity, fixed income, emerging markets, etc.
Between December 2010 and March 2011, Defendants served subpoenas
duces
tecum on Advanced Investment Partners, Alliance Bernstein LP, Alpha Partners LLC, Atlanta
Capital Management LLC, Barclays Global Investors Limited, Cooke & Bieler, L.P., Edgar
Lomax Company, Fayez Sarofim & Co., Globalt, Inc., Goldman Sachs Asset Management
International, INTECH Investment Management LLC, Investment Services Limited, Montag &
Caldwell, LLC, Numeric Investors LP, Orbimed Advisors LLC, Palisades Partners, LLC,
Piedmont Investment Advisors, LLC, State Street Global Advisors, T. Rowe Price Global,
Thompson, Siegel & Walmsley Investment Management LLC, and UBS O'Connor LLC. Co-
Lead Counsel worked with representatives of the Lead Plaintiffs' external investment advisors,
and in many cases, separate counsel that the advisors or managers hired to represent them with
respect to the subpoenas, to respond to the extensive discovery defendants sought. In addition,
Co-Lead Counsel reviewed approximately 100,000 pages of documents produced by these
external investment advisers.
Thereafter, at depositions held throughout the country, Defendants deposed the
following representatives of the various advisors to the Lead Plaintiffs on the following topics:
Numeric Investors LP provided Robert Furdak as a 30(b)(6) witness regarding its investment policies and procedures and its transactions in Merck common stock on behalf of ABP;
Barclays Global Investors Ltd./Blackrock provided Elaine Moore as a 30(b)(6) witness regarding its investment policies and procedures and its transactions in Merck common stock on behalf of ABP;
Advanced Investment Partners provided Doug Case as a 30(b)(6) witness regarding its investment policies and procedures and its transactions in Merck common stock on behalf of ABP;
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OrbiMed Advisors LLC provided Trevor Polischuk as a 30(b)(6) witness regarding its investment policies and procedures and its transactions in Merck common stock on behalf of ABP;
Thompson Siegel & Walmsley Investment Management LLC provided Horace Whitworth as a 30(b)(6) witness regarding its investment policies and procedures and its transactions in Merck common stock on behalf of Jacksonville;
Thompson Siegel & Walmsley Investment Management LLC provided Jessica Thompson as a 30(b)(6) witness regarding its investment policies and procedures and its transactions in Merck common stock on behalf of Jacksonville;
Montag & Caldwell LLC provided Jeff Hagood as a 30(b)(6) witness regarding its investment policies and procedures and its transactions in Merck common stock on behalf of Jacksonville;
Montag & Caldwell LLC provided Piper Burnette as a 30(b)(6) witness regarding its investment policies and procedures and its transactions in Merck common stock on behalf of Jacksonville;
Piedmont Investment Advisors LLC provided Sumali Sanyal as a 30(b)(6) witness regarding its investment policies and procedures and its transactions in Merck common stock on behalf of Detroit;
INTECH Investment Management LLC provided Jennifer Young as a 30(b)(6) witness regarding its investment policies and procedures and its transactions in Merck common stock on behalf of Detroit;
Edgar Lomax Company provided Randall Eley as a 30(b)(6) witness regarding its investment policies and procedures and its transactions in Merck common stock on behalf of Detroit;
Atlanta Capital Management LLC provided Richard England as a 30(b)(6) witness regarding its investment policies and procedures and its transactions in Merck common stock on behalf of Detroit;
(m) Palisades Partners LLC provided Quint Stills as a 30(b)(6) witness
regarding its investment policies and procedures and its transactions in Merck common stock on behalf of Detroit; and
Globalt Inc. provided Gary Fullam as a 30(b)(6) witness regarding its investment policies and procedures and its transactions in Merck common stock on behalf of Detroit.
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There was also considerable expert discovery taken in connection with the motion
for class certification. The Parties submitted multiple expert reports in support of their
respective positions. Lead Plaintiffs filed an expert report on market efficiency and loss
causation by Gregg A. Jarrell, Ph.D., who conducted detailed event studies concerning Merck's
stock price drops. Defendants then deposed Dr. Jarrell, and Lead Plaintiffs deposed Defendants'
expert, Denise Neumann Martin, Ph.D.
b) Class Certification Briefing And Order
On February 7, 2011, Lead Plaintiffs moved to certify the class and to be
appointed class representatives. ECF No. 121-1.
Lead Plaintiffs amended their motion for class certification on September 16,
2011. ECF No. 179.
On December 6, 2011, Defendants filed a 40-page opposition brief. ECF No.
195. Defendants challenged class certification on numerous grounds, including the definition of
the Class, Lead Plaintiffs' adequacy and typicality, and loss causation with respect to various
On January 31, 2012, Lead Plaintiffs filed a 25-page reply brief in further support
of their motion. ECF No. 203.
By Order filed September 25, 2012, the Court granted Lead Plaintiffs' motion and
certified the Action as a class action (the "Class Certification Order"). ECF No. 251. The Court
issued a 20-page opinion outlining its reasons for granting Lead Plaintiffs' motion for class
certification (the "Class Certification Opinion"). ECF No. 250.
On October 9, 2012, Defendants sought permission to appeal the Class
Certification Order to the United States Court of Appeals for the Third Circuit under Fed. R. Civ.
P. 23(f). Defendants requested that the Third Circuit review the District Court's ruling on the
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ground that the District Court erred by declining to resolve a factual dispute regarding the length
of the Class Period.
After extensive briefing, on January 7, 2013, the Third Circuit issued an Order
denying Defendants' Rule 23(f) petition.
In connection with the Court's certification of the Class, on December 27, 2012,
Lead Plaintiffs filed a letter seeking approval of the Notice and Summary Notice of Pendency of
Class Action. ECF No. 271. On December 28, 2012, the Court approved the Class Notice
prepared by Co-Lead Counsel. ECF No. 272. Beginning with the initial mailing on January 17,
2013, nearly 730,000 Class Notices were mailed to potential Class Members.
See Declaration of
Stephanie A. Thurin Regarding (A) Mailing Of The Settlement Notice And Proof Of Claim And
(B) Report On Opt-In Requests Received To Date (the "Epiq Decl."), at ¶¶ 5-8 (Exhibit F). The
Class Notice notified potential Class Members of, among other things: (i) the Action pending
against the Defendants; (ii) the Court's certification of the Action to proceed as a class action on
behalf of the Court-certified Class; and (iii) their right to request to be excluded from the Class,
the effect of remaining in the Class or requesting exclusion, and the requirements for requesting
exclusion. As set forth on Appendix 1 to the Stipulation, one hundred eighty eight (188) requests
for exclusion from the Class were received in connection with the Class Notice.
Lead Plaintiffs' Extensive Fact Discovery Efforts
Through the course of extensive and hotly contested discovery, Lead Plaintiffs,
through the efforts of Co-Lead Counsel, were able to develop strong evidentiary support for the
claims asserted in the Complaint. The results achieved for the Class would not have been
possible in the absence of these discovery efforts.
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After the motion to dismiss was decided in September 2009, formal fact discovery
began. Lead Plaintiffs served 35 documents requests on Defendants. In addition, Lead Plaintiffs
served interrogatories on Defendants.
Further, Lead Plaintiffs gathered evidence from numerous non-parties and served
subpoenas
duces tecum on 7 non-parties, including clinical imaging firms, informatics and
technology firms, industry intelligence firms, and crisis management firms engaged or retained
by Defendants in connection with the ENHANCE trial or the marketing of Vytorin and Zetia.
By Order dated December 22, 2009, the Court ordered that fact discovery be
completed by April 30, 2011. ECF No. 84. By subsequent Order, this date was extended to
August 1, 2011. ECF No. 120.
