IN RE LYFT, INC. DERIVATIVE LITIGATION

• Court: District Court, N.D. California
• Decided: March 28, 2025
• Docket: 4:20-cv-09257
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 RON CHENOY, Case No. 20-cv-09257-HSG

8 Plaintiff, ORDER GRANTING FINAL APPROVAL OF SHAREHOLDER 9 v. DERIVATIVE ACTION SETTLEMENT

10 LYFT, INC., et al., Re: Dkt. No. 68 11 Defendants.

12 13 Pending before the Court is Plaintiffs’ unopposed motion for final approval of shareholder 14 derivation action settlement, attorneys’ fees and expenses, and service award allocations. See Dkt. 15 No. 68 (“Mot.”).1 The Court held a final fairness hearing on February 6, 2025. For the reasons 16 stated below, the Court GRANTS the motion and applies a downward adjustment to the attorneys’ 17 fee award. 18 I. BACKGROUND 19 A. Factual Allegations 20 This is a shareholder derivative action on behalf of nominal defendant Lyft, Inc. (“Lyft”) 21 against several Lyft officers and directors (collectively “Individual Defendants”).2 Plaintiffs 22 allege that the Individual Defendants breached their fiduciary duty by failing, among other things, 23 to: “(1) prevent or remediate the rampant sexual and physical assault committed by Lyft drivers 24 against Lyft passengers; (2) provide an adequate reporting mechanism, oversight of personnel, 25 1 For ease of reference, the Court refers to PDF page numbers rather than documents’ internal 26 pagination unless otherwise noted. 2 The “Individual Defendants” include Logan Green, John Zimmer, Brian Roberts, Prashant 27 (Sean) Aggarwal, Jonathan Christodoro, Ben Horowitz, Valerie Jarrett, David Lawee, Hiroshi 1 training, or disciplinary avenues to prevent or at least remedy the known problem of sexual and 2 physical assault; or (3) implement an adequate background check system to effectively screen Lyft 3 drivers, particularly drivers with known histories of committing past acts of sexual misconduct 4 and/or harassment.” Dkt. No. 60 at 9–10; Verified Shareholder Derivative Complaint (“Compl.”) 5 ¶ 19. Plaintiffs further allege that these Individual Defendants made “a series of false and 6 misleading statements in connection with Lyft’s March 28, 2019 initial public offering (“IPO”).” 7 Dkt. No. 60 at 10; Compl. ¶¶ 1, 16. According to Plaintiffs, the alleged false and/or misleading 8 statements failed to disclose that: “(1) passengers had reported to Lyft being verbally and 9 physically assaulted, sexually harassed, and raped by Lyft drivers even prior to the IPO; (2) it was 10 likely that Lyft would sustain damage to its reputation and also be subject to legal liability as a 11 consequence of numerous and still increasing sexual assaults perpetrated by the Company's 12 drivers; (3) numerous riders of the Company's electronic bikes were caused to sustain injuries such 13 as scrapes, bruising, broken bones, and damaged limbs as a result of a defect in the braking system 14 of Lyft's electronic bikes; (4) riders injured by the defective braking system had complained to the 15 Company before Lyft went public on March 28, 2019; (5) Lyft’s transformation into a multimodal 16 transportation network was being disrupted by safety issues with their bikes; and (6) Lyft failed to 17 maintain internal controls.” Compl. at ¶ 16. 18 Based on this alleged misconduct, Plaintiffs assert claims on behalf of Lyft against the 19 Individual Defendants for alleged breaches of fiduciary duties, unjust enrichment, abuse of 20 control, gross mismanagement, waste of corporate assets, and for contribution under Section 11(f) 21 of the Securities Act of 1933 and Section 21D of the Securities Exchange Act of 1934. Dkt. No. 22 60 at 7. 23 B. Procedural Background 24 This consolidated action combines four federal shareholder derivative actions filed against 25 the Individual Defendants on behalf of nominal defendant Lyft between September 2020 and 26 February 2021. In January 2021, then-Magistrate Judge Jacqueline Scott Corley consolidated 27 three of these actions: Mehta v. Green, Case No. 1:20-cv-01326 (D. Del.) (later Case No. 4:20-cv- 1 Green, Case No. 3:20-cv-09272 (N.D. Cal.). Dkt. No. 60 at 11; Dkt. No. 9. In February 2021, 2 Plaintiff Brad Shuman filed a similar shareholder derivative action, Shuman v. Green, Case No. 3 4:21-cv-01263 (N.D. Cal.), which the Court also consolidated into the above-captioned action. 