Case 2:12-cv-05125-MRP-MAN Document 191 Filed 09/23/13 Page 1 of 50 Page ID #:6530 1 2 3 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA 4 WESTERN DIVISION 5 MAINE STATE RETIREMENT Case No. 2:10-CV-00302 MRP (MANx) SYSTEM, Individually and On 6 Behalf of All Others Similarly DECLARATION OF RANDALL K. Situated, BERGER IN SUPPORT OF MAINE 7 STATE PLAINTIFFS' MOTION FOR Plaintiff, FINAL APPROVAL OF PROPOSED 8 CLASS ACTION SETTLEMENT AND vs. PLAN OF ALLOCATION, AND 9 PETITION FOR AWARD OF ATTORNEYS' FEES AND 10 COUNTRYWIDE FINANCIAL REIMBURSEMENT OF EXPENSES CORPORATION, et al., 11 Date: October 28,2013 Defendants. Time: 1:30 p.m. 12 Courtroom: 12 Judge: Hon. Mariana R. Pfaelzer 13 14 DAVID H. LUTHER, Individually Case No. 2:12-CV-05125 MRP (MANx) and On Behalf of All Others Similarly 15 Situated, 16 Plaintiff, 17 vs. 18 COUNTRYWIDE FINANCIAL CORPORATION, et al., 19 Defendants. ::_:___ _- -1 20 WESTERN CONFERENCE OF Case No. 2:12-CV-05122 MRP (MANx) TEAMSTERS PENSION TRUST 21 FUND, Individually and On Behalf of i All Others Similarly Situated, 22 Plaintiff, 23 vs. 24 COUNTRYWIDE FINANCIAL 25 CORPORATION, et al., 26 Defendants. 27 28 BERGER DECLARATION IN SUPPORT OF MAJN8 STATE PLAfNT!fTS' MOTION FOR FINAL APPROVAL OF PROPOSED CLASS ACTION SETTLEMENT AND PLAN OF ALLOCATION, AND PETITION FOR AWARD OF ATTORNEYS' fEES AND REIMBURSEMENT OF EXPENSES CASE NOS. 2:10-CV-00302 MRP (MANx), 2:12-CV-05125 MRP (MANx), 2:12-CV-05122 MRP (MANx) Case 2:12-cv-05125-MRP-MAN Document 191 Filed 09/23/13 Page 2 of 50 Page ID #:6531 1 I, RANDALL K. BERGER, declare under the penalty of perjury pursuant to 28 2 U.S.C. § 1746 as follows: 3 1. 1 am a partner of the law film of Kirby Mcinerney LLP ("Kirby"), 4 counsel for the General Board of Pension and Health Benefits of the United Methodist 5 Church ("the General Board"), one of the Court-appointed class representatives in the 6 Maine State action. I respectfully submit this declaration in support of Plaintiffs' 7 Motion for an Award of Attorneys' Fees and Expenses. 8 2. On April 2, 2010, pursuant to the Private Securities Litigation Reform 9 Act of 1995 ("PSLRA"), Kirby attorneys prepared and filed a motion and legal 10 memorandum supporting appointment of the General Board as Lead Plaintiff in the 11 Maine State Action. The motion premised upon the General Board's having the 12 largest financial interest of any competing movant- approximately $10 million-- and 13 otherwise demonstrating its statutory adequacy. Kirby attorneys filed opposition and 14 reply briefs for the General Board, and Kirby lawyer Ira Press prepared for and, on 15 May 3, 2010, argued the motion before this Court. On May 14, 2010, this Court 16 denied the General Board's motion and appointed the Iowa Public Employees' 17 Retirement System as Lead Plaintiff and its counsel as Lead Counsel. 18 3. I and Mr. Press unde1iook to educate and advise the General Board 19 regarding alternatives to protect its, and other similarly situated purchasers o 20 Countrywide Certificates, interests in the litigation. At that point in time it was 21 unclear whether Lead Plaintiff or other potential plaintiffs in the Maine State action 22 would have standing to represent the General Board with respect to Certificates issued 23 under different offering documents and/or backed by different mortgages. 24 4. Kirby attorneys undertook legal research concerning standing in RMBS 25 cases, factual research concerning the history of the action against Countrywide (in 26 particular the pre-existing, above captioned Luther action), and prepared associated 27 memoranda. The General Board's choice was to seek service as a nmned plaintiff and 28 BERGER DECLARATION IN SUPPORT OF MAINE STATE PLAINTIFFS' MOTION FOR FINAL APPROVAL OF PROPOSED CLASS ACTION SETTLEMENT AND PLAN OF ALLOCATION, AND PETITION fOR AWARD OF ATTORNEYS' FEES AND REIMBURSEMENT OF EXPENSES CASE NOS. 2:10-CV-00302 MRP (MANx), 2:12-CV-05125 MRP (MANx), 2:12-CV-05122 MRP (MANx) -1- Case 2:12-cv-05125-MRP-MAN Document 191 Filed 09/23/13 Page 3 of 50 Page ID #:6532 1 possibly class representative in Maine State, remain a passive class member, or file 2 individuallitigation. 