NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS AUG 18 2025 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
ELJON LAKO, individually and on behalf No. 24-3932 of all others similarly situated, D.C. No. 8:21-cv-01449-JLS-JDE Plaintiff - Appellant,
and MEMORANDUM*
ARTHUR GARY LAFRANO; ADAM DOBAN,
Plaintiffs - Appellees,
v.
LOANDEPOT, INC.; ANTHONY HSIEH; PATRICK FLANAGAN; NICOLE CARRILLO; ANDREW C. DODSON; JOHN C. DORMAN; BRIAN P. GOLSON; DAWN LEPORE; GOLDMAN SACHS & CO. LLC; BOFA SECURITIES, INC.; CREDIT SUISSE SECURITIES (USA) LLC; MORGAN STANLEY SMITH BARNEY, LLC; BARCLAYS CAPITAL, INC.; CITIGROUP GLOBAL MARKETS, INC.; JEFFERIES LLC; UBS SECURITIES LLC; WILLIAM BLAIR & COMPANY, L.L.C.; JMP SECURITIES, LLC; PIPER SANDLER & CO.; RAYMOND JAMES & ASSOCIATES,
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. INC.; NOMURA SECURITIES INTERNATIONAL, INC.; AMERIVET SECURITIES, INC.,
Defendants - Appellees.
Appeal from the United States District Court for the Central District of California Josephine L. Staton, District Judge, Presiding
Argued and Submitted August 11, 2025 Pasadena, California
Before: NGUYEN, FORREST, and VANDYKE, Circuit Judges.
Eljon Lako appeals the district court’s final approval of a precertification
class action settlement involving claims under Sections 11 and 15 of the Securities
Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.
He claims the district court overlooked various signs of collusion and defects in the
class action notice. We have jurisdiction pursuant to 28 U.S.C. § 1291 and affirm.
“We review a district court’s decision to approve a class action settlement
for clear abuse of discretion.” In re Apple Inc. Device Performance Litig., 50 F.4th
769, 778 (9th Cir. 2022). “Under this ‘extremely limited’ review, we will affirm if
the district judge applies the proper legal standard and makes findings of fact that
are not clearly erroneous.” Id. (quoting In re Bluetooth Headset Prods.
Liab. Litig., 654 F.3d 935, 940 (9th Cir. 2011)). “Where, however, the parties
negotiate a settlement agreement before the class has been certified, settlement
2 24-3932 approval requires a higher standard of fairness and a more probing inquiry than
may normally be required under Rule 23(e).” Roes v. SFBSC Mgmt., LLC, 944
F.3d 1035, 1048 (9th Cir. 2019) (cleaned up).
In addition, we “review the district court’s decision to award attorney’s fees
and costs to class counsel, as well as the method of calculation, for abuse of
discretion.” See In re Apple, 50 F.4th at 778. Meanwhile, we review legal
questions, such as whether notice of a proposed settlement satisfies due process, de
novo. Id.
1. Lako claims that the notice was inadequate because it omitted or
obfuscated key information about discovery, damages, and the status of certain
class representatives. At the outset, these claims were never raised before the
district court and are thus forfeited. See, e.g., G & G Prods. LLC v. Rusic, 902
F.3d 940, 950 (9th Cir. 2018). And any potentially preserved claim lacks merit
because the notice “generally describe[d] the terms of the settlement in sufficient
detail to alert those with adverse viewpoints to investigate and to come forward
and be heard,” thereby satisfying due process and the Private Securities Litigation
Reform Act, 15 U.S.C. § 78u-4(a)(7). See Lane v. Facebook, Inc., 696 F.3d 811,
826 (9th Cir. 2012).
2. The district court did not abuse its discretion in approving the settlement.
A district court reviewing a precertification settlement must explore
3 24-3932 “comprehensively all factors,” give “a reasoned response to all non-frivolous
objections,” develop “the record to support its final approval decision,” and
scrutinize “any subtle signs” of collusion that “infect the negotiations.” Roes, 944
F.3d at 1043 (cleaned up).