4 Dkt. No. 37. 5 In February 2021, the Court granted the parties’ request to stay this consolidated case in 6 light of In re Lyft, Inc. Securities Litigation, No. 4:19-cv-02690 (“Federal Securities Action”), a 7 factually-related securities class action then pending before the Court. See Dkt. No. 34. The 8 parties in that case reached a class-wide settlement, which the Court approved in August 2023, and 9 the Federal Securities Action was dismissed in October 2023. Dkt. No. 60 at 13. Following the 10 Court’s approval of the parties’ class action settlement in the Federal Securities Action, the parties 11 reached a settlement in this matter. Dkt. No. 51. In July 2024, Plaintiffs filed an unopposed 12 motion for preliminary approval of the settlement, Dkt. No. 60, and in October 2024, the Court 13 “preliminarily [found] that the Settlement Agreement is fair, reasonable, and adequate” and 14 granted that motion. Dkt. No. 62; In re Lyft, Inc. Derivative Litig., No. 20-CV-09257-HSG, 2024 15 WL 4505474, at *6 (N.D. Cal. Oct. 16, 2024). The Court also directed the parties to finalize and 16 implement the proposed notice plan. Id. 17 C. Settlement Agreement 18 The key terms of the Stipulation of Settlement, Dkt. No. 60-2 (“Settlement Agreement” or 19 “SA”), are as follows: 20 Settlement Benefits: Lyft will keep the corporate governance reforms set forth in Exhibit A 21 of the Settlement Agreement in place for at least three years. See Dkt. No. 60-2, Ex. A. These 22 reforms include, among other things, Lyft’s amended Clawback Policy, changes to Lyft’s Code of 23 Business Conduct and Ethics, amendments to Lyft’s Compensation Committee Charter, and 24 changes to Lyft’s Corporate Governance Guidelines. Id. Lyft will also post a link to its 25 Compliance and Ethics Hotline on the Lyft website within 90 days of the settlement’s final 26 approval. Id. Consistent with Exhibit A of the Settlement Agreement, Lyft will undertake efforts 27 to improve safety compliance and awareness by (1) adding a user safety executive to Lyft’s 1 911 Safety Feature” and “Safety Phone Calls.” Id. Within 12 months of the settlement’s final 2 approval, Lyft will also make at least one further post on its blog (https://www.lyft.com/blog) 3 about in-app safety features available to riders and drivers. Id. 4 Releases: Under the terms of the Settlement Agreement, the “Releasing Persons shall be 5 deemed to have fully, finally, and forever released, relinquished, and discharged the Released 6 Claims (including Unknown Claims) against the Released Persons and any and all derivative 7 claims arising out of, relating to, or in connection with the defense, settlement, or resolution of the 8 Federal Derivative Actions against the Released Persons.” SA § 5.1. 9 • The Releasing Persons are “Plaintiffs (individually, collectively, and derivatively on behalf 10 of Lyft), all other Applicable Lyft Shareholders, Plaintiffs' Counsel, and Lyft.” Id. § 1.23. 11 • The Released Persons are “Lyft, the Individual Defendants, and their Related Persons.” Id. 12 § 1.22. 13 • Released Claims means “[A]ny and all actions, suits, claims, debts, rights, liabilities, and 14 causes of action, whether under federal, state, local, statutory, common law, foreign law, or 15 any other law, rule or regulation, including both known and Unknown Claims (as defined 16 in paragraph 1.26 below), that: (a) were asserted or could have been asserted by any 17 shareholder derivatively on behalf of Lyft, or by Lyft, against any Released Person; and (b) 18 concern, arise out of, or relate to (i) the allegations asserted in the Federal Derivative 19 Actions or the matters and occurrences that were alleged in the Federal Derivative Actions, 20 or (ii) the Settlement, defense or resolution of the Federal Derivative Actions, except for 21 any claims to enforce the Settlement. Excluded from the term ‘Released Claims’ are all 22 claims alleged in the Federal Securities Action and the State Securities Action.” Id. § 1.21. 