3 5. After much communication between the General Board and Kirby, and 4 after weighing the burdens of litigation against risks of a diminished or zero recovery, 5 and also giving consideration to the possibility that purchasers similarly situated to the 6 General Board might also receive nothing were the General Board to remain passive, 7 the General Board determined to serve as a non-lead plaintiff in the Maine State 8 action. Mr. Press and I communicated that decision to Lead Counsel, and negotiated 9 with them regarding Kirby's role in Maine State, as additional counsel representing 10 the General Board. 11 6. At Lead Counsel's direction, Kirby attorneys reviewed and commented 12 on an Amended Complaint, eventually filed July 13, 2010, and corrected certain 13 information pertaining to the General Board and its purchases. 14 7. Thereafter, also at Lead Counsel's direction, we reviewed the legal basis 15 for voluntary dismissal of certain defendants and consented to those dismissals on 16 behalf of the General Board. Similarly, at Lead Counsel's direction, Kirby attorneys 17 communicated with BNY Mellon, the General Board's securities custodian, to obtain 18 needed information about certain Certificates in anticipation of defendants' motion to 19 dismiss. 20 8. Throughout the litigation, and consistent with PSLRA obligations, Lead 21 Counsel repeatedly communicated with Kirby, and Kirby communicated with the 22 General Board, the status and material events in the litigation as they transpired, 23 strategic decisions, scheduling matters and the result of meetings with defendants' 24 counsel. 25 9. Accordingly, Kirby was obliged to and did prepare numerous lengthy 26 reports to the General Board detailing progress in the litigation. These reports 27 permitted the General Board to participate as needed under the PSLRA to protect 28 BERGER DECLARATION IN SUPPORT OF AlAINE STATE PLAINTIFFS' MOTION FOR FINAL APPROVAL OF PROPOSED CLASS ACTION SETTLEMENT A~D PLAN OF ALLOCATION, AND PETITION FOR AWARD OF ATTORNEYS' FEES AND REIMBURSEMENT OF EXPENSES CASE Nos. 2: 10-CV-00302 MRP (MANx), 2:12-CV-05125 MRP (MANx), 2:12-CV-05122 MRP (MANx) -2- Case 2:12-cv-05125-MRP-MAN Document 191 Filed 09/23/13 Page 4 of 50 Page ID #:6533 absent class member interests. 2 10. At Lead Counsel's direction, Kirby attorneys reviewed drafts o 3 plaintiffs' September 13, 201 0 and September 16, 2010 responses to defendants' 4 motions to dismiss. 5 11. Kirby attorneys relayed and explained to the General Board this Court's 6 November 4, 2010 ruling, which significantly reduced plaintiffs' claims based largely 7 on grounds of standing and tolling ru]es. Kirby attorneys assisted Lead Counsel in 8 identifying the claims remaining in the litigation premised upon the General Board's 9 purchases of specific Countrywide Certificates that were also purchased by plaintiffs 10 in the earlier Luther action. 11 12. At Lead Counsel's direction I reviewed the resulting draft Second 12 Amended Complaint ultimately filed by plaintiffs on December 6, 2010. I further 13 reviewed supplemental briefing ordered by this Court and submitted by defendants in 14 January 2011 addressed to tolling. At Lead Counsel's direction, I provided comments 15 on plaintiffs' February response and thereafter communicated the events and possible 16 consequences to the General Board. 