Preview
FI County, Superior Cou.
NOV 18 2019
CLERKOF THE COURT
BY Danity Alar!
SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO
DEPARTMENT 613
Lead Case No. CGC-17-561118 -
Consolidated With CGC-17-561968
ORDER RE FINAL APPROVAL AND
IN RE WELLS FARGO & COMPANY AUTO RELATED MOTIONS
INSURANCE DERIVATIVE LITIGATION
INTRODUCTION
The above entitled matter came on regularly for hearing on Wednesday, November 13, 2019. The
court issued a tentative ruling before oral argument. The appearances are as stated in the minutes. As
outlined in the tentative ruling!, and having reviewed and considered the argument and written
submissions of all parties and being fully advised, the Court (1) finally approves the settlement, which is
not conditioned on the Court’s approval of the negotiated fee award; and (2) requires supplemental
documentation to support the requests for fees. With respect to (2), CPI Plaintiffs and Delaware CPI
Plaintiffs submitted their supplemental briefing in response to the Court’s Tentative Ruling on
November 12, 2019. As discussed at the hearing, any responsive supplemental filing is due no later
than Friday, November 22, 2019. 2 Once the final submission is filed, the matter will be deemed
submitted without the need for a further hearing.
1 The Court notes that the order below largely comports with the Court’s tentative ruling.
? The Court noted in its Tentative Ruling that it did not interpret any objection to the fee requests to turn
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DISCUSSION AND ANALYSIS
I Fairness of the Settlement
A. Holistic Approach
In its tentative ruling preceding preliminary approval, the Court described its view that the three
derivative settlements, two that have reached the final approval stage in this Court and one that has
reached the final approval stage in federal court, are, in substance, three pieces of a global settlement that
should be considered together. As such, the Court took the view that the total value of the claims and the
total settlement consideration should be taken into account in evaluating the fairness of the settlements.
The parties have declined to endorse that view. In connection with the pending final approval motions,
one party to this action, intervenor and objector R.A. Feuer, has briefed a contrary view.
The Court remains of the view that the settlements are mutually dependent and as such must be
considered together. Pursuant to parallel terms in each of the settlement agreements, each cross-selling
settlement is contingent upon the approval of the other and the cross-selling settlements and the CPI
settlements are conditioned on the “contemporaneous (but unconnected) resolution” of each other. (See
Proposed Cross-Selling Settlement { 50(c); Proposed CPI Settlement { 40(c); Proposed Federal
Settlement {ff 40, 41(c)*.) The point has been made that “resolution” could mean settlement or dismissal.
But the Court is not persuaded that “contemporaneous” resolution can be achieved without settlement. ‘
Accordingly, the settlements are conditioned on settlement of the other actions. Moreover, the conclusion
that the settlements are tied together does not re-write their terms — the assertion that the settlements are
“unconnected” is not a term of the settlement, it is an ambiguous factual assertion that, to the extent it is
inconsistent with the Court’s interpretation of the settlements before it, the Court does not credit. One
result is that the practical reality of the situation facing the settling plaintiffs is that the settlement money
on the computation of the base lodestar, which is the issue that will be addressed by the supplemental
documentation. Nonetheless, at the hearing, opposing parties requested further briefing to address the
request for fees. Thus, the Court permits Feuer and/or Wells Fargo to do so by November 22, 2019.
3 In connection with the parallel final approval motion, Wells Fargo took the position that a condition of
the federal settlement is that the CPI case be contemporaneously settled.
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available in the federal action will only be paid if these claims are settled or the cases are otherwise
“contemporaneous[ly]” dismissed.
In its tentative ruling at preliminary approval, the Court expressed its opinion that, subject to any
objections, the total settlement value appeared reasonable in light of the claims that were being released
and the bases for a settlement discount. After notice was disseminated, there were only two objectors, one
in each action. Neither addressed the issue. The Court tentatively remains of the opinion that the
settlements before it are reasonable as two components of a global settlement.*
B. Separate Approach
CPI Plaintiffs and Delaware CPI Plaintiffs both tout this as an exceptional settlement because of
the corporate governance reforms. Feuer disputes the extent to which the corporate governance reforms .
are traceable to this settlement as opposed to other external pressures on Wells Fargo. As to reforms that
predate the settlement, of which there appear to be many, the Court does not find the record to
persuasively weigh in Plaintiffs’ favor — on one hand this litigation was commenced and hotly contested
at the demurrer stage in the time period preceding the mediation; on the other Wells Fargo was under
pressure from many other sources.” Nevertheless, there is at least one reform, consisting of restrictions on
4 Feuer argues that the CPI claims were not brought to the federal court’s attention. The settlement
approval process in the federal court is not before this Court. To the extent the federal court finds that
final approval is inappropriate, the two settlements before this Court will not become effective because
both settlements are contingent on the settlement in the federal action.
5 However, at the hearing, the parties spent some time discussing the present record regarding corporate
governance reforms. Indeed, CPI Plaintiffs and Delaware CPI Plaintiffs addressed additional governance
reforms, outside of the one reform, noted infra, they contended were unique to this settlement as
evidenced by (1) their expert and (2) timing of certain reforms during settlement negotiations With
respect to the first point, CPI Plaintiffs retained an expert who opines that the reforms specifically address
the wrongdoing alleged and are geared to making sure it will not recur. (Morrissey CPI Decl. 4 19.) The
expert opines that the reforms required under the settlement will provide a substantial value to
shareholders. (Id. at { 44.) The expert opines that the reforms that are unique to the CPI settlement, as
opposed to the Cross-Selling settlement, provide a value of $100-$200 million. (/d. at 752.) A second
expert, retained by the Delaware CPI Plaintiffs, who describes three phases of reforms — reforms initiated
by Wells Fargo; reforms negotiated by CPI Plaintiffs; and reforms negotiated by Delaware CPI Plaintiffs.
(Listokin Decl. {J 20-39.) The expert opines that the reforms will improve Wells Fargo’s corporate
governance and reduce the probability that future scandals will harm the company and its shareholders.
Cd. at J{ 40, 47, 56.) The expert would put the monetary value of the reforms higher than the first expert.
(See id. at {[ 50-55.) With respect to the second point, Delaware CPI Plaintiffs pointed the Court to the
fact that the Delaware CPI Plaintiffs only agreed to join in the settlement subject to the inclusion of
certain further governance reforms. (Corrected Molumphy CPI Final Approval Decl. at { 24; see also
Listokin Decl. {| 31-39.) Thus, Delaware CPI Plaintiffs argue that the fact that Delaware CPI Plaintiffs
required certain additional governance reforms in settlement negotiations shows that these reforms were
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Wells Fargo’s reentry into the CPI business, that appears to be undisputedly unique to the settlement.