Contrary to Lako’s contentions, the district court applied Bluetooth and
surgically addressed all his objections. It found no “explicit or subtle” signs of
collusion. Cf. In re Cal. Pizza Kitchen Data Breach Litig., 129 F.4th 667, 677 (9th
Cir. 2025) (affirming approval even though Bluetooth red flags were present—
unlike here—in light of district court’s “hard look” at parties’ claims). It also
credited the role of a neutral mediator, informal discovery, and the “miniscule
number of exclusions and a single objection” as factors weighing toward fairness.
See, e.g., In re Bluetooth, 654 F.3d at 948; In re Mego Fin. Corp. Secs. Litig., 213
F.3d 454, 459 (9th Cir. 2000).
Additionally, the district court met its “independent obligation to ensure that
the award” of attorneys’ fees “is reasonable.” See In re Bluetooth, 654 F.3d at 941.
It rejected class counsel’s request for a 28% fee, finding no justification for an
upward departure from the benchmark 25%. The district court conducted a
“lodestar cross-check,” too. See id. at 944–45. Its award of $875,000 in fees was
therefore supported by “explicit calculations” and considerations of, “inter alia, the
degree of success in the litigation and benefit to the class,” and whether the
4 24-3932 “calculations yield[ed] an unjustifiably disproportionate award.” Id.; see also In
re Cal. Pizza Kitchen, 129 F.4th at 678–79 (vacating attorneys’ fees of “around
45% of the settlement value” in light of court’s inadequate explanation); Lowery v.
Rhapsody Int’l, Inc., 75 F.4th 985, 991 (9th Cir. 2023) (rejecting award that was
“more than thirty times larger than the amount paid to class members”).
After sua sponte providing Lako “an opportunity to review and respond to
[Plaintiffs’] expert [calculations],” the district court also ensured that the common
fund settlement amount was not, as Lako claims, “too low.” It found that the “$3.5
million settlement represents 11% of what [the Expert] Nye estimated the
maximum recoverable damages to be—and a far greater percentage of Nye’s more
conservative estimate.” It also credited Plaintiffs’ evidence that “the median
recovery in similar securities class action settlements was 8.5% of the maximum
estimated recovery.”
The district court then rejected Lako’s arguments that the “expert’s
secondary calculation report should have included the May 3, 2021 corrective
disclosure because there was a statistically significant decline in share price on
May 7, 2021.” Consistent with the premise that “a security is actively traded in an
‘efficient market,’ in which prices immediately reflect all publicly available
information,” Miller v. Thane Int’l, 615 F.3d 1095, 1103 (9th Cir. 2010), the
second report, as the district court held, focused only on disclosures with a
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NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS AUG 18 2025 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
ELJON LAKO, individually and on behalf No. 24-3932 of all others similarly situated, D.C. No. 8:21-cv-01449-JLS-JDE Plaintiff - Appellant,
and MEMORANDUM*
ARTHUR GARY LAFRANO; ADAM DOBAN,
Plaintiffs - Appellees,
v.
LOANDEPOT, INC.; ANTHONY HSIEH; PATRICK FLANAGAN; NICOLE CARRILLO; ANDREW C. DODSON; JOHN C. DORMAN; BRIAN P. GOLSON; DAWN LEPORE; GOLDMAN SACHS & CO. LLC; BOFA SECURITIES, INC.; CREDIT SUISSE SECURITIES (USA) LLC; MORGAN STANLEY SMITH BARNEY, LLC; BARCLAYS CAPITAL, INC.; CITIGROUP GLOBAL MARKETS, INC.; JEFFERIES LLC; UBS SECURITIES LLC; WILLIAM BLAIR & COMPANY, L.L.C.; JMP SECURITIES, LLC; PIPER SANDLER & CO.; RAYMOND JAMES & ASSOCIATES,
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. INC.; NOMURA SECURITIES INTERNATIONAL, INC.; AMERIVET SECURITIES, INC.,
Defendants - Appellees.