In response to Lead Plaintiffs' document requests and subpoenas, Defendants and
non-parties produced more than 12 million pages of documents.
Co-Lead Counsel dedicated extensive resources and used cutting-edge technology
to review, organize and analyze the vast amount of information produced by Parties and non-
parties, but they also recognized that significant efficiencies both in terms of time and money
could be achieved by coordinating discovery efforts with the parallel action
In re Schering-
Plough Corporation/ENHANCE Securities Litigation, No. 08-397 (DMC) (JAD) ("
Schering").
Co-Lead Counsel in this Action and in
Schering developed a joint discovery
program for the review of documents and the taking of depositions. This approach, among other
things, allowed for a larger overall team of attorneys to review the documents and for the teams
to seamlessly share information with each other and with more senior lawyers in each case. This
increased the efficiency of the document review in both cases by eliminating redundancy and
duplicated efforts and facilitated not only the review of documents but the efficient preparation
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for depositions as well. Thus, areas of responsibility both as to document review and depositions
were allocated among attorneys in both actions.
Additionally, the classes in the respective actions also realized significant cost
savings as the documents produced by all Parties and non-parties were placed in a shared
electronic document depository hosted by Merrill Corporation ("Merrill"), one of the leading
litigation technology support companies, that was hired by co-lead counsel in the Action and
Schering.
The electronic document depository allowed Plaintiffs' Counsel (as well as
plaintiffs' counsel in
Schering) to search the documents through "Boolean" type searches (
i.e.,
the type of searches used in the Westlaw and Lexis-Nexis databases), as well as by multiple
categories, such as by author and/or recipients, type of document (
e.g., emails, memoranda, SEC
filings), date, bates number, etc. The electronic database was accessible through the Internet,
allowing attorneys in this Action and
Schering under the direction and supervision of their
respective Co-Lead Counsel to review documents and coordinate discovery remotely. For
example, when attorneys in one location identified "hot" documents, that designation was saved
so attorneys in other locations would be aware of which documents carried that designation and
could immediately review them.
Co-Lead Counsel achieved substantial savings by working primarily
electronically (saving significant copying costs), and by sharing the costs of electronic data
storage with the plaintiffs in
Schering.
To review Defendants' enormous document production, a team of attorneys from
Plaintiffs' Counsel in this Action as well as a team in the
Schering Action was assembled and
thorough document review guidelines and protocols were prepared for them. These attorneys
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worked full-time on this project to complete the document review and analysis as quickly and
efficiently as possible. The attorneys conducted their review with direct guidance from senior
attorneys. The review was structured to limit overall cost, with the bulk of the initial review
being conducted by more junior attorney employees.
All aspects of the review by attorneys in the Action were carefully supervised by
Co-Lead Counsel to eliminate inefficiencies and to insure a high-quality work-product. This
supervision included multiple in-person training sessions, the drafting of a detailed "document
review manual," presentations regarding the key legal and factual issues in the case, and in-
person instruction from senior attorneys and experts. The training sessions were supplemented
by weekly conferences with senior attorneys at both Co-Lead Counsel firms as well as
conferences with counsel in
Schering to discuss important documents and case strategy.
Moreover, the "hot" documents identified were all subject to further analysis and
assessment by senior attorneys (with the assistance of Lead Plaintiffs' experts) on an on-going
basis. In addition, samplings of documents coded as "relevant" and "non-relevant" were
reviewed by those same senior attorneys to provide quality control,
i.e., to make certain that the
more junior attorneys' assessments were accurate.
In addition to reviewing more than 12 million pages of documents and taking and
defending depositions related to class discovery as described above, Lead Plaintiffs took more
than 50 depositions of fact witnesses and 30(b)(6) witnesses, some of which were two-day
These depositions include, among others:
Defendant Richard Clark, former Merck CEO;
Fred Hassan, former Schering CEO;
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Arthur Hirt, Merck Vice President of Marketing;
Matthew Arm, Marketing Director for Merck;
Soren Bo Christiansen, General Manager of the Merck/Schering joint venture in Europe;
Deepak Khanna, General Manager of the Merck/Schering joint venture;
Elizabeth Stoner, Merck's Senior Vice President of Global Clinical Development Operations;
Drs. Wang, Shi, and Yang, former Schering biostatisticians; and
Drs. Michiel Bots, John J.P. Kastelein and Eric de Groot, third-party witnesses affiliated with the ENHANCE study, whose depositions took place in the Netherlands after a Hague Motion.
In preparing for these depositions (and for possible trial), Co-Lead Counsel
undertook extensive efforts to analyze the complex medical, scientific and statistical issues that
are integral to Lead Plaintiffs' claims, as well as issues related to proving loss causation and the
damages. Co-Lead Counsel and their experts devoted considerable time and effort to learning
and analyzing: (i) the principles of conducting clinical trials and the protocol for the ENHANCE
study; (ii) the interim and final results of the ENHANCE study; (iii) information relating to
collection, transmittal, storage and analysis of data gathered during the course of the ENHANCE
study, including the use of the "SAS" platform in connection with statistical analyses; (iv)
internal Schering and Merck documents and scientific literature concerning the
pharmacodynamics of Vytorin, Zetia, Zocor, other cholesterol drugs in the "statin" class, and
other cholesterol-lowering medications; (v) internal Schering and Merck documents and
scientific literature relating to complex statistical concepts and methods; and (vi) information
relating to the marketing practices of Schering and Merck and M/SP relating to their cholesterol
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The parties also exchanged and served extensive contention interrogatories.
Specifically, on June 3, 2011, Defendants served Plaintiffs with 15 contention interrogatories.
Plaintiffs served over 138 pages in response. Plaintiffs also served Defendants with hundreds of
requests for admission regarding the authenticity and business record status of certain discovery
Extensive Expert Discovery
The parties exchanged 18 opening and rebuttal reports from 9 experts
accompanied by thousands of pages of exhibits.
On September 15, 2011, Lead Plaintiffs served expert reports to Defendants from
the following individuals:
Expert Subject
Gregg A. Jarrell, Ph.D.
Damages, Market Efficiency, Loss Causation, Valuation Analyses
Curt D. Furberg, M.D., Ph.D.
Clinical Trial Standards, Clinical Trial Design, Clinical Trial Data Analyses, Publication of Clinical Trial Results
David B. Madigan, Ph.D
Biostatistics, Clinical Trial Standards Relating To Blinded Data, Clinical Trial Data Quality and Reliability
Allan J. Taylor, M.D., F.A.C.C,
Cardiology, Clinical Trial
Standards, Imaging Trials, cIMT Methodology, Surrogate Clinical Markers
On September 15, 2011, Defendants served expert reports to Lead Plaintiffs from
the following individuals:
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Expert Subject
Arnold Barnett, Ph.D.
Statistics, Clinical Trial Data Quality and Reliability
Marc Cohen, M.D., F.A.C.C,
Cardiology, Surrogate Clinical Markers, Publication of Clinical Trial Results
Eva Lonn M.D., M.Sc.,
Cardiology, Surrogate Clinical
F.R.C.P.C., F.A.C.C.
Markers, Imaging Trials, cIMT Methodology, Publication of Clinical Trial Results
Denise Neumann Martin, Ph.D.
Damages, Market Efficiency, Loss Causation, Valuation Analyses
Robert Starbuck, Ph.D.
Biostatistics, Clinical Trial Data Quality and Reliability, Clinical Trial Data Cleaning
On October 28, 2011, the parties served rebuttal expert reports drafted by each of
the expert witnesses identified above.
Expert depositions commenced in November, 2011. The parties took and
defended a total of 9 expert depositions.