17 13. Kirby attorneys analyzed and explained to the General Board the Court's 18 May 5, 2011 order imposing "tranche-based" standing, which further reduced the 19 General Board's claim, and dismissed Bank of America as a defendant. Lead Counsel 20 sought from Kirby the General Board's joinder to a Rule 54(b) appeal of that order, 21 which request Kirby communicated to the General Board with analysis in extensive 22 memoranda, eventually obtaining the General Board's consent as well as infonnation 23 regarding General Board affiliates necessary for the appeal. 24 14. Reversal of the dismissal of the Luther action by the California Court o 25 Appeals on May 11, 2011 necessitated further communications with the General 26 Board and Lead Counsel concerning strategy. 27 15. At Lead Counsel's direction, Kirby attorneys reviewed for comments a 28 BERGER DECLARATION JN SUPPORT OF MAINE STATE PLAINTIFFS' MOTION FOR FINAL APPROVAl, OF PROPOSED CLASS A Cf!ON SETTLEMENT AND PLAN OF ALLOCATION, AND PETITION FOR AWARD OF ATTORNEYS' FEES AND REIMBURSEMENT OF EXPENSES CASE Nos. 2:10-CV-00302 MRP (MANx), 2:12-CV-05125 MRP (MANx), 2:12-CV-05122 MRP (MANx) -3- Case 2:12-cv-05125-MRP-MAN Document 191 Filed 09/23/13 Page 5 of 50 Page ID #:6534 1 draft Third Amended Complaint and a draft class certification motion. 2 16. On June 13, I pmiicipated in a conference call with this Court concerning 3 discovery directed towards class certification, and thereafter, at Lead Counsel's 4 direction, and based upon information gleaned from the Court conference, reviewed 5 and commented on a proposed stipulation governing class certification and class 6 discovery and a proposed stipulation governing confidential material. 7 17. I reviewed defendants' motion to dismiss the Third Amended Complaint, 8 plaintiffs' response, and the Court's September 13, 2011 opinion, for communication, 9 in substance, to the General Board. 10 18. Kirby attorneys reviewed, analyzed, and communicated with the General 11 Board and Lead Counsel regarding a June 29, 2011 press release and the settlement it 12 announced between Bank of America and Blackrock, PIMCO and 20 other money 13 managers purporting to release all RMBS claims against Countrywide. That 14 settlement threatened the Maine State litigation, the General Board's financial interest 15 in it, and the financial interests of absent class members the General Board sought to 16 represent. 17 19. Kirby attorneys reviewed numerous requests for documents and 18 interrogatories served by defendants upon the General Board and directed towards 19 class certification. Kirby attorneys unde1iook extensive efforts to respond, including 20 searches of the e-mail correspondence of numerous employees of the General Board, 21 interaction with the General Board's IT department, and conversion of hard copy files 22 into electronic files for production. Kirby attorneys undertook extensive review o 23 electronic and hard copy documents for privilege. Kirby attorneys also drafted 24 General Board responses to the document requests and interrogatories. The final 25 production of documents was over 4000 pages. 26 20. Defendants served the General Board Rule with a Rule 30(b)(6) notice to 27 take deposition testimony. Mr. Press and I communicated with the General Board 28 BERGER DECLARATION IN SUPPORT OF MAINE STATE PLAINTIFFS' MOTfON !:'OR FINAL APPROVAL OF PROPOSED CLASS ACTION SETTLE'\1ENT AND PLAN OF ALLOCATlON, AND PETITION FOR A WARD OF ATTORNEYS' FEES AND REIMBURSEMENT OF EXPENSES CASE Nos. 2:10-CV-00302 MRP (MANx), 2:12-CV-05125 MRP (MANx), 2:12-CV-05122 MRP (MANx) -4- Case 2:12-cv-05125-MRP-MAN Document 191 Filed 09/23/13 Page 6 of 50 Page ID #:6535 regarding same, and advised the General Board regarding an appropriate 2 knowledgeable witness. On September 6, 2011, we prepared the General Board's 3 witness for deposition at the General Board's offices in Evanston, Illinois. On 4 September 12, 2011, we again prepared the General Board's witness, with assistance 5 Lead Counsel, at Lead Counsel's offices in Chicago, Illinois. On September 13, 2011, 6 the General Board's deposition was taken by defendants, an aU-day affair, and Mr. 7 Press defended. 8 21. On October 14, 2011, this Court certified the class and the General Board 9 as class representative for purchasers of two tranches of the Countrywide RMBS. 10 22. To protect the General Board's interest in the litigation, as well as the 11 interests of class members represented by the General Board, Kirby attorneys 12 reviewed some, not all, of the extensive conespondence relating to, and motion 13 practice resulting from, merits discovery, and disputes between Lead Plaintiff and 14 defendants and third parties in from late 2011 and through 2012, as well as discovery 15 of plaintiffs' and defendants' experts that occuned during the latter portion of this 16 period. 17 23. In July 2012, I communicated with the General Board and Lead Counsel 18 regarding a proposed dismissal of claims relating to one of the two tranches 19 represented by the General Board, on grounds that the pertinent Certificate had been 20 sold by the General Board and the Certificates had otherwise been fully paid as to 21 other investors. The General Board agreed to the dismissal after a complete analysis. 22 24. In October and November 2012, Kirby attorneys reviewed and drafted 23 responses to merits discovery served on the General Board by defendants. This 24 comprised numerous requests for production of documents and intenogatories. 25 25. I communicated with the General Board regarding efforts by defendants 26 and Lead Counsel to resolve plaintiffs' claims by mediation, and, at Lead Counsel's 27 direction, reviewed and commented upon plaintiffs' Mediation Statement 28 BERGER DECLARATION IN SUPPORT OF lvfAJNE STATE PLAIN l'lFFS' MOTION FOR FINAL APPROVAL OF PROPOSED CLASS ACTION SETTLEMENT A~D PLAl'l OF ALLOCATION, AND PETITION FOR AWARD OF ATTORNEYS' FEES AND RE1\1BlJRSEMENT OF EXPENSES CASE Nos. 2:10-CV-00302 MRP (MANx), 2:12-CV-05125 MRP (MANx), 2:12-CV-05122 MRP (MANx) -5- Case 2:12-cv-05125-MRP-MAN Document 191 Filed 09/23/13 Page 7 of 50 Page ID #:6536 1 26. I reviewed, analyzed, and relayed to the General Board the substance o 2 the Second Circuit's decision in NECA-JBEW Health & Welfare Fund v. Goldman 3 Sachs & Co., which granted broad standing to plaintiffs in RMBS cases, and 4 discussed potential impact in Maine State. 1 also reviewed, analyzed, and relayed to 5 the General Board the substance of this Court's decision in Strategic Capital Bank v. 6 Countrywide. The General Board's Maine State claims were at stake because the 7 Court suggested in Strategic Capital that it might reverse its tolling ruling on grounds 8 that federal court claims could not be tolled by earlier Luther claims lodged in state 9 court. 10 27. In early 2013, I was advised by Lead Counsel regarding settlement 11 negotiations with defendants, and updated and advised the General Board accordingly. 12 Prominent in analysis used to advise the General Board were risks concerning proof o 13 loss causation raised by this Court in its September 13, 2012 order on defendants' 14 motion to dismiss, and also risk that the claims would be lost altogether were the 15 Court to follow the suggestion of Strategic Capital. 16 28. In April 2013, I was further advised by Lead Counsel of likely resolution 17 of the global claims for approximately $500 million. I provided pertinent update 18 information to the General Board, and discussed with Lead Counsel, at length, the 19 basis for uncertainty in regard to distribution of proceeds. In July 2013, I further 20 updated the General Board with the Stipulation of Settlement and its plan o 21 allocation. 