Contrary to Feuer’s argument that these reforms are nothing more than a promise to abide by the
director’s extant fiduciary responsibilities, the Court is persuaded that this is precisely the type of purpose
a governance reform is supposed to serve. (Fletcher v. A. J. Indus., Inc. (1968) 266 Cal.App.3d 313, 324-
25.) :
In addition, the Court believes two other factors are properly considered in evaluating the fairness
of this settlement. First, as described by Wells Fargo’s counsel, there was a sizable pot of money
available to Wells Fargo from its insurers in a federal settlement that was conditioned on the settlement of
this action. CPI Plaintiffs, then, were under pressure to resolve these claims to avoid interfering with that
settlement. Second, as is always the case, this settlement spares Wells Fargo the expense and risk of
further litigation. (See Robbins v. Alibrandi (2005) 127 Cal.App.4th 438, 451.)
Once the Court has determined that the settlement has value, the balance of Feuer’s objection to
the consideration obtained through settlement is not that CPI Plaintiffs or Delaware CPI Plaintiffs could
themselves have extracted a better settlement given the content of their claims, but that Feuer himself
could have done better if he was permitted to move forward with his demand refused derivative action,
which was filed after Plaintiffs’ action. This argument is predicated on Feuer’s contention that interested
Board members reviewed and refused his demand. Feuer did not brief any caselaw supporting this
contention and, although he filed a Sur-Reply, did not respond to the reply argument that he waived any
argument that the Board is interested by submitting a demand. On the briefing before it, the Court is not
persuaded that Feuer could have secured a better settlement than the CPI Plaintiffs or Delaware CPI
Plaintiffs reached.
Cc. Other Issues Raised by Feuer
1. Notice
unique to the CPI action and settlement. In response, at the hearing, Feuer reiterated his argument that
these reforms simply reinforce already existing obligations. While Delaware CPI Plaintiffs addressed
these issues in their November 12, 2019 briefing, CPI Plaintiffs did not. (Compare Supplemental
Submission In Response to Court’s November 8, 2019 Tentative Ruling Re Delaware CPI Plaintiffs
Application for an Award Of Attorneys’ Fees and Plaintiff Reimbursement Awards (Nov. 12, 2019), 4:4-
7:13, with Supplemental Declaration of Mark C Molumphy in Support of Plaintiffs Motion for Award of
Attorneys’ Fees and Expenses and Reimbursement Awards (Nov. 12, 2019).)
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The Court is not persuaded that the notice provided to the shareholders was inadequate. Feuer has
accurately identified a failure to attach exhibits to the operative settlement agreement as it was presented
at preliminary approval and as it was posted on the settlement website. However, Feuer was not misled.
Nor is there any evidence that others were misled. Notably, the long-form notice provided a phone
number that any shareholder could call to request a copy of the settlement. That phone number was
available to raise any concerns about the completeness of the settlement agreement that was posted online.
2. ‘Standing
The Court is not persuaded that the settlement should be rejected because the allegations of the
operative complaint have not withstood a demurrer on the basis of demand futility. The settlement
context is materially distinct from the discovery context in that, were the Court to deny the settlement, the
Court would effectively be substituting its own judgment for the judgment of the directors who agreed to
settle the case and compelling them to demur to the operative complaint rather than settle the action. This
is not an intuitive application of a requirement that is intended to leave control of corporate affairs in the
hands of the directors unless a shareholder can demonstrate, in a well-pleaded complaint, that the
shareholder should be given control of the litigation. Moreover, the Court notes that several cases have
been settled in this context, notwithstanding the two opinions provided by Feuer, neither of which cites
any authority and neither of which has precedential effect in this Court. (Compare Cohn v. Nelson (E.D.
Mo. 2005) 375 F.Supp.2d 844, 856-57, 866 [granting final approval of a settlement; one basis for the
tuling was the difficulty of pleading demand futility]; Inre AOL Time Warner Shareholder Derivative
Litigation (S.D.N.Y. Sept. 6, 2006) 2006 WL 2572114, at *5, *7; see also In re Johnson & Johnson
Derivative Litigation (D.N.J. 2012) 900 F.Supp.2d 467, 480-81, 499 [approving settlement where
complaint had been dismissed for failure to adequately plead demand futility but, should the case have
proceeded absent settlement, an amended complaint would have been filed]; Delaware CPI Reply, 8-9;
with Feuer Objection, Exs. 2, 4.)
3. Collusion
Feuer’s argument that the settlement is collusive is, in substance, a challenge to the settlement
consideration combined with a challenge to the attorney’s fees. Put differently, Feuer argues that the
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Inre Wells Fargo & Co. Auto Insurance Derivative Litigation, Lead Case No. CGC-17-561118
Order re Final Approvalsettlement is collusive because Plaintiffs received nothing but fees. As discussed above, the Court is not
persuaded that Plaintiffs failed to secure meaningful relief. To the extent that relief does not justify the
fee awards sought, the fee awards are not a condition of the settlement and will, be addressed separately.
In any event, the Court is not persuaded that the settlement is collusive.
I. Fees \
CPI Plaintiffs’ request for a negotiated fee award is before the Court. CPI Plaintiffs’ request is —
inclusive of costs. Delaware CPI Plaintiffs’ contested motion for a fee award is before the Court.
Delaware CPI Plaintiffs raise the costs they have incurred as a basis for a multiplier, but do not appear to
seek to recover their costs. For the purposes of this Order, the requests can be discussed together. —
A. Legal Standard -
1. Substantial Benefit Doctrine and Lodestar Calculation
Under the general rule in California, the party prevailing in an action may not recover attorney’s
fees unless a statute expressly permits such recovery. (Fletcher, 266 Cal.App.3d 3at 319.) One exception
to the general rule is the substantial benefit doctrine, pursuant to which the successful plaintiff in a
shareholder derivative action may be awarded attorney’s fees against the corporation if the corporation
received substantial benefits from the litigation, even where the benefits were not pecuniary and the action
did not produce a fund from which they might be paid. (Id. at 320; accord Alaska Elec. Pension Fund v.
Brown (Del. 2010) 988 A.2d 412, 417 [“Delaware courts have long...recognized the ‘common corporate
benefit’ doctrine as an exception to the American Rule to provide for the reimbursement of attorneys’ fees
and expenses in corporate litigation. In order to be entitled to an award of fees under the corporate benefit
doctrine, an applicant must show, as a preliminary matter, that: (i) the suit was meritorious when filed; (ii)
the action producing benefit to the corporation was taken by the defendants before a judicial resolution.
was achieved; and (iii) the resulting corporate benefit was causally related to the lawsuit. ‘This rule
insures that, even without a favorable adjudication, counsel will be compensated for the beneficial results
they produced ...””].) :
To implicate the substantial benefit doctrine, the benefits realized by the corporation must be
sufficiently substantial to justify the award. (Fletcher, 266 Cal.App.2d at 324.) The benefit must be
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actual and concrete. (Pipefitters Local No. 636 Defined Benefit Plan v. Oakley, Inc. (2010) 180
Cal.App.4th 1542, 1551.) It is enough for the trial court to find, upon proper evidence, that the results of
the action maintain the health of the corporation and raise the standards of fiduciary relationships and
other economic behavior or prevent an abuse which would be prejudicial to the rights and interests of the
corporation or affect the enjoyment or protection of an essential right to the stockholder’s interest.