Lead Plaintiffs deposed Defendants' experts, as follows:
Deponent Deposition
Location
Arnold Barnett, Ph.D.
Marc Cohen, M.D., F.A.C.C,
Eva Lonn M.D., M.Sc.,
F.R.C.P.C., F.A.C.C. Denise Neumann Martin, Ph.D.
Robert Starbuck, Ph.D.
Defendants deposed the following Lead Plaintiffs' experts, as follows:
Deponent Deposition
Location
Gregg A. Jarrell, Ph.D. 11/11/2011 New
Curt D. Furberg, M.D., Ph.D.
David B. Madigan, Ph.D
Allan J. Taylor, M.D., F.A.C.C, 12/16/2011
4 Dr. Martin was deposed for two days. One day was in connection with the Schering case and one day was in connection with the Merck case.
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Deponent Deposition
Location
Lead Plaintiffs' scientific, medical, and statistical experts were essential to the
development of their claims. Lead Plaintiffs allege that biostatisticians from the Merck/Schering
joint venture conducted improper statistical analyses, in violation of accepted clinical trial
standards, thereby learning the results of the ENHANCE study before it was proper to do so.
The opinions of Drs. Madigan, Furberg and Taylor were necessary to support Lead Plaintiffs'
claims that (i) conducting such analyses on "blinded" clinical trial data was improper, and (ii) the
analyses revealed that Vytorin had failed to outperform Zocor.
Defendants' Motion For Summary Judgment
On March 1, 2012, Defendants moved for summary judgment. ECF Nos. 216
through 220. In support, Defendants submitted 36 pages of briefing, a 12-page Rule 56.1
statement, and 42 exhibits.
Defendants argued that summary judgment should be granted because Lead
Plaintiffs could not prove loss causation as to any alleged corrective disclosure after January 15,
On April 6, 2012, Lead Plaintiffs submitted their opposition to the motion,
including 40 pages of opposition briefing, 85 pages of Rule 56.1 statements, and 238 exhibits.
ECF No. 231, 233.
In their opposition to Defendants' motion, Lead Plaintiffs argued that Defendants
misstated the standard for loss causation, and argued that a reasonable jury would find all alleged
disclosures made from January 14, 2008 to March 30, 2008 were true corrective disclosures.
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Defendants filed a 15-page reply brief in further support of their summary
judgment motion, reiterating the arguments in their main briefs. ECF No. 241.
In an Order dated September 25, 2012, the Court denied Defendants' motion for
summary judgment. ECF No. 252.
The Parties' Extensive Pretrial Order
By Order dated August 6, 2012, the Court set the trial to begin on November 3,
2012. ECF No. 244. At a September 25, 2012 status conference, the Court postponed (at
Defendants' request and over Co-Lead Counsel's objection) the trial of the Action to March 4,
2013. ECF No. 253. By Order dated October 4, 2012, the Court set a February 5, 2013 deadline
for the submission of a joint final pre-trial order ("Pretrial Order"), and set the final pre-trial
conference for February 7, 2013. ECF No. 324.
On January 8, 2013, the parties exchanged extensive proposed Pretrial Order
materials, including thousands of proposed trial exhibits, designated deposition testimony,
hundreds of proposed stipulated facts, proposed summaries of expert qualifications, proposed
jury instructions and verdict forms, proposed legal issues, witness lists, and proposed voir dire
questions.5 The Parties exchanged objections to proposed Pretrial Order materials, and
supplemental exhibits and deposition designations on January 22, 2013 and January 28, 2013.
The parties thereafter conducted numerous meet and confers.
On February 5, 2013, the Parties jointly filed the Pretrial Order with the Court.
Lead Plaintiffs (together with Co-Lead Plaintiffs in the Schering
action) identified, among other
things, 46 potential witnesses expected to testify live or by video, 213 stipulated facts, stipulated
5 The Parties submitted competing sets of jury instructions and verdict forms offering in critical respects fundamentally divergent views of the applicable law.
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by Lead Plaintiffs in the
Merck and
Schering actions and Defendants, and 51 proposed jury
instructions, including 17 jointly proposed with Defendants.
Also on February 5, 2013, Lead Plaintiffs and Defendants separately filed trial
briefs outlining their respective cases in chief and key legal and factual issues to be decided.
Daubert Motions
On January 14, 2013, Lead Plaintiffs were served with two motions by
Defendants challenging the opinions and qualifications of their four expert witnesses.
Lead Plaintiffs filed their oppositions to these
Daubert briefs on February 4, 2013.
The Parties reached a settlement in principle prior to the filing of reply papers.
Motions In Limine
On February 1, 2013, Lead Plaintiffs filed 23 motions
in limine. Lead Plaintiffs
sought to exclude, among other things: (i) evidence and argument regarding the contention that
Merck and Schering are good corporate citizens, including references to Merck's and Schering's
mission to extend and enhance human life; (ii) evidence and argument regarding Merck's
employment of thousands of New Jersey residents; (iii) evidence and argument regarding post-
class period results of government investigations into Defendants after the release of the
ENHANCE study results; and (iv) evidence and argument regarding the size of other pending
clinical trials relating to Vytorin.
Also on February 1, 2013, Defendants served Lead Plaintiffs with seven motions
in limine. Defendants sought to exclude, among other things: (i) settlements or allegations of
misconduct relating to Vioxx or other unrelated drugs; (ii) evidence and argument regarding the
Congressional investigation into the ENHANCE study; (iii) evidence and argument regarding
certain internet message board postings; (iv) purported opinion testimony of two physicians who
spoke publicly about the ENHANCE results during the Class Period; (v) evidence or argument
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regarding the merger between Merck and Schering, the personal wealth of Defendants, or the
decision of a certain physician to "cut ties" with Merck; and (vi) evidence or argument
concerning a purported link between Vytorin and cancer.
The Parties reached a settlement in principle prior to the filing of opposition
Trial Preparation And Other Pretrial Motions
Lead Plaintiffs retained a jury consultant and trial graphics company for trial.
Together with the jury consultant, Lead Plaintiffs conducted an extensive multi-day mock trial
exercise specifically for this Action. Lead Plaintiffs also worked with their jury consultant on
the proposed jury instructions, verdict forms and voir dire, and to develop numerous
demonstratives for trial.
Lead Plaintiffs also prepared, or were in the process of preparing, drafts of trial
examination for the current and former individual defendants, experts, and other current and
former employees of Merck and Schering.
In addition, on February 1, 2013, Lead Plaintiffs filed a motion to bifurcate the
trial. ECF No. 289. Lead Plaintiffs proposed addressing all class-wide issues in the first phase
of the trial, and addressing all individual reliance issues relating to Lead Plaintiffs in the second
phase. The accompanying 37-page brief also served as an opposition to Defendants' January 14,
2013 motion to bifurcate. Defendants also proposed separating the class-wide issues from
individual issues relating to Lead Plaintiffs, but argued that Defendants should be able to
introduce evidence relating to Lead Plaintiffs' investment decisions in the first phase of trial.
The Parties reached a settlement in principle prior to the filing of reply papers.
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RISKS REGARDING LIABILITY AGAINST DEFENDANTS
At the time the Settlement was reached, the Parties were approximately three
weeks away from trial. Lead Plaintiffs and Co-Lead Counsel had a thorough understanding of
the strengths and weaknesses of the Action. While Lead Plaintiffs and Co-Lead Counsel believe
that the claims asserted against the Defendants have merit, they also recognize that there were
considerable risks involved in pursuing the Action.