Appeal from the United States District Court for the Central District of California Josephine L. Staton, District Judge, Presiding
Argued and Submitted August 11, 2025 Pasadena, California
Before: NGUYEN, FORREST, and VANDYKE, Circuit Judges.
Eljon Lako appeals the district court’s final approval of a precertification
class action settlement involving claims under Sections 11 and 15 of the Securities
Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.
He claims the district court overlooked various signs of collusion and defects in the
class action notice. We have jurisdiction pursuant to 28 U.S.C. § 1291 and affirm.
“We review a district court’s decision to approve a class action settlement
for clear abuse of discretion.” In re Apple Inc. Device Performance Litig., 50 F.4th
769, 778 (9th Cir. 2022). “Under this ‘extremely limited’ review, we will affirm if
the district judge applies the proper legal standard and makes findings of fact that
are not clearly erroneous.” Id. (quoting In re Bluetooth Headset Prods.
Liab. Litig., 654 F.3d 935, 940 (9th Cir. 2011)). “Where, however, the parties
negotiate a settlement agreement before the class has been certified, settlement
2 24-3932 approval requires a higher standard of fairness and a more probing inquiry than
may normally be required under Rule 23(e).” Roes v. SFBSC Mgmt., LLC, 944
F.3d 1035, 1048 (9th Cir. 2019) (cleaned up).
In addition, we “review the district court’s decision to award attorney’s fees
and costs to class counsel, as well as the method of calculation, for abuse of
discretion.” See In re Apple, 50 F.4th at 778. Meanwhile, we review legal
questions, such as whether notice of a proposed settlement satisfies due process, de
novo. Id.
1. Lako claims that the notice was inadequate because it omitted or
obfuscated key information about discovery, damages, and the status of certain
class representatives. At the outset, these claims were never raised before the
district court and are thus forfeited. See, e.g., G & G Prods. LLC v. Rusic, 902
F.3d 940, 950 (9th Cir. 2018). And any potentially preserved claim lacks merit
because the notice “generally describe[d] the terms of the settlement in sufficient
detail to alert those with adverse viewpoints to investigate and to come forward
and be heard,” thereby satisfying due process and the Private Securities Litigation
Reform Act, 15 U.S.C. § 78u-4(a)(7). See Lane v. Facebook, Inc., 696 F.3d 811,
826 (9th Cir. 2012).
2. The district court did not abuse its discretion in approving the settlement.
A district court reviewing a precertification settlement must explore
3 24-3932 “comprehensively all factors,” give “a reasoned response to all non-frivolous
objections,” develop “the record to support its final approval decision,” and
scrutinize “any subtle signs” of collusion that “infect the negotiations.” Roes, 944
F.3d at 1043 (cleaned up).
Contrary to Lako’s contentions, the district court applied Bluetooth and
surgically addressed all his objections. It found no “explicit or subtle” signs of
collusion. Cf. In re Cal. Pizza Kitchen Data Breach Litig., 129 F.4th 667, 677 (9th
Cir. 2025) (affirming approval even though Bluetooth red flags were present—
unlike here—in light of district court’s “hard look” at parties’ claims). It also
credited the role of a neutral mediator, informal discovery, and the “miniscule
number of exclusions and a single objection” as factors weighing toward fairness.
See, e.g., In re Bluetooth, 654 F.3d at 948; In re Mego Fin. Corp. Secs. Litig., 213
F.3d 454, 459 (9th Cir. 2000).
Additionally, the district court met its “independent obligation to ensure that
the award” of attorneys’ fees “is reasonable.” See In re Bluetooth, 654 F.3d at 941.
It rejected class counsel’s request for a 28% fee, finding no justification for an
upward departure from the benchmark 25%. The district court conducted a
“lodestar cross-check,” too. See id. at 944–45. Its award of $875,000 in fees was
therefore supported by “explicit calculations” and considerations of, “inter alia, the
degree of success in the litigation and benefit to the class,” and whether the
4 24-3932 “calculations yield[ed] an unjustifiably disproportionate award.” Id.; see also In
re Cal. Pizza Kitchen, 129 F.4th at 678–79 (vacating attorneys’ fees of “around
45% of the settlement value” in light of court’s inadequate explanation); Lowery v.