(Fletcher, 226 Cal.App.2d at 324-25.)°
A trial court awarding fees under the substantial benefit doctrine begins by establishing the
lodestar amount. (Robbins, 127 Cal.App.4th at 453.) The lodestar amount is calculated by multiplying
the hours reasonably worked by the reasonable hourly billing rate. (Laffitte v. Robert Half Internat. Inc.
(2016) 1 Cal.5th 480, 487; Lealao v. Beneficial California, Inc. (2000) 82 Cal.App.4th 19, 26.) The
lodestar amount can be adjusted by applying an upward or downward multiplier. (Laffitte, 1 Cal.5th at
487.) Factors that a court may consider in fixing a multiplier include the novelty and difficulty of the
questions involved; the skill displayed in presenting them; the extent to which the nature of the litigation
precluded other employment by the attorneys; and the contingent nature of the fee award. (Ketchum v-
6 The parties generally cite both California and Delaware law, without expressly taking a position as to
which law should apply to evaluate the fairness of the settlement and the fee requests. However, when
discussing the burden of proving a substantial benefit, the parties do not offer any California law. Instead,
Plaintiffs point to Delaware law pursuant to which, Plaintiffs argue, a causal connection between the suit
and the benefit is presumed if the filing of the suit precedes the benefit. (See, e.g., CPI Plaintiffs’ Reply
to Feuer Objection, 18-19.) The case on which they rely provides: “When a case is litigated in Delaware,
our courts ‘recognize a presumption that there is a causal relationship between the benefit and a timely
filed suit.’ To overcome this presumption, defendants have the burden of ‘demonstrating that the lawsuit
did not in any way cause their action.’ Where, as here, similar lawsuits are litigated in multiple
jurisdictions, the presumption of a causal relationship generally applies only to the Delaware litigation. As
this Court explained in Jn re Infinity Broadcasting Corp. Shareholders Litigation, attorneys who litigate
in other jurisdictions are entitled to share in a Delaware fee award, ‘if their efforts elsewhere conferred a
benefit realized as part of the Delaware settlement.’ But, they must substantiate their contribution to the
result achieved.” (Alaska Elec. Pension Fund v. Brown (Del. 2007) 941 A.2d 1011, 1015 [internal
footnotes omitted].) The Delaware Supreme Court further explained that there “are several reasons why
the Delaware plaintiffs are usually the only ones given a presumption of causation. First, it is reasonable
to presume that, if the Delaware plaintiffs are able to negotiate a settlement, they, rather than out-of-state
plaintiffs, are the ones who contributed to the benefit. Second, the Delaware plaintiffs have been
appearing in front of the Court of Chancery during the course of the litigation. Thus, even without
evidence of their specific contribution to the result achieved, the trial court is able to determine an
appropriate fee award based on its knowledge of the Delaware plaintiffs’ activities in court. Finally, if the
presumption were extended to all plaintiffs litigating similar claims in other jurisdictions, such a rule
would encourage the filing of multiple ‘mere pendency’ lawsuits, wasting judicial resources and making it
more difficult to reach settlements.” (Jd. at 1015-16.) This Delaware rule is inapplicable to this
California litigation.
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Inre Wells Fargo & Co. Auto Insurance Derivative Litigation, Lead Case No. CGC-17-561118
Order re Final ApprovalMoses (2001) 24 Cal.4th 1122, 1132.) “The purpose of such adjustment is to fix a fee at the fair market
value for the particular action. In effect, the court determines, retrospectively, whether the litigation
involved a contingent risk or required extraordinary legal skill justifying augmentation of the unadorned
lodestar in order to approximate the fair market rate for such services.” (Ibid.) In so doing, “a trial court
should award a multiplier for exceptional representation only when the quality of representation far
exceeds the quality of representation that would have been provided by an attorney of comparable skill
and experience billing at the hourly rate used in the lodestar calculation. Otherwise, the fee award will
result in unfair double counting and be unreasonable.” (Jd. at 1139.)
2. Review of a Negotiated Fee
In Robbins, plaintiff stockholders settled their derivative claims against defendant board members.
(Robbins, 127 Cal.App.4th at 443) The parties entered two agreements: (1) a settlement agreement; and
(2) a separate agreement by which the successor company would by $5 million to plaintiffs for their
attorney’s fees and costs. (Ibid.) The Court of Appeal explained that where there is a negotiated fee
award, the trial court’s obligation is to determine if the negotiated fee is fair. (dd. at 444, 449.), This
requires the court to review the settlement as a whole, including the fee award, to ensure that it was fairly
and honestly negotiated, is not collusive, and adequately protects the interests of the corporation and of
the shareholders. (Jbid.) The most important factor for deciding if the negotiated fee is fair is whether the
fees bear a reasonable relationship to the value of the attorneys’ work. (/d. at 451.) Although the
negotiated fee need not be perfectly consistent with the fees the court would award under the substantial
benefit doctrine, it must be in the same range — a settlement that is clearly out of that range is not a fair
and reasonable settlement of a claim for attorneys’ fees. (Ibid.)
B. Application
With respect to CPI Plaintiffs, the Court is reviewing a negotiated fee. With respect to Delaware
CP] Plaintiffs, the Court is reviewing a fee motion made on the basis of the substantial benefit doctrine
that is opposed by Wells Fargo. Feuer opposes any award of fees on the ground that the litigation did not
provide a substantial benefit to the corporation.
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Under Robbins, the Court considers whether the negotiated fee agreements are in the same range
as what the Court should approve under the substantial benefit doctrine. Accordingly, for both fee
requests the Court will conduct a substantial benefit doctrine analysis. To do this, the Court considers
whether this litigation conferred a substantial benefit on Wells Fargo and, if so, whether the lodestar is in
the range of the negotiated fee. The Court inquires whether, if the Court finds the negotiated fee
agreement entered by CPI Plaintiffs is not in the same range, CPI Plaintiffs request an award of fees under
the substantial benefit doctrine.
On the first point, consistent with the discussion of the fairness of the settlement, the Court is
persuaded that at least one of the governance reforms provided a substantial benefit to the corporation.’
Moreover, the Court is persuaded that this reform is attributable to both CPI Plaintiffs and Delaware CPI
Plaintiffs.®
On the second point, as in the Cross-Selling Action, the Court does not have sufficient information
to conduct a lodestar analysis with a reasonable degree of certainty. The Court issued a tentative ruling in
the Cross-Selling action detailing its concerns and the type of information that would enable the Court to
make an appropriate evaluation. The Court directs the moving parties to that tentative, as the issues here
are closely similar and the same type of information would serve the same purpose here.?