23 Notice: Lyft provided notice of the Settlement Agreement consistent with the proposed notice 24 plan. See Dkt. Nos. 60-2, Ex. C (“Notice”), 60-2, Ex. D (“Summary Notice”); SA § 3.2.5. 25 Specifically, (1) Lyft published the Summary Notice in the national edition of Investor’s Business 26 Daily, (2) Plaintiffs’ counsel published the Summary Notice via PR Newswire, and (3) Lyft posted 27 the relevant notice materials on a webpage that was accessible from the “Investors” page of Lyft’s 1 Attorneys’ Fees and Costs: Plaintiffs’ counsel seeks $700,000 in attorneys’ fees and expenses 2 from the Individual Defendants’ insurers for the 764.05 hours that counsel worked on this matter. 3 Mot. at 24–25. 4 Service Award: Plaintiffs’ counsel requests $1,500 service awards for the three named plaintiffs. 5 Mot. at 27–28. These awards will be drawn from funds allocated for Plaintiffs’ attorneys’ fees and 6 expenses. 7 II. FINAL SETTLEMENT APPROVAL 8 A. Legal Standard 9 Pursuant to Federal Rule of Civil Procedure 23.1, “[a] derivative action may be settled, 10 voluntarily dismissed, or compromised only with the court’s approval.” Fed. R. Civ. P. 23.1(c). 11 “Rule 23 requires courts to employ a two-step process in evaluating a class action or derivative 12 action settlement.” In re Wells Fargo & Co. Sharehold Derivative Litig., No. 16-CV-05541-JST, 13 2019 WL 13020734, at *4 (N.D. Cal. May 14, 2019). First, the court “must make a preliminary 14 determination that the settlement is fair, reasonable, and adequate” under Rule 23(e)(2). Id. 15 (internal citation and quotations omitted). Only if a settlement is “fundamentally fair, adequate, 16 and reasonable” may it be approved. In re Hewlett-Packard Co. S’holder Derivative Litig., No. 17 3:12-CV-06003-CRB, 2015 WL 1153864, at *3 (N.D. Cal. Mar. 13, 2015) (internal citation and 18 quotations omitted). “[I]f the court preliminarily approves a derivative action settlement, notice 19 ‘must be given to shareholders or members in the manner that the court orders.’” In re Wells 20 Fargo & Co. Sharehold Derivative Litig., 2019 WL 13020734, at *4 (quoting Fed. R. Civ. P. 21 23.1(c)). The court then holds a hearing to “make a final determination whether the settlement is 22 ‘fair, reasonable, and adequate.’” Id. (quoting Fed. R. Civ. P. 23(e)(2)). 23 In the context of a derivative action, courts evaluate fairness, reasonableness, and adequacy 24 by considering a range of factors, such as “the strength of the plaintiffs’ case; the risk, expense, 25 complexity, and likely duration of further litigation; . . . the amount offered in settlement; the 26 extent of discovery completed and the stage of the proceedings; [and] the experience and views of 27 counsel . . . ” Id. (internal citation and quotations omitted). Courts also consider “the extent of the 1 In re Pinterest Derivative Litig., No. C 20-08331-WHA, 2022 WL 484961, *3 (N.D. Cal. Feb. 16, 2 2022) (internal citation and quotations omitted). And courts ensure that the proposed settlement is 3 not “the product of fraud or overreaching by, or collusion between, the negotiating parties,” In re 4 Hewlett-Packard, 2015 WL 1153864, at *3 (internal citation and quotation omitted). See also 5 Lloyd v. Gupta, No. 15-CV-04183-MEJ, 2016 WL 3951652, at *4 (N.D. Cal. July 22, 2016) 6 (internal citation and quotations omitted) (noting that courts consider whether “the settlement is 7 the result of arm’s-length negotiations in which plaintiffs’ counsel has effectively represented the 8 interest of the shareholder class, and whether the substantive terms of the settlement are in the 9 interests of [the company] and its shareholders relative to the likely rewards of litigation.”). 