Co-Lead Counsel's investigation and discovery with respect to both liability and
damages issues, legal analyses, and jury research all enabled Lead Plaintiffs and Co-Lead
Counsel to thoroughly understand and evaluate the strengths and weaknesses of the claims and
the risks of continued litigation, and accordingly to enter into the Settlement on a fully informed
Lead Plaintiffs and Co-Lead Counsel considered, among other things: (i) the
substantial cash benefit to Settlement Class Members under the terms of the Agreement; (ii) the
risks and expense of bringing the Action to trial; (iii) the risk of not prevailing on some or all
claims; (iv) the difficulties and risks involved in proving the claims at trial, including the
difficulties of proving (a) materiality with respect to the ENHANCE trial, (b) scienter, and (c)
loss causation where, as here, the disclosures regarding the ENHANCE study occurred over an
extended period of time; (v) that, even if Lead Plaintiffs prevailed at trial, any monetary recovery
could potentially have been less than the Settlement Amount; (vi) the delays inherent in such
litigation, including appeals; and (vii) the risks of presenting an exceedingly complex and fact-
intensive case to a jury.
Lead Plaintiffs' claims presented significant risks given, among other things, the
highly complex nature of the alleged fraud here at issue. To prove their case, Lead Plaintiffs
needed to establish that Schering biostatisticians working for the Merck/Schering joint venture
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conducted improper statistical analyses on unblinded data from the ENHANCE study, and were
then able to conclude, based on their knowledge of statistical methods, that the ENHANCE study
had failed. These alleged violations of complex practices related to the conduct of clinical trials
might not be easily understood by a jury and were vigorously disputed by Defendants who
offered a plausible alternate explanation supported by experts and numerous exhibits,
specifically that Defendants were focused on improving data quality and not improperly learning
the ENHANCE results. Moreover, because these biostatisticians were Schering employees,
Plaintiffs faced a very real risk that jury would have been unwilling to impose liability of Merck
for their conduct.
Further, even if improper actions were proven, Lead Plaintiffs faced the very real
risk that a jury would conclude that Defendants did not act with the requisite scienter. The
statistical analyses described above were conducted by junior employees of Schering, who were
several steps removed from the senior officers of Schering, let alone of Merck. Lead Plaintiffs
were forced to rely on circumstantial evidence to show that Defendants were aware that the
ENHANCE study had failed. Without a true "smoking gun" showing actual scienter, a jury may
have concluded that Lead Plaintiffs did not adequately prove this element of their case.
The difficulty of establishing scienter was compounded here by the fact that
Defendants would have been able to buttress their assertion that they did not engage in any
wrongdoing in connection with the ENHANCE trial or the marketing of Vytorin and Zetia, by
citing to the facts that, although Congress launched an investigation into the conduct of the trial,
that investigation produced no findings adverse to Defendants and, similarly, although the FDA
scrutinized the management of the ENHANCE trial, it also made no adverse findings.
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In addition, Lead Plaintiffs faced a significant risk in establishing loss causation
and resulting damages. If a jury were to find that any of the alleged corrective disclosures
identified in the Complaint were not true corrective disclosures, the potential recovery for the
Class would be significantly diminished. Specifically, Lead Plaintiffs faced significant risk of a
jury finding that the alleged fraud was fully cured as of January 14, 2008, when the top-line
results of the ENHANCE study were publicly disclosed, yet the price of Merck's stock did not
decline in a statistically significant amount. Plaintiffs alleged that the market remained uncertain
until March 30, 2008 as to what the full ENHANCE results would reveal. However, if the
Defendants were able to convince the jury that no new material information relating to the
alleged fraud was publicly disclosed after January 14, 2008, the jury could very well have ended
the Class Period on that date, resulting in no recoverable damages for the Class.
RISKS ATTENDANT TO TRIAL
In addition to specific liability risks in this action and the usual uncertainties
attendant to placing complex issues before a jury, a trial of this case presented many specific
risks. All of the key fact witnesses in this Action who Plaintiffs would have used to present
evidence at trial were adverse witnesses, including Defendant Clark and current and former
Merck and Schering officers.
Moreover, given the complex nature of this Action, Lead Plaintiffs intended to
rely heavily on their scientific experts. At the time the Settlement was reached, the Parties had
exchanged
Daubert motions in which Defendants were seeking to exclude all or most of the
testimony that Plaintiffs intended to offer through these experts. Had Defendants prevailed in
excluding any of this testimony, the presentation of many aspects of Plaintiffs' case would have
been extremely difficult, thereby increasing the risks at trial.
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In addition, at the time the Settlement was reached, the Parties had also briefed
in
limine motions through which Defendants sought to exclude key evidence. If Defendants
succeeded on these motions, it would have presented enormous obstacles to Plaintiffs'
presentation of their claims.
Even if Lead Plaintiffs were successful in obtaining a jury verdict on all or part of
their claims, it was a foregone certainty that a jury verdict would have been just the beginning of
a long appellate process. Given the novelty of the issues concerning materiality, damages, and
the duties attendant under Section 10(b), a long and arduous appellate process, with the
possibility of reversal, presented extreme risk to the Class of actual recovery.
THE PARTIES' SETTLEMENT NEGOTIATIONS
As mentioned above, the $215 million cash Settlement is the third largest
settlement ever obtained against a pharmaceutical manufacturer in a securities fraud class action,
and among the top 50 securities fraud class action settlements of all time. As a point of
comparison, the same common nucleus of operative facts that form the basis of Lead Plaintiffs'
allegations in the Action were also investigated by multiple state and federal agencies. Of those
investigations, the only monetary recovery achieved was a $5.4 million settlement by a coalition
of 36 state attorneys general, a recovery of 2.5% of the proposed $215 million Settlement.
Furthermore, there were no criminal or SEC claims brought against any Defendant, no
restatement filed, no Congressional findings of wrongdoing and no negative FDA findings. In
addition, Vytorin, the drug at issue, was never withdrawn from the market; there were no
allegations that Vytorin was unsafe to use; and Merck and Schering continued to sell billions of
dollars of the drug during the Class Period and to date.
The proposed Settlement was reached only after a lengthy mediation process that
began more than two years ago. At different points in time, three well-respected and highly
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experienced mediators contributed their efforts to resolve Lead Plaintiffs' claims, collectively
holding dozens of formal and informal discussions and formal mediation sessions.
In early 2011, the parties jointly agreed to mediate before the Honorable Layn R.
Phillips (Ret.). Judge Phillips conducted three mediation sessions in 2011 and spoke with
counsel for the parties on numerous other occasions. Lead Plaintiffs' first formal mediation
session with Judge Phillips occurred in April 2011. Prior to the initial session with Judge
Phillips, Lead Plaintiffs and Defendants exchanged detailed mediation statements, each attaching
more than 100 exhibits. The initial mediation session was attended by representatives from Lead
Plaintiffs, representatives from Merck and their counsel, representatives and counsel for Lead
Plaintiffs in the
Schering action, and representatives from Defendants' insurance carriers. That
mediation was not successful. A second mediation session took place in July 2011, and was
attended by the same representatives as those at the April 2011 session. Supplemental mediation
statements, outlining new discovery taken to date, were exchanged. This mediation session was
In February 2012, the Court appointed the Honorable Nicholas H. Politan (Ret.)
as an additional mediator to facilitate settlement discussions, but Judge Politan passed away
shortly after his appointment. In May 2012, the Court appointed Stephen M. Greenberg and
Jonathan J. Lerner of Pilgrim Mediation Group to facilitate the discussions.
In mid-2012, the parties began meeting informally with Pilgrim Mediation Group.
Messrs. Greenberg and Lerner conducted separate sessions with Lead Plaintiffs and Defendants
in person or by telephone on multiple occasions in May, June, July, August and September 2012,
and the Court convened an in-person mediation session at the courthouse in Newark, New Jersey
on September 7, 2012. The Lead Plaintiffs attended the in-person September 7, 2012 mediation
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session and were actively involved in all the mediation discussions. These mediation sessions
were also unsuccessful.