Further, as in the Cross-Selling Action, the Court has similar concerns about the requested upward
multiplier. The Court directs the parties to the discussion in that tentative ruling. The Court observes that
the Delaware CPI Plaintiffs’ fee motion is unique in that Wells Fargo opposes it, including by requesting
a substantial downward multiplier on the ground that the reforms were negotiated primarily before
7 See also footnote 5, supra.
8 Although Delaware CPI Plaintiffs do not appear to have been involved in the negotiation of this term of
the settlement, Wells Fargo was aware of their action and the settling parties were sufficiently interested
in securing Delaware CPI Plaintiffs’ endorsement of the settlement that they modified settlement terms to
obtain that endorsement. Accordingly, the Court is persuaded that Delaware CPI Plaintiffs’ action was a
cause of the reform.
9° The Court recognizes and appreciates that Delaware CPI Plaintiffs provided some explanation of the
tasks each biller performed in this litigation. However, the document that the Court contemplates would
provide more detail. The Court also does not construe any objection to raise particularized issues with the
calculation of the base lodestar — Wells Fargo’s broad reference to duplication appears to be better
characterized as a request for a downward multiplier. Nevertheless, the Court has an obligation to
evaluate the reasonableness of the fee request.
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Delaware CPI Plaintiffs were at the table and that their litigation was duplicative of other litigation.
Broadly, the Court gives some credence to Feuer’s contention that the governance reforms embodied in
the proposed settlement are a product of a number of pressures on Wells Fargo. The Court does not take
Feuer’s point so far as to deny a request for fees, but the Court does take that as a point worthy of
consideration in determining the extent to which the results flowing from this litigation should be credited
to efforts of the attorneys here, without considering the other pressures on Wells Fargo. This cautions
against a significant upward multiplier, but at the same time the Court is not persuaded that one action
should be subject to a strong downward multiplier where the centerpiece of the fee analysis is whether the
fees bear a reasonable relationship to the attorney’s work. (See Robbins, 127 Cal.App.4th at 451.)
Ii. Costs :
The Court does not closely analyze Delaware CPI Plaintiffs’ costs because those costs are urged as
a point of consideration for the multiplier analysis, not as an independent item of recovery. The Court
does flag the following costs claimed by the CPI Plaintiffs, whose request for costs the Court must
consider if the Court is not persuaded that the fees alone justify the negotiated fee agreement.
(1) Cotchett Firm: Miscellaneous: $216.67. This amount is not adequately explained.
(Corrected Molumphy CPI Final Approval Decl., Ex. 5 at { 6.) , -
(2) Bottini Firm: Transportation, Hotels, and Meals: $1,834.54. This amount is potentially
excessive for three total trips to San Francisco. (/d., Ex. 6 at J and Ex. C.)
(3) Multiple Firms: Online Legal and Financial Research: It is unclear from the declarations
whether these expenses are overhead expenses paid by the firm to access various databases or expenses
specifically attributable to this litigation. To the extent they are the former, it is arguably unfair to shift
those costs onto Wells Fargo’s shareholders.
(4) Multiple Firms: Meals: The Court is not inclined to award costs for meals absent compelling
argument from counsel to the contrary. Accordingly, the moving parties are asked to identify their costs
attributable to meals.
IV. Incentive Awards
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In re Wells Fargo & Co. Auto Insurance Derivative Litigation, Lead Case No. CGC-17-561118
Order re Final Approval .Two CPI Plaintiffs and four Delaware CPI Plaintiffs each have submitted declarations in support
of their requests for $5,000 incentive awards, each, totaling $30,000. (See Corrected Molumphy CPI
Final Approval Decl., Exs. 9-10; Rehns Decl., Exs. 7-10.) One of the CPI Plaintiffs offers an estimate of
the time she spent on this case — 55 hours. (See Corrected Molumphy CPI Final Approval Decl., Ex. 10.)
Delaware CP] Plaintiffs are institutional plaintiffs whose paid staff spent work time assisting with the
case. (See Rehns Decl., Exs. 7-10.) Plaintiffs argue that these awards are appropriate to reward their
contributions. (See CPI Fee Motion, 19; Delaware CPI Fee Motion, 15.) No objection to the request was
received.
At least in the class action context, discretionary incentive awards are regularly approved to
compensate class representatives for the risk or expense they have incurred in securing a benefit on
members of the class and to encourage individuals to step forward. (See, e.g., Cellphone Termination Fee
Cases (2010) 186 Cal.App.4th 1380, 1393-94; Munoz v. BCI Coca-Cola Bottling Co. (2010) 186
Cal.App.4th 399, 412; Allapattah Services, Inc. v. Exxon Corp. (S.D. Fla. 2006) 454 F.Supp.2d 1185,
1218-19 [collecting cases].) In the absence of an objection, it appears reasonable to grant some incentive
award. However, given the number of plaintiffs and the time commitment that was involved — for
example, there do not appear to have been depositions or formal discovery — an award of $2,000 per
plaintiff appears reasonable.
Vv. Miscellaneous
The moving parties are asked to separate their proposed final approval order and proposed
judgment into two separate documents.!° The moving parties are asked to provide a Word-editable
version of both documents to this Department via email. On November 15, 2019, the moving parties
complied with these requirements.
CONCLUSION AND ORDER
The settlement is finally approved, which is not conditioned on the Court’s approval of the
negotiated fee award. However, the relevant parties have submitted supplemental documentation to
support their requests for fees, and any opposing party may respond to said supplemental documentation
10 The parties may consider further distinguishing between a final approval order, fee order, and
judgment, as three documents.
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by November 22, 2019. On November 22, 2019, the matter will then be deemed submitted.
IT IS SO ORDERED. / Lynn
Dated: November 18, 2019 Lf
t ~ OU
Teri L. Jackson
Judge of the Superior Court
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Inre Wells Fargo & Co. Auto Insurance Derivative Litigation, Lead Case No. CGC-17-561118
Order re Final ApprovalCERTIFICATE OF ELECTRONIC SERVICE
(CCP 1010.6(6) & CRC 2.260(g))
I, KEITH TOM, a Deputy Clerk of the Superior Court of the County of San Francisco,
certify that I am not a party to the within action.