10 B. Discussion 11 i. Adequacy of Notice 12 Rule 23.1(c) requires that notice of the settlement “be given to shareholders or members in 13 the manner that the court orders.” Fed. R. Civ. P. 23.1(c). This requirement “guards against 14 collusive settlement practices.” Bushansky v. Armacost, No. 12–CV–01597–JST, 2014 WL 15 2905143, at *1 (N.D. Cal. June 25, 2014). More specifically, “notice and court approval of 16 settlements under Rule 23.1 discourage private settlements under which the plaintiff-stockholder 17 and his attorney profit to the exclusion of the corporation and nonparty stockholders.” Papilsky v. 18 Berndt, 466 F.2d 251, 258 (2d Cir. 1972).3 19 The Court previously approved the parties’ notice plan. See In re Lyft, Inc. Derivative 20 Litig., 2024 WL 4505474, at *6. Plaintiffs’ counsel have since submitted a declaration and several 21 exhibits establishing that they implemented the approved plan. See Dkt. No. 70. Specifically, as 22 outlined in the Settlement Agreement, (1) Lyft published the Summary Notice in the national 23 edition of Investor’s Business Daily, (2) Plaintiffs’ counsel published the Summary Notice via PR 24 Newswire; and (3) Lyft posted the Stipulation (and exhibits thereto) and Notice on an internet page 25 that Lyft created and that could be reached through the Lyft website. Mot. at 15; Dkt. No. 70. SA 26 § 3. 27 1 The deadline for shareholders to submit objections to the Settlement Agreement and 2 Plaintiffs’ request for attorneys’ fees was January 13, 2025. Dkt. No. 66. No shareholders filed 3 objections to the proposed settlement or the attorneys’ fee request. Mot. at 16. In light of these 4 facts, the Court finds that the parties have sufficiently provided notice to Lyft shareholders and 5 satisfied Rule 23.1(c). 6 ii. Fairness, Adequacy, and Reasonableness 7 The Court analyzed several factors, including (1) benefits to the corporation, (2) possible 8 conflicts or signs of collusion, (3) the scope of release, and (4) preferential treatment, when it 9 granted preliminary approval. See In re Lyft, Inc. Derivative Litig., 2024 WL 4505474, at *4–7. 10 The Court found the Settlement Agreement to be fair, adequate, and reasonable when it granted 11 that approval, and the Court has no reason to alter that determination now that shareholders have 12 received notice and an opportunity to file objections. “[T]he absence of a large number of 13 objections to a proposed class action settlement raises a strong presumption that the terms of a 14 proposed class settlement action are favorable to the class members.” In re Omnivision Techs., 15 Inc., 559 F. Supp. 2d 1036, 1043 (N.D. Cal. 2008). “Courts reviewing settlements of shareholder 16 derivative suits have applied the same presumption.” In re Wells Fargo & Co. S’holder 17 Derivative Litig., 445 F. Supp. 3d 508, 518 (N.D. Cal. 2020), aff’d, 845 F. App’x 563 (9th Cir. 18 2021). Accordingly, in the absence of any objections here, “[t]his presumption merely buttresses 19 the Court’s prior conclusions regarding the Settlement’s fairness.” Id. Having reviewed the 20 factors set out in Rule 23(e)(2), the Court continues to find that the Settlement Agreement is fair, 21 reasonable, and adequate, and that Lyft shareholders received adequate notice. Accordingly, 22 Plaintiffs’ motion for final approval of the shareholder derivative action settlement is GRANTED. 23 III. ATTORNEYS’ FEES 24 Plaintiffs’ counsel seeks $700,000 in attorneys’ fees and expenses from the Individual 25 Defendants’ insurers for the 764.05 hours that counsel worked on this matter. Mot. at 24–25. 26 A. Legal Standard 27 “[A] court may grant fees and expenses to derivative counsel when the derivative suit 1 Supp. at 1445. “The benefit need not be pecuniary to give rise to attorneys’ fees.” In re Pinterest 2 Derivative Litig., No. C 20-08331-WHA, 2022 WL 2079712, at *2 (N.D. Cal. June 9, 2022). The 3 Court has discretion to choose either the lodestar method or the percentage-of-the-fund method to 4 calculate reasonable attorneys’ fees. Id. at *2. Regardless of method, however, “[t]he appropriate 5 amount of compensation must be based on the benefit that has been conferred to [Lyft] by the 6 derivative suit. The court must thus first determine the total benefit that [Lyft] received from the 7 derivative suit and then determine, from that benefit, a reasonable attorney fee award for 8 derivative counsel.” In re Oracle Sec. Litig., 852 F. Supp. at 1446. 