In January 2013, as the trial date approached, Messrs. Greenberg and Lerner re-
started the process of separate in-person and telephone discussions with Lead Plaintiffs and
Defendants. After several discussions, on February 1, 2013, Messrs. Greenberg and Lerner
transmitted to both sides a final, "take-it-or-leave-it" mediators' recommendation of a cash
settlement of $215 million. This was the mediators' recommendation of a settlement amount
that would be fair to both the Class and the Defendants. The mediators informed the parties that
the $215 million amount was not subject to any negotiation, and gave the parties a deadline to
either accept or reject the proposal. On Monday, February 11, 2013, the mediators confirmed
that Lead Plaintiffs and Defendants had accepted the mediators' recommendation.
On February 25, 2013, the Parties executed a Memorandum of Understanding.
The formal Settlement Agreement and exhibits were then drafted over the following months,
following numerous negotiating sessions, both by phone and in person, regarding the precise
settlement terms.
PLAN OF ALLOCATION
Pursuant to the Preliminary Approval Order, and as set forth in the Settlement
Notice, all Class Members who want to participate in the distribution of the Net Settlement Fund
(
i.e., the Settlement Fund less (a) any Taxes, (b) any Notice and Administration Costs, (c) and
Litigation Expenses awarded by the Court, and (d) any attorneys' fees awarded by the Court)
must submit a valid Proof of Claim and all required information postmarked no later than
November 18, 2013. As provided in the Settlement Notice, the Net Settlement Fund will be
distributed according to the plan of allocation approved by the Court.
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The proposed Plan of Allocation is designed to achieve an equitable and rational
distribution of the Net Settlement Fund, but it is not a formal damages analysis that would have
been submitted at trial. Co-Lead Counsel developed the Plan of Allocation in consultation with
Forensic Economics and Dr. Gregg Jarrell, Lead Plaintiffs' damages expert, and believe it
provides a fair and reasonable method to equitably distribute the Net Settlement Fund among
Authorized Claimants.
In developing the Plan of Allocation, Lead Plaintiffs' damages expert calculated
the reasonable amount of artificial inflation present in the per share closing prices of Merck
common stock and call options (and artificial deflation in the per share closing prices of sold
Merck put options) throughout the Class Period that was purportedly caused by the alleged fraud.
The damages expert's analysis entailed studying the price decline in Merck common stock and
call options (and price increase in the sold Merck put options) associated with the alleged
corrective disclosures, adjusted to eliminate the effects attributable to general market or industry
conditions. In this respect, artificial inflation tables were created and presented as part of the
Settlement Notice for Merck common stock and call options (and artificial deflation tables in the
per share closing prices of Merck put options). These tables will be utilized in calculating
Recognized Loss Amounts for Authorized Claimants.
Epiq Systems, Inc. ("Epiq"), as the Court-approved Claims Administrator, will
determine each Authorized Claimant's
pro rata share of the Net Settlement Fund based upon
each Authorized Claimant's Recognized Claim (defined in the Plan of Allocation as the total of
the Claimant's Recognized Loss Amounts) compared to the aggregate Recognized Claims of all
Authorized Claimants, as calculated in accordance with the Plan of Allocation. Calculation of
the Recognized Claim will depend upon several factors, including when the Authorized
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Claimant's common stock or call options were purchased (or put options were sold) during the
Class Period, whether these securities were purchased (or sold) during the Class Period, and if
The proposed Plan of Allocation was designed to fairly and rationally allocate the
Net Settlement Fund among Authorized Claimants based on the amount of alleged artificial
inflation present in Merck common stock and call options (and artificial deflation in Merck put
options) that was purportedly caused by the Defendants' alleged violations of the federal
securities laws during the Class Period and the risks of recovery. Accordingly, Co-Lead Counsel
respectfully submit that the proposed Plan of Allocation is fair and reasonable and should be
LEAD PLAINTIFFS' COMPLIANCE WITH THE COURT'S ORDER REQUIRING
ISSUANCE OF NOTICE OF THE SETTLEMENT TO CLASS MEMBERS AND CLASS
REACTION TO DATE
The terms of the Settlement are set forth in the Stipulation and in the Notice of (I)
Proposed Settlement and Plan of Allocation; (II) Settlement Fairness Hearing; and (III) Motion
for an Award of Attorneys' Fees and Reimbursement of Litigation Expenses (the "Settlement
Notice"), which provides Class Members with information on the terms of the Settlement and,
among other things, their right to object to any aspect of the Settlement, the Plan of Allocation,
or the Fee and Expense Application; and the manner for submitting a Proof of Claim in order to
be eligible for a payment from the proceeds of the Settlement and of their right to opt-back into
the Class.6 The Settlement Notice also informs Class Members of Co-Lead Counsel's intention
6 As set forth in the Preliminary Approval Order, Persons who previously submitted a request for exclusion from the Class may elect to opt-back into the Class and be eligible to receive a payment from the Settlement, but a Person may not opt-back into the Class for the purpose of objecting to any aspect of the Settlement, the Plan of Allocation, or Co-Lead Counsel's request for attorneys' fees and reimbursement of Litigation Expenses.
See id. ¶10 and Settlement Notice at response to Question 18 (ECF No. 330 Preliminary Approval Order Ex. 1).
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to apply for an award of attorneys' fees in an amount not to exceed 28% of the Settlement Fund
(which includes accrued interest), and for reimbursement of litigation expenses in an amount not
to exceed $5,000,000, plus interest, which would include an application for reimbursement of the
reasonable costs and expenses incurred by Lead Plaintiffs directly related to their representation
of the Class in an amount not to exceed $175,000.
On June 7, 2013, the Court entered the Order Preliminarily Approving Proposed
Settlement and Providing for Notice (the "Preliminary Approval Order"), which approved the
form and content of the Settlement Notice.
Pursuant to the Preliminary Approval Order, the Court authorized Co-Lead
Counsel to retain Epiq as Claims Administrator in the Action and instructed Epiq to disseminate
copies of the Settlement Notice and Proof of Claim (the "Settlement Notice Packet") by mail and
to publish the Summary Settlement Notice of (I) Proposed Settlement and Plan of Allocation; (II)
Settlement Fairness Hearing; and (III) Motion for an Award of Attorneys' Fees and
Reimbursement of Litigation Expenses (the "Summary Settlement Notice"). The Preliminary
Approval Order also set an August 5, 2013 deadline for Class Members to submit objections to
the Settlement, the Plan of Allocation or the Fee and Expense Application or to opt-back into the
On June 21, 2013, Settlement Notice Packets were mailed to 689,892 potential
Class Members and to 2,237 Nominees listed in Epiq's proprietary nominee database, by first-
class mail.
See Epiq Decl. ¶ 6.
Epiq received additional request for Settlement Notice Packets from nominees
and other individuals. From the Notice Date through July 1, 2013, Epiq mailed an additional 44
copies of the Settlement Notice Packet to potential members of the Class whose names and
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addresses were provided by individuals or Nominees, and mailed another 37,122 Settlement
Notice Packets to Nominees who requested Settlement Notice Packets to Nominees who
requested Settlement Notice Packets in bulk for forwarding to their customers.
Id. ¶ 7.
As of July 1, 2013, Epiq has disseminated a total of 729,295 Settlement Notice
Packets to potential Class Members and Nominees by first-class mail.
Id. ¶ 8.
On July 2, 2013, Epiq caused the Summary Settlement Notice to be published in
the national edition of
The Wall Street Journal and to be transmitted over
PR Newswire.