On NOV 182019 , l electronically served the ATTACHED
DOCUMENT(S) via File&ServeXpress on the recipients designated on the Transaction Receipt
located on the File&ServeXpress website. :
Dated: NOV 18 2019
T. Michael Yuen, Clerk
By: <
KEITH YOM, Deputy Clerk
Preview
FI County, Superior Cou. NOV 18 2019 CLERKOF THE COURT BY Danity Alar! SUPERIOR COURT OF CALIFORNIA COUNTY OF SAN FRANCISCO DEPARTMENT 613 Lead Case No. CGC-17-561118 - Consolidated With CGC-17-561968 ORDER RE FINAL APPROVAL AND IN RE WELLS FARGO & COMPANY AUTO RELATED MOTIONS INSURANCE DERIVATIVE LITIGATION INTRODUCTION The above entitled matter came on regularly for hearing on Wednesday, November 13, 2019. The court issued a tentative ruling before oral argument. The appearances are as stated in the minutes. As outlined in the tentative ruling!, and having reviewed and considered the argument and written submissions of all parties and being fully advised, the Court (1) finally approves the settlement, which is not conditioned on the Court’s approval of the negotiated fee award; and (2) requires supplemental documentation to support the requests for fees. With respect to (2), CPI Plaintiffs and Delaware CPI Plaintiffs submitted their supplemental briefing in response to the Court’s Tentative Ruling on November 12, 2019. As discussed at the hearing, any responsive supplemental filing is due no later than Friday, November 22, 2019. 2 Once the final submission is filed, the matter will be deemed submitted without the need for a further hearing. 1 The Court notes that the order below largely comports with the Court’s tentative ruling. ? The Court noted in its Tentative Ruling that it did not interpret any objection to the fee requests to turn -1- In re Wells Fargo & Co. Auto Insurance Derivative Litigation, Lead Case No. CGC-17-561118 Order re Final ApprovaloO ND HA FF WN Yo NY VY NY NY N NN NO Beye ye Bee Be Be ee oN A A FF YH FF SBD we RA DH BF WN SF DISCUSSION AND ANALYSIS I Fairness of the Settlement A. Holistic Approach In its tentative ruling preceding preliminary approval, the Court described its view that the three derivative settlements, two that have reached the final approval stage in this Court and one that has reached the final approval stage in federal court, are, in substance, three pieces of a global settlement that should be considered together. As such, the Court took the view that the total value of the claims and the total settlement consideration should be taken into account in evaluating the fairness of the settlements. The parties have declined to endorse that view. In connection with the pending final approval motions, one party to this action, intervenor and objector R.A. Feuer, has briefed a contrary view. The Court remains of the view that the settlements are mutually dependent and as such must be considered together. Pursuant to parallel terms in each of the settlement agreements, each cross-selling settlement is contingent upon the approval of the other and the cross-selling settlements and the CPI settlements are conditioned on the “contemporaneous (but unconnected) resolution” of each other. (See Proposed Cross-Selling Settlement { 50(c); Proposed CPI Settlement { 40(c); Proposed Federal Settlement {ff 40, 41(c)*.) The point has been made that “resolution” could mean settlement or dismissal. But the Court is not persuaded that “contemporaneous” resolution can be achieved without settlement. ‘ Accordingly, the settlements are conditioned on settlement of the other actions. Moreover, the conclusion that the settlements are tied together does not re-write their terms — the assertion that the settlements are “unconnected” is not a term of the settlement, it is an ambiguous factual assertion that, to the extent it is inconsistent with the Court’s interpretation of the settlements before it, the Court does not credit. One result is that the practical reality of the situation facing the settling plaintiffs is that the settlement money on the computation of the base lodestar, which is the issue that will be addressed by the supplemental documentation. Nonetheless, at the hearing, opposing parties requested further briefing to address the request for fees. Thus, the Court permits Feuer and/or Wells Fargo to do so by November 22, 2019. 3 In connection with the parallel final approval motion, Wells Fargo took the position that a condition of the federal settlement is that the CPI case be contemporaneously settled. -2- Inre Wells Fargo & Co. Auto Insurance Derivative Litigation, Lead Case No. CGC-17-561118 Order re Final ApprovaloO Om DY DH FF YW NY YN NN NY Be ee Be ee ee eB RBemeRRRBEBRB SFB WFBRESRE S available in the federal action will only be paid if these claims are settled or the cases are otherwise “contemporaneous[ly]” dismissed. In its tentative ruling at preliminary approval, the Court expressed its opinion that, subject to any objections, the total settlement value appeared reasonable in light of the claims that were being released and the bases for a settlement discount. After notice was disseminated, there were only two objectors, one in each action. Neither addressed the issue. The Court tentatively remains of the opinion that the settlements before it are reasonable as two components of a global settlement.* B. Separate Approach CPI Plaintiffs and Delaware CPI Plaintiffs both tout this as an exceptional settlement because of the corporate governance reforms. Feuer disputes the extent to which the corporate governance reforms . are traceable to this settlement as opposed to other external pressures on Wells Fargo. As to reforms that predate the settlement, of which there appear to be many, the Court does not find the record to persuasively weigh in Plaintiffs’ favor — on one hand this litigation was commenced and hotly contested at the demurrer stage in the time period preceding the mediation; on the other Wells Fargo was under pressure from many other sources.” Nevertheless, there is at least one reform, consisting of restrictions on 4 Feuer argues that the CPI claims were not brought to the federal court’s attention. The settlement approval process in the federal court is not before this Court. To the extent the federal court finds that final approval is inappropriate, the two settlements before this Court will not become effective because both settlements are contingent on the settlement in the federal action. 5 However, at the hearing, the parties spent some time discussing the present record regarding corporate governance reforms. Indeed, CPI Plaintiffs and Delaware CPI Plaintiffs addressed additional governance reforms, outside of the one reform, noted infra, they contended were unique to this settlement as evidenced by (1) their expert and (2) timing of certain reforms during settlement negotiations With respect to the first point, CPI Plaintiffs retained an expert who opines that the reforms specifically address the wrongdoing alleged and are geared to making sure it will not recur. (Morrissey CPI Decl. 4 19.) The expert opines that the reforms required under the settlement will provide a substantial value to shareholders. (Id. at { 44.) The expert opines that the reforms that are unique to the CPI settlement, as opposed to the Cross-Selling settlement, provide a value of $100-$200 million. (/d. at 752.) A second expert, retained by the Delaware CPI Plaintiffs, who describes three phases of reforms — reforms initiated by Wells Fargo; reforms negotiated by CPI Plaintiffs; and reforms negotiated by Delaware CPI Plaintiffs. (Listokin Decl. {J 20-39.) The expert opines that the reforms will improve Wells Fargo’s corporate governance and reduce the probability that future scandals will harm the company and its shareholders. Cd. at J{ 40, 47, 56.) The expert would put the monetary value of the reforms higher than the first expert. (See id. at {[ 50-55.) With respect to the second point, Delaware CPI Plaintiffs pointed the Court to the fact that the Delaware CPI Plaintiffs only agreed to