In Re Sears, Roebuck by pgx86857


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                         UNITED STATES DISTRICT COURT
                         NORTHERN DISTRICT OF ILLINOIS
                               EASTERN DIVISIO N

IN RE SEARS, ROEBUCK AND CO . Case No . 02C 07527
SECURITIES LITIGATION             Judge Elaine E. Buckl o

                    REIMBURSEMENT OF EXPENSE S

      I, C . JUDSON HA,MLIN, declare as follows :

        1 . I was appointed by Lead Plaintiff, the Department of the Treasury of the Stat e

 of New Jersey and its Division of Investment ("New Jersey") as Special Master/Coordinator

 for Pension Fund Litigation . New Jersey is the Court-appointed lead plaintiff ("Lead

 Plaintiff') in the above-captioned consolidated securities class action (the "Action") . I am a

 retired Judge of the Superior Court of the State of New Jersey . I have been closely involved in

 monitoring and supervising the conduct of the Action . I submit this declaration in support of

 the Lead Plaintiffs application for (a) approval of the proposed settlement of this Action (the

 "Settlement") ; (b) approval of the proposed plan of allocation (the "Plan of Allocation°') ; and

 (c) an award of attorneys' fees and reimbursement of litigation expenses . I have personal

 knowledge of matters related to the Lead Plaintiff, and of the other matters set forth in this

 declaration, having been directly involved in the commencement of the Action and throughout

 its prosecution, mediation and Settlement, and I could and would testify competently thereto .

Lead Plaintiff New Jersey

         2. As of rune 30, 2005, Lead Plaintiff had approximately $80 billion under

 management. Among the funds that the Division of Investment manages is Common Pension

 Fund D, which was created for the purpose of investing the assets of various state pension

 plans in international common stock and fixed income securities . As of June 30, 2005,

 Common Pension Fund D had assets of approximately $13 .7 billion, and supports the pension

 obligations to many of the over 700,000 current and retired New Jersey public employees . The

  following state pension plans are participants in Common Pension Fund D : Judicial Retirement

  System, Police and Fireman's Retirement System, Public Employees' Retirement System,

  State Police Retirement System and Teachers' Pension and Annuity Fund . The Division of

  Investment made a significant investment in Sears' common stock, purchasing over 600,000

  shares of Sears common stock during the Class Period . New Jersey lost millions as a result of

  Sears' violations of the federal securities laws .

         3 . I and multiple New Jersey State officers worked closely with the count-

  appointed lead counsel in this Action, Milberg Weiss Bershad & Schulman LLP ("Lead

  Counsel"), and their professionals . New Jersey was highly involved in evaluating whether to

  pursue appointment as lead plaintiff and, thereafter, in prosecuting, mediating and ultimately

  settling the Action . New Jersey corresponded on a regular, sometimes daily or even more

  frequent basis with Lead Counsel, either through me as the Division of Investment's Special

  Master/Coordinator for Pension Fund Litigation, retained by the New Jersey Attorney General

  to oversee and supervise the -prosecution of such cases, or Victoria Manning and others of the

  Office of the Attorney General of the State of New Jersey . New Jersey diligently participated

  in all aspects of the Action and carefully supervised the work of its outside counsel ,

scrutinizing and approving work product and counsel's periodic reports of lodestar and

litigation expenses.

        4 . New Jersey has successfully applied over the last several years to be appointed

 lead plaintiff in such cases as In re Electronic Data Systems Securities Litigation, In re Nortel

Networks Securities Litigation, In re Tenet Healthcare Securities Litigation, In re Motorola

 Securities Litigation, In re Sprint Corp . Securities Litigation and In re Marsh & McLennan

 Securities Litigation . In advance of deciding to pursue lead plaintiff status in this Action the

 Division of Investment and I analyzed its trading information for Sears to evaluate and

 consider the numerous factors relevant to that determination, including the size of New

 Jersey's losses sustained on its purchases of Sears common stock during the Class Period and

 Sears's alleged fraudulent conduct and Sears's financial stability .