Id. ¶ 9.
Epiq also posts information regarding the Settlement on a dedicated website
established for the Action, www.merckvytorinsecuritieslitigation.com, to provide Class Members
with information concerning the Settlement, as well as downloadable copies of the Settlement
Notice Packet and the Stipulation.
Id. ¶ 13.
As set forth above, the deadline for Class Members to file objections to the
Settlement, the Plan of Allocation and/or the Fee and Expense Application or to opt back into the
Class is August 5, 2013. To date, no objections to the Settlement, the Plan of Allocation or Co-
Lead Counsel's Fee and Expense Application have been received and no requests to opt-back
into the Class have been received.
Id. ¶ 14. Co-Lead Counsel will file reply papers on August
13, 2013 that will address any objections and opt-in requests that may be received.
CO-LEAD COUNSEL'S MOTION FOR ATTORNEYS' FEES AND
REIMBURSEMENT OF LITIGATION EXPENSES
In addition to seeking final approval of the Settlement and Plan of Allocation, Co-
Lead Counsel has moved on behalf of Plaintiffs' Counsel for a fee award from the Settlement
Fund. In light of the fact that the amount of attorneys' fees to be awarded will be initially
recommended to the Court by the Court-appointed, independent Special Masters, Co-Lead
Counsel has not applied for a specific fee amount. Three of the four Lead Plaintiffs expressly
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support an award of fees amounting to 28% of the Settlement Fund, and the fourth Lead Plaintiff
takes no position on the amount of the fee, and instead defers to the discretion of the Special
Masters and the Court.
Co-Lead Counsel also request reimbursement of expenses incurred in connection
with the investigation, prosecution, and resolution of the Action from the Settlement Fund in the
amount of $4,367,376.95, well below the $5,000,000 maximum expense amount the Class was
advised could be requested. Co-Lead Counsel further request reimbursement of the costs and
expenses incurred by Lead Plaintiffs, pursuant to 15 U.S.C. § 78u-4(a)(4), directly related to
their representation of the Class in the total amount of $109,865.31 (as detailed in paragraphs
162-164, below), an amount well below the maximum $175,000 in Lead Plaintiff costs and
expenses the Class was advised could be requested. The legal authorities supporting the request
for an award of fees and expenses are set forth in Co-Lead Counsel's separate Fee Memorandum.
Below is a summary of the primary factual bases for Co-Lead Counsel's requested fees and
AN AWARD OF FEES UP TO 28% WOULD BE FAIR AND REASONABLE
The work undertaken by Co-Lead Counsel in investigating and prosecuting this
case and arriving at the present Settlement in the face of substantial risks has been time-
consuming and challenging. As more fully set forth above, the Action settled only after Co-Lead
Counsel overcame multiple legal and factual challenges and the Parties had litigated the case to
the eve of trial. Among other efforts, Co-Lead Counsel conducted an extensive investigation
into the Class's claims; researched and prepared a detailed amended complaint; successfully
opposed Defendants' motion to dismiss; successfully moved for class certification, and opposed
Defendants' effort to appeal the Court's Class Certification order; consulted extensively with
experts and consultants; obtained, organized and reviewed more than 12 million pages of
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documents obtained from Defendants and non-parties, and took over 50 and defended more than
20 depositions; successfully opposed Defendants' motion for summary judgment; prepared for
trial scheduled to begin on March 4, 2013, and engaged in a hard-fought and protracted
settlement process with experienced defense counsel.
At all times throughout the pendency of the Action, Co-Lead Counsel's efforts
were driven and focused on advancing the litigation to bring about the most successful outcome
for the Class, whether through settlement or trial. The substantial time and expense incurred by
Co-Lead Counsel have achieved precisely such an outcome, and accordingly, this factor weighs
strongly in favor of Co-Lead Counsel's Fee Application.
A Lodestar Cross-Check Confirms The Reasonableness Of Co-Lead
Counsel's Fee Application
As described in the Fee Memorandum, the requested fee award is not only fair
and reasonable under the percentage method but confirmed by a lodestar cross-check.
Attached hereto as Exhibits G thru L are declarations from Plaintiffs' Counsel7 in
support of the request for an award of attorney's fees and reimbursement of litigation expenses.
Included with each firm's declaration is a schedule that summarizes the lodestar of the firm, as
well as the expenses incurred by category (the "Fee and Expense Schedules").8 In particular, the
attached declarations and the Fee and Expense Schedules contained within each indicate the
amount of time spent on this case by each attorney and professional support staff employed by
Plaintiffs' Counsel, and the lodestar calculations based on their current billing rates. As set forth
in each declaration, the declarations were prepared from contemporaneous daily time records 7 Plaintiffs' Counsel include Co-Lead Counsel, the law firms of Carella, Byrne, Cecchi, Olstein, Brody & Agnello, P.C. and Seeger Weiss, LLP, Court-appointed liaison counsel to the Class; Labaton Sucharow; and Klausner & Kaufman PA, additional counsel to Jacksonville. 8 Attached as Exhibit M is a summary chart of the hours expended and lodestar amounts for each firm comprising Plaintiffs' Counsel, as well as a summary of each firm's total litigation expenses.
Case 2:08-cv-02177-DMC-JAD Document 333-2 Filed 07/02/13 Page 41 of 51 PageID: 21617
regularly prepared and maintained by the respective firms, which are available at the request of
the Court. The hourly rates for attorneys and professional support staff included in these
schedules are the same as the regular current rates charged for their services in non-contingent
matters and/or which have been accepted in other securities or shareholder litigation. For
attorneys or professional support staff who are no longer employed by Plaintiffs' Counsel, the
lodestar calculations are based upon the billing rates for such person in his or her final year of
As summarized in Exhibit M hereto, Plaintiffs' Counsel have expended
105,341.76 hours in the investigation, prosecution and resolution of the Action against
Defendants, for a collective lodestar value of $44,941,902.75 through May 31, 2013.9 Under the
lodestar approach, a fee award of 28% of the Settlement Fund yields a multiplier of 1.34 on the
lodestar. This multiplier is within the range of multipliers awarded in actions where similar
settlements have been achieved.
See Fee Memorandum at Legal Arg. § I.C.2 (i).
THE QUALITY OF CO-LEAD COUNSEL'S REPRESENTATION
A number of considerations may be relevant to assessing the quality of class
counsel's representation of a plaintiff class, including the Court's own observations, class
counsel's experience and standing at the bar, and the quality of opposing counsel. Ultimately,
however, the acid test for evaluating "quality of the representation" is the quality of the results
achieved for the class members whom Class Counsel were appointed to represent.
9 Co-Lead Counsel will continue to perform legal work on behalf of the Class should the Court approve the proposed Settlement. Additional resources will be expended assisting Class Members with their Proof of Claim Forms and related inquiries and working with the Claims Administrator, Epiq, to ensure the smooth progression of claims processing.
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The Excellent Results Obtained From Co-Lead Counsel's Efforts
Here, for the reasons previously detailed above and in Lead Plaintiffs'
Memorandum In Support Of Final Approval Of Class Action Settlement And Plan Of
Allocation, Co-Lead Counsel respectfully submit that the Settlement, consisting of $215 million
in cash – the third largest securities class action settlement ever paid by a pharmaceutical
company – is an extraordinary result for the Class. Indeed, the result achieved for the Class
reflects the superior quality of Co-Lead Counsel's representation.
Reached just weeks before trial, the Settlement is the result of Co-Lead Counsel's
hard work, persistence and skill in a case that presented significant litigation risks. It also bears
repeating that Co-Lead Counsel obtained this exceptional result where there was neither a
financial restatement involved nor criminal convictions related to the alleged misconduct.