join in the settlement subject to the inclusion of certain further governance reforms. (Corrected Molumphy CPI Final Approval Decl. at { 24; see also Listokin Decl. {| 31-39.) Thus, Delaware CPI Plaintiffs argue that the fact that Delaware CPI Plaintiffs required certain additional governance reforms in settlement negotiations shows that these reforms were =3- Inre Wells Fargo & Co. Auto Insurance Derivative Litigation, Lead Case No. CGC-17-561118 : Order re Final Approval| 28 Wells Fargo’s reentry into the CPI business, that appears to be undisputedly unique to the settlement. Contrary to Feuer’s argument that these reforms are nothing more than a promise to abide by the director’s extant fiduciary responsibilities, the Court is persuaded that this is precisely the type of purpose a governance reform is supposed to serve. (Fletcher v. A. J. Indus., Inc. (1968) 266 Cal.App.3d 313, 324- 25.) : In addition, the Court believes two other factors are properly considered in evaluating the fairness of this settlement. First, as described by Wells Fargo’s counsel, there was a sizable pot of money available to Wells Fargo from its insurers in a federal settlement that was conditioned on the settlement of this action. CPI Plaintiffs, then, were under pressure to resolve these claims to avoid interfering with that settlement. Second, as is always the case, this settlement spares Wells Fargo the expense and risk of further litigation. (See Robbins v. Alibrandi (2005) 127 Cal.App.4th 438, 451.) Once the Court has determined that the settlement has value, the balance of Feuer’s objection to the consideration obtained through settlement is not that CPI Plaintiffs or Delaware CPI Plaintiffs could themselves have extracted a better settlement given the content of their claims, but that Feuer himself could have done better if he was permitted to move forward with his demand refused derivative action, which was filed after Plaintiffs’ action. This argument is predicated on Feuer’s contention that interested Board members reviewed and refused his demand. Feuer did not brief any caselaw supporting this contention and, although he filed a Sur-Reply, did not respond to the reply argument that he waived any argument that the Board is interested by submitting a demand. On the briefing before it, the Court is not persuaded that Feuer could have secured a better settlement than the CPI Plaintiffs or Delaware CPI Plaintiffs reached. Cc. Other Issues Raised by Feuer 1. Notice unique to the CPI action and settlement. In response, at the hearing, Feuer reiterated his argument that these reforms simply reinforce already existing obligations. While Delaware CPI Plaintiffs addressed these issues in their November 12, 2019 briefing, CPI Plaintiffs did not. (Compare Supplemental Submission In Response to Court’s November 8, 2019 Tentative Ruling Re Delaware CPI Plaintiffs Application for an Award Of Attorneys’ Fees and Plaintiff Reimbursement Awards (Nov. 12, 2019), 4:4- 7:13, with Supplemental Declaration of Mark C Molumphy in Support of Plaintiffs Motion for Award of Attorneys’ Fees and Expenses and Reimbursement Awards (Nov. 12, 2019).) -4- In re Wells Fargo & Co. Auto Insurance Derivative Litigation, Lead Case No. CGC-17-561118 Order re Final Approvaloem IN DH BF WN RN NR NR De we we ee Res BNRRREBBHSE SCR RWAF BEERS S The Court is not persuaded that the notice provided to the shareholders was inadequate. Feuer has accurately identified a failure to attach exhibits to the operative settlement agreement as it was presented at preliminary approval and as it was posted on the settlement website. However, Feuer was not misled. Nor is there any evidence that others were misled. Notably, the long-form notice provided a phone number that any shareholder could call to request a copy of the settlement. That phone number was available to raise any concerns about the completeness of the settlement agreement that was posted online. 2. ‘Standing The Court is not persuaded that the settlement should be rejected because the allegations of the operative complaint have not withstood a demurrer on the basis of demand futility. The settlement context is materially distinct from the discovery context in that, were the Court to deny the settlement, the Court would effectively be substituting its own judgment for the judgment of the directors who agreed to settle the case and compelling them to demur to the operative complaint rather than settle the action. This is not an intuitive application of a requirement that is intended to leave control of corporate affairs in the hands of the directors unless a shareholder can demonstrate, in a well-pleaded complaint, that the shareholder should be given control of the litigation. Moreover, the Court notes that several cases have been settled in this context, notwithstanding the two opinions provided by Feuer, neither of which cites any authority and neither of which has precedential effect in this Court. (Compare Cohn v. Nelson (E.D. Mo. 2005) 375 F.Supp.2d 844, 856-57, 866 [granting final approval of a settlement; one basis for the tuling was the difficulty of pleading demand futility]; Inre AOL Time Warner Shareholder Derivative Litigation (S.D.N.Y. Sept. 6, 2006) 2006 WL 2572114, at *5, *7; see also In re Johnson & Johnson Derivative Litigation (D.N.J. 2012) 900 F.Supp.2d 467, 480-81, 499 [approving settlement where complaint had been dismissed for failure to adequately plead demand futility but, should the case have proceeded absent settlement, an amended complaint would have been filed]; Delaware CPI Reply, 8-9; with Feuer Objection, Exs. 2, 4.) 3. Collusion Feuer’s argument that the settlement is collusive is, in substance, a challenge to the settlement consideration combined with a challenge to the attorney’s fees. Put differently, Feuer argues that the -5- Inre Wells Fargo & Co. Auto Insurance Derivative Litigation, Lead Case No. CGC-17-561118 Order re Final Approvalsettlement is collusive because Plaintiffs received nothing but fees. As discussed above, the Court is not persuaded that Plaintiffs failed to secure meaningful relief. To the extent that relief does not justify the fee awards sought, the fee awards are not a condition of the settlement and will, be addressed separately. In any event, the Court is not persuaded that the settlement is collusive. I. Fees \ CPI Plaintiffs’ request for a negotiated fee award is before the Court. CPI Plaintiffs’ request is — inclusive of costs. Delaware CPI Plaintiffs’ contested motion for a fee award is before the Court. Delaware CPI Plaintiffs raise the costs they have incurred as a basis for a multiplier, but do not appear to seek to recover their costs. For the purposes of this Order, the requests can be discussed together. — A. Legal Standard - 1. Substantial Benefit Doctrine and Lodestar Calculation Under the general rule in California, the party prevailing in an action may not recover attorney’s fees unless a statute expressly permits such recovery. (Fletcher, 266 Cal.App.3d 3at 319.) One exception to the general rule is the substantial benefit doctrine, pursuant to which the successful plaintiff in a shareholder derivative action may be awarded attorney’s fees against the corporation if the corporation received substantial benefits from the litigation, even where the benefits were not pecuniary and the action did not produce a fund from which they might be paid. (Id. at 320; accord Alaska Elec. Pension Fund v. Brown (Del. 2010) 988 A.2d 412, 417 [“Delaware courts have long...recognized the ‘common corporate benefit’ doctrine as an exception to the American Rule to provide for the reimbursement of attorneys’ fees and expenses in corporate litigation. In order to be entitled to an award of fees under the corporate benefit doctrine, an applicant must show, as a preliminary matter, that: (i) the suit was meritorious when filed; (ii) the action producing benefit to the corporation was taken by the defendants before a judicial resolution. was achieved; and (iii) the resulting corporate benefit was causally related to the lawsuit. ‘This rule insures that, even without a favorable adjudication, counsel will be compensated for the beneficial results they produced ...””].) : To implicate the substantial benefit doctrine, the benefits realized by the corporation must be sufficiently substantial to justify the award. (Fletcher, 266 Cal.App.2d at 324.) The benefit must be -6- In re Wells Fargo & Co. Auto Insurance Derivative Litigation, Lead Case No. CGC-17-561118 Order re Final ApprovalCm YN DH FF WN | Rw NY NY NN NR KN ND — Be Be Bee Be Be Be oe eo aa AR BS =F SF Ce ADA A RBH KF DS actual and concrete. (Pipefitters Local No. 636 Defined Benefit Plan v. Oakley, Inc. (2010) 180 Cal.App.4th 1542, 1551.) It is enough for the trial court to find, upon proper evidence, that the results of the action maintain the health of the corporation and raise the standards of fiduciary relationships and other economic behavior or prevent an abuse which would be prejudicial to the rights and interests of the corporation or affect the enjoyment or protection of an essential right to the stockholder’s interest. (Fletcher, 226 Cal.App.2d at 324-25.)° A trial court awarding fees under the substantial benefit doctrine begins by establishing the lodestar amount. (Robbins, 127 Cal.App.4th at 453.) The lodestar amount is calculated by multiplying the hours reasonably worked by the reasonable hourly billing rate. (Laffitte v. Robert Half Internat. Inc. (2016) 1 Cal.5th 480, 487; Lealao v. Beneficial California, Inc. (2000) 82 Cal.App.4th 19, 26.) The lodestar amount can be adjusted by applying an upward or downward multiplier. (Laffitte, 1 Cal.5th at 487.) Factors that a court may consider in fixing a multiplier include the novelty and difficulty of the questions involved; the skill displayed in presenting them; the extent to which the nature of the litigation precluded other employment by the attorneys; and the contingent nature of the fee award. (Ketchum v- 6 The parties generally cite both California and Delaware law, without expressly taking a position as to which law should apply to evaluate the fairness of the settlement and the fee requests. However, when discussing the burden of proving a substantial benefit, the parties do not offer any California law. Instead, Plaintiffs point to Delaware law pursuant to which, Plaintiffs argue, a causal connection between the suit and the benefit is presumed if the filing of the suit precedes the benefit. (See, e.g., CPI Plaintiffs’ Reply to Feuer Objection, 18-19.) The case on which they rely provides: “When a case is litigated in Delaware, our courts ‘recognize a presumption that there is a causal relationship between the benefit and a timely filed suit.’ To overcome this presumption, defendants have the burden of ‘demonstrating that the lawsuit did not in any way cause their action.’ Where, as here, similar lawsuits are litigated in multiple jurisdictions, the presumption of a causal relationship generally applies only to the Delaware litigation. As this Court explained in Jn re Infinity Broadcasting Corp. Shareholders Litigation, attorneys who litigate in other jurisdictions are entitled to share in a Delaware fee award, ‘if their efforts elsewhere conferred a benefit realized as part of the Delaware settlement.’ But, they must substantiate their contribution to the result achieved.” (Alaska Elec. Pension Fund v. Brown (Del. 2007) 941 A.2d 1011, 1015 [internal footnotes omitted].) The Delaware Supreme Court further explained that there “are several reasons why the Delaware plaintiffs are usually the only ones given a presumption of causation. First, it is reasonable to presume that, if the Delaware plaintiffs are able to negotiate a settlement, they, rather than out-of-state plaintiffs, are the ones who contributed to the benefit. Second, the Delaware plaintiffs have been appearing in front of the Court of Chancery during the course of the litigation. Thus, even without evidence of their specific contribution to the result achieved, the trial court is able to determine an appropriate fee award based on its knowledge of the Delaware plaintiffs’ activities in court. Finally, if the presumption were extended to all plaintiffs litigating similar claims in other jurisdictions, such a rule would encourage the filing of multiple ‘mere pendency’ lawsuits, wasting judicial resources and making it more difficult to reach settlements.” (Jd. at 1015-16.) This Delaware rule is inapplicable to this California litigation. -7- Inre Wells Fargo & Co. Auto Insurance Derivative Litigation, Lead Case No. CGC-17-561118 Order re Final ApprovalMoses (2001) 24 Cal.4th 1122, 1132.) “The purpose of such adjustment is to fix a fee at the fair market value for the particular action. In effect, the court determines, retrospectively, whether the litigation involved a contingent risk or required extraordinary legal skill justifying augmentation of the unadorned lodestar in order to approximate the fair market rate for such services.” (Ibid.) In so doing, “a trial court should award a multiplier for exceptional representation only when the quality of representation far exceeds the quality of representation that would have been provided by an attorney of comparable skill and experience billing at the hourly rate used in the lodestar calculation. Otherwise, the fee award will result in unfair double counting and be unreasonable.” (Jd. at 1139.) 2. Review of a Negotiated Fee In Robbins, plaintiff stockholders settled their derivative claims against defendant board members. (Robbins, 127 Cal.App.4th at 443) The parties entered two agreements: (1) a settlement agreement; and (2) a separate agreement by which the successor company would by $5 million to plaintiffs for their attorney’s fees and costs. (Ibid.) The Court of Appeal explained that where there is a negotiated fee award, the trial court’s obligation is to determine if the negotiated fee is fair. (dd. at 444, 449.), This requires the court to review the settlement as a whole, including the fee award, to ensure that it was fairly and honestly negotiated, is not collusive, and adequately protects the interests of the corporation and of the shareholders. (Jbid.) The most important factor for deciding if the negotiated fee is fair is whether the fees bear a reasonable relationship to the value of the attorneys’ work. (/d. at 451.) Although the negotiated fee need not be perfectly consistent with the fees the court would award under the substantial benefit doctrine, it must be in the same range — a settlement that is clearly out of that range is not a fair and reasonable settlement of a claim for attorneys’ fees. (Ibid.) B. Application With respect to CPI Plaintiffs, the Court is reviewing a negotiated fee. With respect to Delaware CP] Plaintiffs, the Court is reviewing a fee motion made on the basis of the substantial benefit doctrine that is opposed by Wells Fargo. Feuer opposes any award of fees on the ground that the litigation did not provide a substantial benefit to the corporation. -8- Inre Wells Fargo & Co. Auto Insurance Derivative Litigation, Lead Case No. CGC-17-561118 Order re Final ApprovalCm YN DH FW NY YPN N NY NY Be Bee Be Be we Be Be SB RBNRRRBBKR BE Se WT_AADARESEHReS Under Robbins, the Court considers whether the negotiated fee agreements are in the same range as what the Court should approve under the substantial benefit doctrine. Accordingly, for both fee requests the Court will conduct a substantial benefit doctrine analysis. To do this, the Court considers whether this litigation conferred a substantial benefit on Wells Fargo and, if so, whether the lodestar is in the range of the negotiated fee. The Court inquires whether, if the Court finds the negotiated fee agreement entered by CPI Plaintiffs is not in the same range, CPI Plaintiffs request an award of fees under the substantial benefit doctrine. On the first point, consistent with the discussion of the fairness of the settlement, the Court is persuaded that at least one of the governance reforms provided a substantial benefit to the corporation.’ Moreover, the Court is persuaded that this reform is attributable to both CPI Plaintiffs and Delaware CPI Plaintiffs.® On the second point, as in the Cross-Selling Action, the Court does not have sufficient information to conduct a lodestar analysis with a reasonable degree of certainty. The Court issued a tentative ruling in the Cross-Selling action detailing its concerns and the type of information that would enable the Court to make an appropriate evaluation. The Court directs the moving parties to that tentative, as the issues here are closely similar and the same type of information would serve the same purpose here.? Further, as in the Cross-Selling Action, the Court has similar concerns about the requested upward multiplier. The Court directs the parties to the discussion in that tentative ruling. The Court observes that the Delaware CPI Plaintiffs’ fee motion is unique in that Wells Fargo opposes it, including by requesting a substantial downward multiplier on the ground that the reforms were negotiated primarily before 7 See also footnote 5, supra. 8 Although Delaware CPI Plaintiffs do not appear to have been involved in the negotiation of this term of the settlement, Wells Fargo was aware of their action and the settling parties were sufficiently interested in securing Delaware CPI Plaintiffs’ endorsement of the settlement that they modified settlement terms to obtain that endorsement. Accordingly, the Court is persuaded that Delaware CPI Plaintiffs’ action was a cause of the reform. 9° The Court recognizes and appreciates that Delaware CPI Plaintiffs provided some explanation of the tasks each biller performed in this litigation. However, the document that the Court contemplates would provide more detail. The Court also does not construe any objection to raise particularized issues with the calculation of the base lodestar — Wells Fargo’s broad reference to duplication appears to be better characterized as a request for a downward multiplier. Nevertheless, the Court has an obligation to evaluate the reasonableness of the fee request. -9- Inre Wells Fargo & Co. Auto Insurance Derivative Litigation, Lead Case No. CGC-17-561118 Order re Final Approvalom NY DH FF Ww NY NN NOB Bee Be Be Se eB Be Be nv = Ss © we A DWH BF WN KY DS 23 Delaware CPI Plaintiffs were at the table and that their litigation was duplicative of other litigation. Broadly, the Court gives some credence to Feuer’s contention that the governance reforms embodied in the proposed settlement are a product of a number of pressures on Wells Fargo. The Court does not take Feuer’s point so far as to deny a request for fees, but the Court does take that as a point worthy of consideration in determining the extent to which the results flowing from this litigation should be credited to efforts of the attorneys here, without considering the other pressures on Wells Fargo. This cautions against a significant upward multiplier, but at the same time the Court is not persuaded that one action should be subject to a strong downward multiplier where the centerpiece of the fee analysis is whether the fees bear a reasonable relationship to the attorney’s work. (See Robbins, 127 Cal.App.4th at 451.) Ii. Costs : The Court does not closely analyze Delaware CPI Plaintiffs’ costs because those costs are urged as a point of consideration for the multiplier analysis, not as an independent item of recovery. The Court does flag the following costs claimed by the CPI Plaintiffs, whose request for costs the Court must consider if the Court is not persuaded that the fees alone justify the negotiated fee agreement. (1) Cotchett Firm: Miscellaneous: $216.67. This amount is not adequately explained. (Corrected Molumphy CPI Final Approval Decl., Ex. 5 at { 6.) , - (2) Bottini Firm: Transportation, Hotels, and Meals: $1,834.54. This amount is potentially excessive for three total trips to San Francisco. (/d., Ex. 6 at J and Ex. C.) (3) Multiple Firms: Online Legal and Financial Research: It is unclear from the declarations whether these expenses are overhead expenses paid by the firm to access various databases or expenses specifically attributable to this litigation. To the extent they are the former, it is arguably unfair to shift those costs onto Wells Fargo’s shareholders. (4) Multiple Firms: Meals: The Court is not inclined to award costs for meals absent compelling argument from counsel to the contrary. Accordingly, the moving parties are asked to identify their costs attributable to meals. IV. Incentive Awards “-10- In re Wells Fargo & Co. Auto Insurance Derivative Litigation, Lead Case No. CGC-17-561118 Order re Final Approval .Two CPI Plaintiffs and four Delaware CPI Plaintiffs each have submitted declarations in support of their requests for $5,000 incentive awards, each, totaling $30,000. (See Corrected Molumphy CPI Final Approval Decl., Exs. 9-10; Rehns Decl., Exs. 7-10.) One of the CPI Plaintiffs offers an estimate of the time she spent on this case — 55 hours. (See Corrected Molumphy CPI Final Approval Decl., Ex. 10.) Delaware CP] Plaintiffs are institutional plaintiffs whose paid staff spent work time assisting with the case. (See Rehns Decl., Exs. 7-10.) Plaintiffs argue that these awards are appropriate to reward their contributions. (See CPI Fee Motion, 19; Delaware CPI Fee Motion, 15.) No objection to the request was received. At least in the class action context, discretionary incentive awards are regularly approved to compensate class representatives for the risk or expense they have incurred in securing a benefit on members of the class and to encourage individuals to step forward. (See, e.g., Cellphone Termination Fee Cases (2010) 186 Cal.App.4th 1380, 1393-94; Munoz v. BCI Coca-Cola Bottling Co. (2010) 186 Cal.App.4th 399, 412; Allapattah Services, Inc. v. Exxon Corp. (S.D. Fla. 2006) 454 F.Supp.2d 1185, 1218-19 [collecting cases].) In the absence of an objection, it appears reasonable to grant some incentive award. However, given the number of plaintiffs and the time commitment that was involved — for example, there do not appear to have been depositions or formal discovery — an award of $2,000 per plaintiff appears reasonable. Vv. Miscellaneous The moving parties are asked to separate their proposed final approval order and proposed judgment into two separate documents.!° The moving parties are asked to provide a Word-editable version of both documents to this Department via email. On November 15, 2019, the moving parties complied with these requirements. CONCLUSION AND ORDER The settlement is finally approved, which is not conditioned on the Court’s approval of the negotiated fee award. However, the relevant parties have submitted supplemental documentation to support their requests for fees, and any opposing party may respond to said supplemental documentation 10 The parties may consider further distinguishing between a final approval order, fee order, and judgment, as three documents. -ll- Inre Wells Fargo & Co. Auto Insurance Derivative Litigation, Lead Case No. CGC-17-561118 Order re Final Approval— oe nN HH FF WN 10 by November 22, 2019. On November 22, 2019, the matter will then be deemed submitted. IT IS SO ORDERED. / Lynn Dated: November 18, 2019 Lf t ~ OU Teri L. Jackson Judge of the Superior Court -12- Inre Wells Fargo & Co. Auto Insurance Derivative Litigation, Lead Case No. CGC-17-561118 Order re Final ApprovalCERTIFICATE OF ELECTRONIC SERVICE (CCP 1010.6(6) & CRC 2.260(g)) I, KEITH TOM, a Deputy Clerk of the Superior Court of the County of San Francisco, certify that I am not a party to the within action. On NOV 182019 , l electronically served the ATTACHED DOCUMENT(S) via File&ServeXpress on the recipients designated on the Transaction Receipt located on the File&ServeXpress website. : Dated: NOV 18 2019 T. Michael Yuen, Clerk By: < KEITH YOM, Deputy Clerk