         5 . After consideration and discussion of these and other factors among the

 Division of Investment, then headed up by Peter Langerman, Esq ., the Office of the Attorney

 General, State Treasurer John McCormak, and myself, New Jersey decided to pursue

 appointment as a lead plaintiff for purposes of prosecuting the Action against Sears on behalf

 of the Class.

Lead Plaintiff Extensively Participated
in the Pro secution and Settlement of the Actio n

          6 . New Jersey was appointed lead plaintiffs by Order dated April 14, 2003 . All

 pleadings were reviewed by me and the staff of the Attorney General . We monitored outside

  counsel's activities and obtained periodic reports detailing staff assigned, costs incurred,

  actions taken and the status of the litigation .

     Prosecution of the Actio n

       7 . The overriding goal of New Jersey has been and continues to be to obtain the

maximum recovery possible for the benefit of the Class at the lowest reasonable cost, tempered

by careful analysis of the risks involved in the Action . Accordingly, the Attorney General's

Office and the Division of Investment have closely supervised, carefully monitored and have

been actively involved in all aspects of the prosecution of the Action, devoting in that regard

hundreds of hours to the Action . Lead Plaintiff has continuously received periodic status

reports from Milberg Weiss on case developments, and has participated in regular discussions

with Counsel concerning the conduct of the Action . In particular the Lead Plaintiff through its

representatives has, among other things :

               (a) reviewed and substantively commented on (i) our first amended

complaint, (ii) the briefs submitted in opposition to the motions to dismiss the first amended

complaint, (iv) our class certification motion and supporting papers, (v) certain significant

correspondence with the Court, and (vi) our confidential mediation statement ;

               (b) actively participated in all aspects of discovery, including (i) consulting

with Lead Counsel concerning the content of a confidentiality order ; (ii) consultation with

Lead Counsel concerning a motion for default judgment and other sanctions based upon the

defendants apparent spoliation of evidence ; (iii) consultation with Lead Counsel concerning a

motion to compel discovery relating to the terms of settlement of a wrongful termination

lawsuit brought by defendant Kevin Keleghan against Sears ; (iv) consultation with Lead

Counsel concerning the content of a motion for a protective order to prevent defendants from

conducting numerous and repetitive depositions of the Lead Plaintiff; (v) authorizing Lead

Counsel to utilize the services of a select number of other firms primarily to assist in the review

of the massive document production from defendants ;

               (c) consulted with Lead Counsel in connection with the retention of credit

card industry experts and damages experts, and carefully reviewed the utility and costs of such

retentions ;

                (d) approved the selection of The Garden City Group, Inc . ("GCG") as

notice administrator after being assured that, because of (i) GCG's reputation and experience

with large complex settlements, including so-called "mega-fund" settlements of securities class

actions ; (ii) GCG's experience with notice publication plans, and the experience of GCG's in-

house notice expert ; and (iii) GCG's experience in establishing and maintaining settlement

websites and handling large volumes of telephone inquiries ;

      Mediation and Settlement of the Action

         8 . New Jersey, through myself and the Office of the Attorney General of Ne w

Jersey, through Deputy Attorney General Victoria Manning and others, were intimately

involved in overseeing, and later, participating in the lengthy negotiations that led to the

Settlement. Lead Counsel kept us apprised of all offers and responses made during the

protracted settlement negotiations .