Rhapsody Int’l, Inc., 75 F.4th 985, 991 (9th Cir. 2023) (rejecting award that was
“more than thirty times larger than the amount paid to class members”).
After sua sponte providing Lako “an opportunity to review and respond to
[Plaintiffs’] expert [calculations],” the district court also ensured that the common
fund settlement amount was not, as Lako claims, “too low.” It found that the “$3.5
million settlement represents 11% of what [the Expert] Nye estimated the
maximum recoverable damages to be—and a far greater percentage of Nye’s more
conservative estimate.” It also credited Plaintiffs’ evidence that “the median
recovery in similar securities class action settlements was 8.5% of the maximum
estimated recovery.”
The district court then rejected Lako’s arguments that the “expert’s
secondary calculation report should have included the May 3, 2021 corrective
disclosure because there was a statistically significant decline in share price on
May 7, 2021.” Consistent with the premise that “a security is actively traded in an
‘efficient market,’ in which prices immediately reflect all publicly available
information,” Miller v. Thane Int’l, 615 F.3d 1095, 1103 (9th Cir. 2010), the
second report, as the district court held, focused only on disclosures with a
5 24-3932 statistically significant effect on the first impact date following disclosure, and the
May 7th decline was preceded by four statistically insignificant decreases.
Nor were the calculations otherwise improper. First, they did not
erroneously limit Section 11 damages to “the period of time preceding the release
of a second batch of shares after the IPO’s lockup period ended.” As the district
court noted, “Lako himself concedes” that traceability issues arise when there is a
“release of additional shares into the market due to the expiration of an IPO lock-
up.” See also Slack Technologies, LLC v. Pirani, 598 U.S. 759, 770 (2023).
Second, the calculations reasonably excluded certain months from the Section 11
damages period that overlapped with the Section 10(b) period since “damages for
shares purchased during the period in question are higher under Section 10(b) than
under Section 11.” And lastly, the district court properly rejected Lako’s claims
based on the Cornerstone Research, which does not apply to cases involving both
sections 10(b) and 11 claims, as here.
3. The allocation plan was fair. See Class Plaintiffs v. City of Seattle, 955
F.2d 1268, 1284–85 (9th Cir. 1992). Lako raises several arguments alleging
inconsistencies between the plan and the damages calculations. But as the district
court held, there was a “reasonable basis for each challenged aspect.” For
example, because Section 11 damages were higher and easier to prove since they
do not require scienter, the Plan reasonably assigned more inflation to shares
6 24-3932 bought right after the IPO. In addition, Lako’s qualms about disparate “per-share
price inflation figures” mistakenly relied on Plaintiffs’ secondary, more
conservative damages estimate. The final common fund value of $3.5 million,
meanwhile, was based on Plaintiffs’ primary estimate of $32 million. That value
therefore accurately reflected around 11% of the primary damages estimate.
4. Lako’s remaining arguments—including about the $5,000 service award
to Plaintiff Doban, Doban’s alleged in-and-out trader status, price maintenance
theory under Comcast Corp. v. Behrend, 569 U.S. 27 (2013), and absent class
member declarations—have little merit and, critically, were never raised before the
district court. “Absent exceptional circumstances, we generally will not consider
arguments raised for the first time on appeal.” In re Am. W. Airlines, Inc., 217
F.3d 1161, 1165 (9th Cir. 2000); see also Alaska Airlines, Inc. v. United Airlines,
Inc., 948 F.2d 536, 546, n.15 (9th Cir. 1991) (“It is well established that an
appellate court will not reverse a district court on the basis of a theory that was not
raised below.”). No such circumstance is present here.
AFFIRMED.
7 24-3932