9 B. Discussion 10 i. Benefits to Lyft 11 The Court first addresses the degree to which the Settlement Agreement “confers a 12 substantial corporate benefit.” In re Oracle Sec. Litig., 852 F. Supp. at 1445. As a preliminary 13 matter, it is important to reiterate that the Settlement Agreement does not provide any monetary 14 compensation to Lyft or its shareholders. Instead, the Settlement Agreement requires Lyft to 15 adopt certain corporate governance reforms and keep those reforms—and other reforms—in place 16 for a three-year period. In attempting to “valu[e] these policy changes for the purpose of 17 determining the total benefit conferred on the corporation,” there often “is a serious causation 18 problem in any attempt to attribute the policy changes to the derivative suit.” In re Oracle Sec. 19 Litig., 852 F. Supp. at 1446. Here, Lyft had already implemented many of the specified reforms 20 before entering the Settlement Agreement (and in one instance implemented the reform before this 21 lawsuit was even filed). Dkt. No. 60-24; In re Pinterest Derivative Litig., 2022 WL 2079712, at 22 *3 (“[T]he Court is concerned that this settlement could prove to be mainly cosmetic. No 23 defendant will pay money to the corporation. Instead, certain corporate reforms are to be 24 undertaken but a fair number of the reforms were already in place as a result of the corporation’s 25 own actions addressing the problem.”). Because the Settlement Agreement fixes these reforms in 26

27 4 Lyft implemented the new “Clawback Policy” in October 2023, amended its Code of Business 1 place for a three-year period, the reforms may well engender some lasting trust in Lyft’s safety 2 and corporate governance, yielding financial benefits for Lyft. See In re Apple Computer, Inc. 3 Derivative Litig., No. C 06-4128 JF (HRL), 2008 WL 4820784, at *2 (N.D. Cal. Nov. 5, 2008) 4 (“At the very least, potential buyers of Apple stock likely will view such reforms as an additional 5 reason to purchase the stock.”). 6 In short, here it is difficult to establish the concrete value of the “identifiable benefit that 7 may have been conferred by the derivative action,” and “counsel have not provided the Court with 8 a methodology for quantifying the precise benefits that were conferred.” In re Oracle Sec. Litig., 9 852 F. Supp. at 1448; In re Wells Fargo & Co. S’holder Derivative Litig., 445 F. Supp. 3d at 523. 10 The relevant question “is not whether the reforms are valuable, but whether the benefits are 11 quantifiable and clearly attributable to [counsels’] efforts.” In re Wells Fargo & Co. S'holder 12 Derivative Litig., 445 F. Supp. 3d at 523. As set forth above, the precise value of these reforms is 13 difficult to determine. But having found the settlement fair, adequate, and reasonable, the Court 14 proceeds on the assumption that they have at least some value to the company and its 15 shareholders. 16 ii. The Risks and Burdens Facing Class Counsel 17 Counsel faced significant risks in this matter, both because “derivative lawsuits are rarely 18 successful” by their nature and because counsel undertook this matter on a contingency fee basis. 19 In re Pac. Enterprises Sec. Litig., 47 F.3d 373, 378 (9th Cir. 1995). See In re Wells Fargo & Co. 20 S’holder Derivative Litig., 445 F. Supp. 3d at 523 (“The risk that [counsel] took in litigation on a 21 contingency basis—a risk they have borne for more than three years – also weighs in favor of a 22 substantial attorney’s fee award.”). Plaintiffs acknowledge that they faced a “substantial risk that 23 they would have been unsuccessful in defeating Defendants’ pre-trial motions.” Mot. at 19. By 24 Plaintiffs’ own admission, they would have faced multiple hurdles in further litigation, including 25 establishing demand futility, overcoming the business judgment rule, and proving damages. See 26 Mot. at 19–20. Accordingly, the Court finds that this factor weighs in favor of a substantial 27 attorneys’ fee award. 1 iii. Comparable Cases 2 Plaintiffs identify several cases with significant attorneys’ fee awards in other governance 3 reform derivative actions. Mot. at 27; see Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1050 (9th 4 Cir. 2002) (“[I]n most cases it may be . . . appropriate to examine lawyers’ reasonable 5 expectations, which are based on the circumstances of the case and the range of fee awards out of 6 common funds of comparable size.”). The Court has reviewed these cases but notes that each case 7 appears to involve a settlement agreement that both instituted and maintained multiple governance 8 reforms. While the Settlement Agreement at issue here does implement a few minor reforms, the 9 bulk of the Agreement’s benefit is found in its maintenance provisions, which ensure that the 10 reforms will stay in place for at least three years.5 On this front, the Settlement Agreement is not 11 as substantial as agreements approved in other reform-based derivative actions. 12 iv. Fee Award 13 In general, district courts have discretion over the amount of attorneys’ fees to award. See 14 Gates v. Deukmejian, 987 F.2d 1392, 1398 (9th Cir. 1992) (“The district court has a great deal of 15 discretion in determining the reasonableness of the fee . . .”); Morales v. City of San Rafael, 96 16 F.3d 359, 368 (9th Cir. 1996), opinion amended on denial of reh’g, 108 F.3d 981 (9th Cir. 1997) 17 (“It is firmly established that the district court has discretion over how much to award for 18 attorney’s fees . . .”).6 For several reasons, the Court finds that $700,000 is an unreasonable 19

20 5 The Settlement Agreement institutes three reforms: (1) it requires Lyft to post a link to its Compliance and Ethics Hotline on the Lyft website within 90 days of final approval, (2) it adds a 21 new standing member to the Lyft Culture of Ethics and Compliance Committee, and (3) it requires Lyft to make one additional post on its blog regarding in-app safety features available to riders and 22 drivers. Dkt. No. 60-2. The other reforms presented in the Settlement Agreement, including the enhanced Clawback Policy, improved safety feature awareness, amended Code of Business 23 Conduct and Ethics, amended Compensation Committee Charter, and amended Corporate Governance Guidelines, predate the Settlement Agreement. Id. 24 6 Citing district court cases that are more than ten years old, Plaintiffs suggest that the Court should apply some sort of relaxed scrutiny to the attorneys’ fee request because it is unopposed. 25 See Mot. at 25. That suggestion is inconsistent with current Ninth Circuit authority establishing that where parties negotiate an attorneys’ fees amount as part of a settlement, the district court 26 “has a heightened duty to . . . scrutinize closely the relationship between attorneys’ fees and benefit to the class, being careful to avoid awarding ‘unreasonably high’ fees simply because they 27 are uncontested.” Roes, 1-2 v. SFBSC Mgmt., LLC, 944 F.3d 1035, 1051 (9th Cir. 2019) (internal 1 attorneys’ fee award in this matter. 2 First, there has been relatively little litigation in this case. This action was stayed from 3 February 2021 (two months after it was filed) to January 2024 pending the resolution of the 4 Federal Securities Action. The Federal Securities Action settlement seems to have paved the way 5 for this Settlement Agreement, and this Agreement did not involve monetary negotiations or 6 payments. Second, the Court has reviewed the billing records that counsel submitted and has 7 found numerous examples of unreasonable billing. See Hensley v. Eckerhart, 461 U.S. 424, 434 8 (1983) (“The district court also should exclude from this initial fee calculation hours that were not 9 ‘reasonably expended.’”). A partner at one firm, for instance, billed over thirty hours (including 10 nine hours in a single day) for “editing the complaint.” At least two other attorneys were also 11 involved in editing the complaint, for multiple hours. And these edits came after an attorney at the 12 same firm spent over thirty-five hours “drafting the complaint.” An attorney at one firm billed 13 five hours to “cite check motion for preliminary approval” on the same days that an attorney at 14 another firm billed multiple hours drafting the same document. Another partner billed over thirty 15 hours for work on the “final approval papers,” but Plaintiffs’ motion for final approval largely 16 resembled their motion for preliminary approval. And attorneys at two firms billed substantial 17 time on drafting these same final approval papers.7 18 The Supreme Court instructs that “[c]ounsel for the prevailing party should make a good 19 faith effort to exclude from a fee request hours that are excessive, redundant, or otherwise 20 unnecessary.” Id. Here, no such effort is apparent, and the Court is convinced that no paying 21 client would uncritically accept these bills given the apparent instances of excessive billing for 22 overlapping work. Nor do these billing records suggest that counsel exercised “billing judgment.” 23 See Hensley, 461 U.S. at 434 (“In the private sector, ‘billing judgment’ is an important component 24 in fee setting . . . . Hours that are not properly billed to one’s client also are not properly billed to 25 one’s adversary . . .” (emphasis in original)). The consequence of these issues is that counsel’s 26 7 The Court directs Plaintiffs’ counsel to file under seal the exact billing records that were 27 submitted for in camera review via email to HSGpo@cand.uscourts.gov on February 14, 2025, so 1 claimed lodestar, and thus the overall fee amount, is substantially inflated. Accordingly, the Court 2 will apply a downward adjustment of just under 15 percent and award $600,000 in attorneys’ fees. 3 See Gates, 987 F.2d at 1399 (“[T]he district court has the authority to make across-the-board 4 percentage cuts . . . ‘as a practical means of trimming the fat from a fee application’” (internal 5 citation omitted)); Rosenfeld v. U.S. Dep’t of Just., 903 F. Supp. 2d 859, 876 (N.D. Cal. 2012) 6 (“Having failed to demonstrate and document in the record that he exercised appropriate billing 7 judgment to eliminate inefficiencies, and coupled with the lack of billing detail contained in 8 certain documents, the Court will adjust Plaintiff’s final fee award downward by ten percent to 9 compensate for these shortcomings.”). The Court notes that even this reduction is conservative 10 under the circumstances, given the difficulty of cross-comparing the work being done mostly by 11 large teams at two separate firms on often overlapping substantive projects. 12 IV. SERVICE AWARD 13 Plaintiffs ask the Court to award three $1,500 service award payments, which will be 14 drawn from the attorneys’ fee award. “Derivative plaintiffs may . . . merit compensation for work 15 done on behalf of the [shareholders].” In re Wells Fargo & Co. Sharehold Derivative Litig., 2019 16 WL 13020734, at *8 (internal citation and quotations omitted). $1,500 is below what some courts 17 have considered “the presumptively reasonable amount of $5,000 for such awards.” Accordingly, 18 the Court concludes that the requested service awards are reasonable and grants the awards. 19 // 20 // 21 // 22 // 23 // 24 // 25 // 26 // 27 // V. CONCLUSION Plaintiffs’ motion for final approval of the derivative settlement is granted, Dkt. No. 68. 2 The Court awards attorneys’ fees in the amount of $600,000 and litigation costs in the amount of 3 $7,453.67. The Court approves payment of three $1,500 service awards to the three named 4 plaintiffs. The parties are directed to implement this Order and the Settlement Agreement in 5 accordance with the terms of the Settlement Agreement. The Clerk is directed to enter judgment 6 consistent with this order and close the file. 7 IT IS SO ORDERED. 8 Dated: 3/28/2025

10 Havwoks S. GILLIAM, JR. □ United States District Judge

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