22 29. Kirby's compensation for the services rendered in this case and 23 reimbursement of expenses has been and remains wholly contingent on the outcome. 24 30. Attached hereto as Exhibit A is a detailed summary indicating the 25 amount of time spent by each Kirby attorney and professional support staff involved 26 in this litigation, and the lodestar calculation based on my firm's current billing rates. 27 For personnel who are no longer employed by my firm, the lodestar calculation is 28 BERGFR DECLARATION lN SUPPORT OF AfAJNE STATE PLAINTIFFS' MOTION FOR FINAL APPROVAL OF PROPOSED CLASS ACTION SETTT,F.MENT AND PLAN OF ALl,OCATlON, AND PETITION FOR AWARD OF ATTORNEYS' FEES AND REIMBURSEMENT OF EXPENSES CASE Nos. 2:10-CV-00302 MRP (MANx), 2:12-CV-05125 MRP (MANx), 2:12-CV-05122 MRP (MANx) -6- Case 2:12-cv-05125-MRP-MAN Document 191 Filed 09/23/13 Page 8 of 50 Page ID #:6537 1 based upon the billing rates for such personnel in his or her final year of employment 2 by my firm. The schedule was prepared from contemporaneous daily time records 3 regularly prepared and maintained by the firm, which are available at the request o 4 the Court. 5 31. Time spent preparing this declaration in support of application for fees 6 and reimbursement of expenses, as well as all other time expended after August 31, 7 2013, has been excluded from Exhibit A. 8 32. The hourly rates for the Kirby attorneys and professional support staf 9 included in Exhibit A are the same as the regular current rates charged for their 10 services in non-contingent matters and/or which have been accepted in other securities 11 or shareholder litigation. 12 33. The total number of hours expended on this litigation by Kirby through 13 August 31, 2013 is 1044. The total lodestar for my firm is $665,338.75, consisting o 14 $590,512.50 for attorneys' time and $74,826.25 for professional support staff time. 15 34. Kirby's lodestar figures are based upon the firm's billing rates, which 16 rates do not include charges for expense items. Expense items are billed separately 17 and such charges are not duplicated in my firm's billing rates. 18 35. As detailed in Exhibit B, Kirby has incurred a total of $8,527.50 m 19 unreimbursed expenses in connection with the prosecution of this litigation. 20 36. The expenses incurred in this action are reflected Kirby's books and 21 records. These books and records are prepared from expense vouchers, check records 22 and other source materials and are an accurate record of the expenses incurred. 23 37. With respect to the standing of my firm, attached hereto as Exhibit Cis a 24 brief biography of my firm and attorneys in my firm who were principally involved in 25 this litigation. 26 27 28 BERGER DECLARATION IN SUPPORT OF !Vl4JNE S7~1TE PLAINTIFFS' MOTION FOR FINAL APPROVAL OF PROPOSED CLASS ACTION SETTLEMENT AND PLAN OF ALLOCATION, AND PETITION FOR AWARD OF ATTORNEYS' FEES AND REIMBURSEMENT OF EXPENSES CASE NOS. 2:10-CV-00302 MRP (MANx), 2:12-CV-05125 MRP (MANx), 2:12-CV-05122 MRP (MANx) -7- Case 2:12-cv-05125-MRP-MAN Document 191 Filed 09/23/13 Page 9 of 50 Page ID #:6538 1 I declare under penalty of perjury under the laws of New York that the 2 3 foregoing is true and correct. Executed this 17th day of September, 2013, at New 4 York, New York. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 BERGER DECLARATION IN SUPPORT OF 1'>1AINE 5'TATE PLAINTIFFS' Men JON FOR FINAL APPROVAL OF PROPOSED CLASS ACTION SETTLEMENT AND PLAN OF ALLOCATION, AND PETlTION FOR AWARD OF ATTORNEYS' FEES AND REIMBURSEMENT OF EXPENSES CASE NOS. 2:10-CV-00302 MRP (MANx), 2:12-CV-05125 MRP (MANx), 2:12-CV-05122 MRP (MANx) -8- Case 2:12-cv-05125-MRP-MAN Document 191 Filed 09/23/13 Page 10 of 50 Page ID #:6539 EXHIBIT A Exhibit A -9-