The Court's Observations As To The Quality Of Co-Lead Counsel's
Work
The Court may, of course, also take into account its own observations of the
quality of Co-Lead Counsel's representation during the course of this litigation. Since the
inception of the Action on May 5, 2008, Co-Lead Counsel have appeared on multiple occasions
before the Court, and the Court has reviewed numerous motions and briefs submitted by Co-
Lead Counsel, including, inter alia, a detailed amended complaint, an opposition to Defendants'
motion to dismiss, briefing in support of class certification, an opposition to Defendants' motion
for summary judgment, and the numerous papers in connection with both preliminary and final
approval of the Settlement. Although the papers submitted to the Court represent only a fraction
of the total work performed by Co-Lead Counsel throughout the pendency of the Action, Co-
Lead Counsel respectfully submit that the quality of that work in reflective of the quality,
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thoroughness and professionalism of the effort that Co-Lead Counsel have devoted to all aspects
of this Action on behalf of the Class.
The Standing And Expertise Of Co-Lead Counsel
Co-Lead Counsel are highly experienced in prosecuting complex litigation,
particularly securities class actions, and worked diligently and efficiently in prosecuting this
Action. As demonstrated by the firm resumes attached to their respective declarations (
see
Exhibits G and H hereto), Co-Lead Counsel – the law firms of G&E and BLB&G – are among
the most experienced and skilled firms in the securities litigation field, and each firm has a long
and successful track record in securities cases throughout the country.
Standing And Caliber Of Defense Counsel
The quality of the work performed by Co-Lead Counsel in attaining the
Settlement also should be evaluated in light of the quality of the opposition. Defendants were
represented by multiple law firms, which included many of the nation's most elite firms.
Defense counsel included Paul, Weiss, Rifkind, Wharton & Garrison LLP; Lowenstein Sandler
LLP; Tompkins, McGuire, Wachenfeld, & Barry LLP; and Pepper Hamilton, LLP. These firms
vigorously represented the interests of their respective clients. In the face of this experienced,
formidable, and well-financed opposition who aggressively litigated the Action on behalf of their
clients until the eve of trial, Co-Lead Counsel were nonetheless able to persuade Defendants to
settle the case on terms highly favorable to the Class – a fact which makes Co-Lead Counsel's
success here all the more impressive.
THE RISKS AND UNIQUE COMPLEXITIES OF THE LITIGATION
The Risks Undertaken By Co-Lead Counsel In Pursuing This Action
This Action presented exceedingly novel procedural and substantive legal
challenges from the outset. As discussed above, Co-Lead Counsel were required to contend
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with, among others, unusual class certification issues and complex issues of circumstantial proof,
loss causation and damages, many of which were lacking precedent. In particular, there were
substantial risks to establishing loss causation and damages under Section 10(b), and to proving
misconduct and scienter in a highly complex, scientifically based case supported only by
circumstantial evidence.
These novel risks are in addition to risks typically accompanying all securities
litigation, such as the fact that this prosecution was undertaken by Co-Lead Counsel entirely on a
contingent-fee basis as discussed below.
The Risks Of Contingent Litigation
There are numerous cases where plaintiffs' counsel in contingent-fee cases such
as this have expended thousands of hours, only to receive no compensation whatsoever. This
prosecution was undertaken by Co-Lead Counsel on a contingent-fee basis, and the risks
assumed by Co-Lead Counsel (as described above), and the time and expenses incurred without
any payment (as described above), were substantial.
From the outset, Co-Lead Counsel understood that they were embarking on a
complex, expensive and lengthy litigation with no guarantee of ever being compensated for the
substantial investment of time and money the case would require. In undertaking that
responsibility, Co-Lead Counsel were obligated to ensure that sufficient resources were
dedicated to the prosecution of the Action and that funds were available to compensate staff and
to cover the considerable costs that a case such as this requires. With an average lag time of
several years for cases of this type to conclude, the financial burden on contingent-fee counsel is
far greater than on a firm that is paid on an ongoing basis. Indeed, Plaintiffs' Counsel received
no compensation during the course of this nearly five year Action and advanced or incurred
$4,367,376.95 in expenses in prosecuting this Action for the benefit of the Class.
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Co-Lead Counsel also bore the risk that no recovery would be achieved. As
discussed herein, from the outset, this case presented multiple risks and uncertainties that could
have prevented any recovery whatsoever.
Moreover, for decades the United States Supreme Court (and countless lower
courts) have repeatedly and consistently recognized that it is in the public interest to have
experienced and able counsel enforce the securities laws and regulations pertaining to the duties
of officers and directors of public companies. Indeed, as recognized by Congress through the
passage of the PSLRA, vigorous private enforcement of the federal securities laws can only
occur if private investors, particularly institutional investors, take an active role in protecting the
interests of shareholders. If this important public policy is to be carried out, courts should award
fees that adequately compensate plaintiffs' counsel, taking into account the risks undertaken in
prosecuting securities class actions.
The risks assumed by Co-Lead Counsel in connection with the Action, and the
time and expenses incurred without any payment, were extensive. Co-Lead Counsel's persistent
efforts in the face of substantial risks and uncertainties have resulted in a significant and
immediate recovery for the benefit of the Class. In circumstances such as these, and in
consideration of Co-Lead Counsel's hard work and the extraordinary result achieved, a fee of
28% of the Settlement Fund, as detailed below, is reasonable and should be approved.
AWARDS IN SIMILAR CASES
Awards of attorneys' fees that have been approved in other large securities class
action cases have been compiled and are discussed in the accompanying Fee Memorandum.
See
Fee Memorandum at Legal Arg. § I.C.2. For the reasons set forth therein, a fee award of 28% is
well within the range of fee awards that have been approved in other similarly sized litigations.
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THE REACTION OF THE CLASS TO THE FEE APPLICATION
In accordance with the Preliminary Approval Order, 729,295 Notice Packets have
been mailed to potential Class Members and Nominees advising them that Co-Lead Counsel
would seek an award of attorneys' fees in an amount not to exceed 28% of the Settlement Fund
and reimbursement of expenses paid on incurred in connection with the investigation,
prosecution, and resolution of the Action in an amount not to exceed $5,000,000 and expenses
incurred by the Lead Plaintiffs in an amount not to exceed $175,000.
See Epiq Decl. ¶ 8.
Additionally, on July 2, 2013 the Court-approved Summary Notice was published in the national
edition of
The Wall Street Journal and was transmitted over the Internet via
PRNewswire.
Id. ¶
9. The Stipulation of Settlement, Claims Notice, Preliminary Approval Order, and Claim Form
have also been posted on the website for this Action,
https://www.merckvytorinsecuritieslitigation.com, for review (
Id. ¶13) and on Co-Lead
Counsel's websites, gelaw.com and blbglaw.com. As noted above, the deadline set by the Court
for Class Members to object to the amount of attorney's fees and expenses set forth in the
Settlement Notice has not yet passed. To date, Co-Lead Counsel are not aware of any objections
by any Class member to the amount of fees set forth in the Settlement Notice.
See ¶ 129 above.
Co-Lead Counsel will address all objections received, if any, in their reply papers to be filed with
the Court on or before August 13, 2013.
REIMBURSEMENT OF THE REQUESTED LITIGATION EXPENSES IS FAIR
AND REASONABLE
Co-Lead Counsel also seek reimbursement from the Settlement Fund in the total
aggregate amount of $4,367,376.95 for litigation expenses that were reasonably incurred by
Plaintiffs' Counsel in connection with commencing, prosecuting and resolving the claims
asserted in the Action against Defendants, as well as $109,865.31 for the costs and expenses
Case 2:08-cv-02177-DMC-JAD Document 333-2 Filed 07/02/13 Page 47 of 51 PageID: 21623
incurred by Lead Plaintiffs directly related to their representation of the Class (the "Expense
From the beginning of the case, Co-Lead Counsel were aware that they might not
recover any of their expenses, and, at the very least, would not recover any of their out-of-pocket
expenses until the Action was successfully resolved. Thus, Co-Lead Counsel were motivated to,
and did, take significant steps to minimize expenses whenever practicable without jeopardizing
the vigorous and efficient prosecution of the case.