         9. In connection with the negotiations that ultimately led to the Settlement, Lea d

Plaintiff participated, in person and by telephone, in numerous conferences with counsel,

approved all substantive correspondence relating to settlement discussions, and had numerous

communications with Lead Counsel concerning their negotiation sessions . Ju particular, I

personally attended the negotiating sessions, the mediation sessions conducted by Judge

Politan, and was regularly and frequently briefed about, and participated in, discussions

concerning our negotiating strategy, including the following mediation and settlement matters :

                (a) Using Judge Politan as a mediator in the Action ;

                (b) In order to fairly assess and respond to settlement proposals, Lead

 Counsel briefed us on, and we evaluated, the maximum recoverable damages determined by

 our damages expert, Stanford Consulting Group, as well as the positions on damages that the

 defendants were likely to take ;

                (c) We consulted with Lead Counsel and were advised of their evaluations

 of the various sets of insurance policies that were implicated, including issues related to

 coverage limitations ; and

                (d) We discussed with Lead Counsel the specific elements of each offer and

 counteroffer made and received, and evaluated the merits of those proposals, as well as the

 recommendations made by Judge Politan, and determined what offers and counteroffers were

 to be made to Sears.

         10 . As the Settlement and Settlement's documentation were negotiated, I and other s

 from the Attorney General's Office also reviewed, conferred with Lead Counsel and approved

 the Stipulation of Settlement, and the forms of Judgment and other Orders submitted to the

 Court in connection with the Settlement . We have further reviewed and commented upon the

 bri efs and other documents that arc presently being submitted in support of (a) final approval

 of the Settlement and approval of Lead Plaintiffs proposed Plan of Allocation ; and (b)

 approval of Lead Counsel's application for an award of attorneys' fees and reimbursement of

 litigation expenses.

Lead Plaintiff St rongly Endorses the Settlement,
the Plan of Allocation and Counsel 's Application for
Awards of Attorneys' Fees and Reimbursement of Litigation Expens e

         11 . Based on our intimate involvement throughout the prosecution of this Action

 and the mediation of this Action, we strongly endorse the Settlement, and believe it provides an

 excellent recovery for the Class, especially when measured against the maximum amount o f

recoverable damages . For the same reasons , we also strongly endorse the proposed Plan of.

Allocation, and believe that it represents a fair and reasonable method for valuing claims

submitted by Class Members, and for distributing the Net Settlement Funds to Class member s

who submit valid and timely proof of claim forms .

       12. Consistent with our previous undertakings as lead plaintiff in other securitie s

class actions, we conducted arm's-length negotiations concerning a retainer agreement (th e

"Retainer Agreement") in order to establish early in the litigation the attorneys' fees tha t

Counsel could request based upon the recovery obtained for the Class. In doing so, we

carefully considered agreements reached by other institutional investors in so-called "mega-

fund" securities class action cases, and the circumstances specific to this Action and relied

upon our past experiences as lead plaintiffs and class members in securities class actions . The

attorneys ' fee grid that we agreed upon, which was designed such that percentages woul d

decrease as the recovery increased (i.e., utilizing a decreasing percentage method ), but would

increase for recoveries achieved in later stages of the litigation (thereby not penalizing Counse l

for incurring additional time and expenses in the case), is as follows:

STAGE OF LITIGATION AT WHIC H                                                      FEE
                                            AMOUNT OF RECOVERY
    RECOVER IS OBTAINED                              -                         PERCENTAGE

COMMENCEMENT OF ACTION,                     $0 - $100, 000,000                        16 %
UP UNTIL COMMENCEMENT OF                    $100,000,001 - $200,000,000               14%
TRIAL                                       Greater than $200,000 ,000                12 %

                                            $0 - $ 100,000,000                       20%
                                            $100,000,001 - $200,000,000              18 %
                                            Greater than $200,000,000                 16%

          13 . On the basis of all these factors, we believed that the fee grid constituted a strict,

but fair, method of compensating Counsel for their efforts in this case, and that a -fee

application in the amount determined by the fee structure set forth in the Retainer Agreement

would represent a fair and reasonable payment to Counsel . After the Lead Plaintiff reached an

agreement in principle with defendants, the Division of Investment and the Office of the

Attorney General, consistent with their obligations to the Class to obtain the best result at the

most efficient cost, re-evaluated the fee permitted under the terms of the Retainer Agreement .

We evaluated that fee by comparing it to Counsel's lodestar, and by considering the

outstanding result obtained for the Class and the fees and results obtained in other "mega-fund"

cases .

          14 . As the attorneys' fee application was being prepared, New Jersey evaluated th e

proposed fee, as was disclosed in the Notice, and considered it, as we did previously, in light of

the outstanding results obtained for the Class, the amount of time (as measured by Counsel's

lodestar) expended, and our experience in other class actions and the results and fees applied

for and awarded in other substantial securities class actions .

          15 . We further believe, after reviewing the expenses incurred by Lead Counsel and

the other firms, that the litigation expenses being requested for reimbursement are reasonable,

 and represent costs and expenses necessary for the prosecution and resolution of this massive

 securities fraud action. As a result, Lead Plaintiff has approved the request for reimbursement

 of expenses submitted by Counsel .

          16-     Lead Plaintiff understands that reimbursement of a lead plaintiffs reasonable

 costs and expenses, including lost wages, is authorized under the PSLRA_ For this reason, in

 connection with the fee and expense application, we determined the un-reimbursed costs an d

 expenses that Lead Plaintiff New Jersey has incurred in connection with the litigation . Such

 costs and expenses include the wage costs for New Jersey's employees for the time they

 expended on this litigation, and un-reimbursed travel, meal and other costs incurred relating to

 this litigation . Lead Plaintiffs un-reimbursed costs and expenses total $28,182 .31,1 and we

 request reimbursement of such amount from the Settlement Fund

         17 . In conclusion, as the authorized representative of the Lead Plaintiff who wa s

 intimately involved throughout the commencement, prosecution mediation and Settlement of

 this Action, I (a) strongly support the Settlement obtained for the Class as fair, reasonable and

 adequate, and believe that it represents an outstanding recovery ; (b) strongly endorse the Plan

 of Allocation, and believe that it provides a fair and reasonable method for valuing claims

 submitted by Class Members and for distributing the Net Settlement Funds ; and (c) strongly

 endorse and approve the attorneys' fee and litigation expense reimbursement application, and

 believe that it represents fair and reasonable compensation for the Lead Counsel and the othe r

       This includes time spent by the following personnel :
       NAME                                         Hours                  Charge
Attorney General's Office
       Brown, Donette                               21 .3                  $1,282.33
       Burstein, Jeffrey C .                         2.0                     $301.0 8
       Cornish, Samuel                              22 .2                   $1,826.96
       Duffy, Michael                               20 .0                   $1,816.40
       Jacobson, Carol                              61 .2                  $8,295.40
       Manning, Victoria                            77.0                   $10,054 .61
       Perez, Arlene Quinones                       12.5                      $946.87
Plus Division of Investment
       Maneck Kotwal                                14 .0                     $756.89
       Sarnowsld, Susan                              5.0                      $220.33
Plus anticipated time for Settlement Hearin g
       Jacobson, Carol                               7.5                    $1,016.59
Total wage based cost                                                      $26,517-4 6
Plus un-reimbursed travel expenses incurred                                 $1,466 .25
Plus airfare for 12/8/2006 hearing                                            $198.60
Total Amount to be reimbursed                                              $28,182 .3 1

 firms in light of the outstanding recovery for the Class and the litigation iisks, and that it is

 consistent with the fees app lied for and awarded in other substantial class actions .

 Accordingly, I respectfully request that the Court approve the Settlement, the Plan of

 Allocation and the attorneys' fee and litigation expense reimbursement application .

      I declare , under penalty of perjury, that the foregoing facts are true and correct

Executed at l 0 day of November, 2006

                                                     C.rr                      J.
                                                    Z J~MSON HAMLIN
                                                     p ial Master/Coordinator for Pension
                                                    F Ad Litigation for the Department of the
                                                     reasury of the State of New Jersey and its
                                                    Division of In vestment


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