As set forth in the Fee and Expenses Schedules (attached as Exhibit M hereto),
Plaintiffs' Counsel have incurred a total of $4,367,376.95 in unreimbursed litigation expenses in
connection with the prosecution of the Action for which they are seeking reimbursement. As
attested to, these expenses are reflected on the books and records maintained by respective
Plaintiffs' Counsel. These books and records are prepared from expense vouchers, check records
and other source materials, and are an accurate record of the expenses incurred. Plaintiffs'
Counsel's expenses are set forth in detail in their firm's respective declaration, each of which
identifies the specific category of expense,
e.g., online and legal factual research, experts' fees,
out-of-town travel costs, the costs of document management and litigation support,
photocopying, telephone, fax and postage expenses, and other costs actually incurred for which
Co-Lead Counsel seek reimbursement. These expense items are billed separately and such
charges are not duplicated in the respective firms' billing rates. A summary chart of Plaintiffs'
Counsel's expenses is attached hereto as Exhibit M.
Co-Lead Counsel maintained strict control over the litigation expenses. Indeed,
many of the litigation expenses were paid out of two litigation funds created by Co-Lead
Counsel and maintained by G&E (the "Litigation Funds"). A description of the payments from
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the Litigation Funds by category is set forth in the individual firm declaration submitted on
behalf of G&E (the "Berger Declaration"). Neither Litigation Fund currently carries a balance.
See Berger Declaration ¶10-11.
Of the total amount of expenses, $452,156.32 was expended on experts and
consultants shared with counsel in
Schering and $1,941,144.47 was expended on experts and
consultants for the Merck action alone. As noted above, Co-Lead Counsel retained damages and
loss causation experts to assist in the prosecution of the Action as well as to assist in developing
a fair and reasonable plan for allocating the net settlement proceeds to eligible Class Members.
Co-Lead Counsel also retained experts in statistics and cardiovascular medicine. Co-Lead
Counsel also retained a trial consulting firm to prepare exhibits for trial, conduct a mock trial,
and analyze the results of the deliberations of mock jurors. These experts and consultants were
essential to the overall prosecution of the Action. In total, Co-Lead Counsel retained several
experts and consultants to analyze complex matters involved in this Action. In addition to
consulting with Co-Lead Counsel in developing the case, Lead Plaintiffs' experts produced a
total of 8 expert reports and 4 of Lead Plaintiffs' experts were deposed by Defendants.
Another large component of the expenses, $302,237.19 was expended on
document review and production. Co-Lead Counsel had to retain the services of vendors to,
among other things: (i) maintain the electronic database through which the millions of pages of
documents produced were reviewed; (ii) have documents processed so that they would be in
searchable format; and (iii) convert and upload hard copy documents so that they would be
electronically searchable.
Additionally, Co-Lead Counsel paid $186,475 for mediation fees assessed by the
various mediators in this and the
Schering matter.
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The other expenses for which Plaintiffs' Counsel seek reimbursement are the
types of expenses that are necessarily incurred in litigation and routinely charged to clients billed
by the hour. These expenses include, among others, court fees, costs of out-of-town travel,
copying costs, long distance telephone and facsimile charges and postage and delivery expenses.
All of the Litigation Expenses incurred by Plaintiffs' Counsel, which total
$4,367,376.95, were necessary to the successful investigation, prosecution and resolution of the
claims asserted in the Action against Defendants. Co-Lead Counsel's Expense Application has
been approved by Lead Plaintiffs.
See Exhibits B thru E attached hereto.
Additionally, pursuant to 15 U.S.C. § 78u-4(a)(4), Lead Plaintiffs, ABP, IFM,
Jacksonville, and Detroit seek reimbursement of their reasonable costs and expenses incurred
directly in connection with their representation of the Class in the amounts of $34,557.41,
$45,682, $13,455.90, and $16,170, respectively. The amount of time and effort devoted to this
Action by the Lead Plaintiffs is detailed in the accompanying declarations of their respective
representatives, annexed hereto as Exhibits B, C, D and E.
See Declarations of J.G.H.C.M. Beris
and J.A. Hendriks, Lutz Schleidt, John Keane, and John Riehl. Co-Lead Counsel respectfully
submit that these requested amounts are fully consistent with Congressional intent, as expressed
in the PSLRA, of encouraging institutional and other highly experienced plaintiffs to take an
active role in bringing and supervising actions of this type.
As set forth is the Fee Memorandum and in the supporting declarations submitted
on behalf of the Lead Plaintiffs herewith, Lead Plaintiffs have been fully committed to pursuing
the Class's claims against the Defendants for more than three years. These large institutions
have actively and effectively fulfilled their obligations as representatives of the Class, complying
with all of the many demands placed upon them during the litigation and settlement of this
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Action, and providing valuable assistance to Co-Lead Counsel. The efforts expended by the
representatives for the Lead Plaintiffs during the course of this Action are precisely the types of
activities Courts have found to support reimbursement to class representatives, and fully support
Lead Plaintiffs' requests for reimbursement of costs and expenses.
See Fee Memorandum Legal
The Settlement Notice informed potential Class Members that Co-Lead Counsel
would be seeking reimbursement of expenses incurred by Lead Plaintiffs in an amount not to
exceed $175,000. The total amount sought by the Lead Plaintiffs (
i.e., $109,865.31) is
significantly below the total $175,000 in expenses that Class Members were advised could be
sought. To date, no objection has been raised as to the maximum amount of Litigation Expenses
set forth in the Notice, including the amount sought to be reimbursed to the Lead Plaintiffs.
In view of the complex nature of the Action, as well as the fact that this Action
was vigorously prosecuted until the eve of trial, the expenses incurred by Plaintiffs' Counsel
were reasonable and necessary to pursue the interests of the Class and achieve the present
Settlement. Accordingly, Co-Lead Counsel respectfully submit that the expenses incurred by
Plaintiffs' Counsel and Lead Plaintiffs are fair and reasonable and should be reimbursed in full
from the Settlement Fund.
CONCLUSION
For all the reasons set forth above, Lead Plaintiffs and Co-Lead Counsel
respectfully submit that the Settlement and the Plan of Allocation should be approved as fair,
reasonable and adequate. Co-Lead Counsel further submit that they should be awarded a fee in
accordance with the substantial work undertaken, the extraordinary risks involved in the action,
and the excellent result achieved. The request for reimbursement of Plaintiffs' Counsel's
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Source: https://www.merckvytorinsecuritieslitigation.com/Content/Documents/Joint%20Declaration%20Part%201.pdf
Date: November 2010 Land East of Watmore Lane, Ecological Appraisal CSa Environmental Planning Taylor Wimpey UK Ltd Report No. CSA/1668/01 Land East of Watmore Lane, Winnersh Ecological Appraisal Contents 1.0 Methodology Desktop Biological Records Search Evaluation and Assessment Ecological Context Designated Sites
Credits: Questo rapporto è stato realizzato Dal Technology and Innovation Council (TIC) di Business International In collaborazione con: Istituto per la Promozione Industriale Direzione politiche e progetti d'intervento Dipartimento Net-economy Pubblicato a Roma il 3 maggio 2004 Technology and Innovation Council In collaborazione con:
