Read-Rite Corporation Securities Litigation 03-CV-03148-Affidavit Of Matthew M. Houston In

68 Pages·2006·3.41 MB·English

1 SUSAN KUPFER #14172 4
GLANCY BINKOW & GOLDBERG LLP
2 455 Market Street, Suite 1810
San Francisco , California 94105
3 Telephone: [phone]
Facsimile : (415) 972-816 6
4
-and-
5
LIONEL Z. GLANCY #134180
6 GLANCY BINKOW & GOLDBERG LLP
1801 Avenue of the Stars , Suite 31 1
7 Los Angeles, California 90067
Telephone: [phone]
8 Facsimile : [phone]
9 Liaison Counsel for Plaintiffs
[Additional Counsel on Signature Page ]
10
UNITED STATES DISTRICT COURT
11 FOR THE NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION
12
Master File No . 03-03148 RMW
13
In re READ-RITE CORPORATION
SECURITIES LITIGATION CLASS ACTION
14
Hon. Ronald M. Whyte
15
This Document Relates to :
All Actions .
16
17
AFFIDAVIT OF MATTHEW M. HOUSTON IN
SUPPORT OF THE ENTRY OF AN ORDER
18
DIRECTING DISTRIBUTION OF THE NET SETTLEMENT FUN D
19
STATE OF NEW YORK )
20
) ss . :
COUNTY OF NEW YORK )
21
22
MATTHEW M. HOUSTON, being duly s worn, deposes and says :
23
24
25
26
27
28
1 1 . I am a member of the firm of Wechsler Harwood LLP . My firm is lead
2 counsel in the referenced securities class action .
3 2. By Order and Final Judgment dated May 6, 2005, the Court approved the
4 settlement of this action and retained jurisdiction over, among other things, the distribution of the
5 settlement proceeds . I submit this affidavit in support of plaintiffs' application for entry of any order
6 directing that the Net Settlement Fund be distributed to the Class in accordance with the fina l
7 determinations made by the Claims Administrator , Berdon Claims Administration LLC ("BCA"),
8 a wholly owned affiliate of Berdon LLP ("Berdon") .
9 3 . In accordance with the Stipulation of Settlement , the parties created a cash
10 fund of $2,500,000 plus interest ("Settlement Fund" ) to be distributed in the following manner : (1)
11 the amount awarded by the Court for attorneys ' fees and reimbursement of expenses would be paid
12 to plaintiffs ' counsel ; (2) the costs and expenses incurred in the administration of the Settlement
13 Fund would be paid to the Claims Administrator ; and (3) the remainder of the Settlement Fund (the
14 "Net Settlement Fund"), would be distributed to all members of the Class who submi tted valid
15 claims for payment , on a fro rata basis .
16 4. As detailed in the affidavit of Michael Rosenbaum (the "Rosenbaum
17 Affidavit") annexed hereto as Exhibit 1, the Claims Administrator has performed, inter alia, the
18 following services : (i) processing of the Proofs of Claim submitted by Class Members ; (ii)
19 determining the adequacy of the Proofs of Claims and any documentation submitted therewith : (iii)
20 notifying claimants regarding any inadequacies in their Proofs of Claim ; (iv) making final
21 determinations regarding the approval or rejection of deficient claims ; and (v) preparing and filing
22 tax returns on behalf of the Settlement Fund .
23 5 . The process of administering Proofs of Claims is complete upon the direction
24 of the Court, BCA is prepared to distribute the Net Settlement Fund to all class members who hav e
25 submitted valid claims . No claimant has objected to BCA's determination as to the validity o f
26 submitted claims .
27
28 2
1 6. To date, Berdon received no payments for its services and is seeking $69,500 . BCA
2 also has an outstanding balance of $4,953 .12 in out-of-pocket expenses incurred in its claims
3 administration and review . The amount requested, $74,453 .12, includes all fees and expenses
4 through completion of the distributionof the Net Settlement Fund . See Rosenbaum Affidavit at ¶¶
5 10-12. BCA, in addition to the services already provided, will be responsible for the transmittal of
6 the settlement checks and explanatory letters to claimants, preparation of certain Internal Revenue
7 Service tax forms for the Settlement Fund, payment of any withholding taxes required under IRS
8 regulations, reissuing checks that are returned, and tracking claimants whose mail is undeliverable .
9 7. Plaintiffs counsel are not seeking any fees or expenses incurred in connection with
10 the administration of the Settlement Fund .
11 8. Based upon my work with BCA in connection with this action, and my review of th e
12 materials submitted by them concerning the scope and extent of the services performed and to be
13 performed, I believe that the amount sought by BCA for its services is reasonable . Plaintiffs'
14 counsel therefore respectfully request that the Court enter an Order (1) approving the payment to
15 BCA for fees and expenses incurred in the administration of the Settlement in the amount requested,
16 as set forth in the Rosenbaum Affidavit; and (2) directing that the remainder of the Net Settlement
17 Fund be distributed on a p Lo Lata basis less any additional taxes owe to the Internal Revenue Service
18 in accordance with the determinations made by the Claims Administrator .
19
20 "Aw I I ~.
MA TH . HOUSTON
21
Swor to before me this
22 2 ~ y of March, 200 6
23
24
Notary PII ' A .
25 Howiv P ile, State o OW
No. 019A4692087
26 CafM*o0Wled In Nassau~~ Q
27 I
n 2811 3
Exhibit 1
1 ROBERT I. HARWOOD SUSAN KUPFER #141724
MATTHEW M. HOUSTON GLANCY BINKOW & GOLDBERG LLP
2 WECHSLER HARWOOD LLP 455 Market Sreet
488 Madison Avenue, 8th Floor Suite 181 0
3 New York, NY 10022 San Francisco , CA 94105
Telephone : [phone] Telephone : [phone]
4 Facsimile : (212) 753-363 0 Facsimile : [phone]
5 CHARLES J . PIVEN LIONELZ . GLANCY #134180
MARSHALL PERKINS GLANCY BINKOW & GOLDBERG LLP
6 LAW OFFICES OF CHARLES J . PiVEN, P.A . 1801 Avenue of the Star s
401 East Pratt Street , Suite 252 5 Suite 31 1
7 Baltimore, MD 21202 Los Angeles, CA 90067
Telephone : [phone] Telephone: [phone]
8 Facsimile : [phone] Facsimile : (310) 201-916 0
9 Co-Lead Counsel for Plaintiffs Liaison Counsel for Plaintiffs
10
11
12 UNITED STATES DISTRICT COURT
13 FOR THE NORTHERN DISTRICT OF CALIFORNIA
14 SAN JOSE DIVISION
15
16 In re READ-RITE CORPORATION Master File No. 03-03148 RM W
SECURITIES LITIGATION
17 DECLARATION OF MICHAEL ROSENBAUM
IN SUPPORT OF APPLICATION FOR AN
18 THIS DOCUMENT RELATES TO : ORDER AUTHORIZING DISTRIBUTION
OF NET SETTLEMENT FUND
19 ALL ACTIONS
Hon. Ronald M. Whyte
20
21
I, MICHAEL ROSENBAUM, declare :
22
1 . I am over 21 years of age and am not a party to this action . I have personal knowledge
23
of the facts set forth herein and, if called as a witness, could and would testify competently thereto .
24
I submit this declaration in order to provide the Court and the parties to the above-captioned action
25
with information regarding the administration and processing of proofs of claim in connection with
26
this action .
27
28
MASTER FILE NO. 03-03148 RMW DECLARATION OF MICHAEL ROSENBAUM IN SUPPORT OF APPLICATION FOR AN
ORDER AUTHORIZING DISTRIBUTION OF NET SETTLEMENT FUND I
1 2 . I am Managing Director of Berdon Claims Administration LLC (`Berdon"), Claims
2 Administrator for the above-captioned action . I am and have been the person at Berdon primarily
3 responsible for administering the settlement and have worked with and under the direction of
4 Wechsler Harwood LLP and the Law Offices of Charles J . Piven, P .A., Co-Lead Counsel for
5 Plaintiffs and the Class ("Plaintiffs' Counsel") .
6 3. I make this declaration in support of Plaintiffs' application for an Order authorizing th e
distribution of the Net Settlement Fund, to describe the claims administration process that Berdo n
7
8 has provided in this matter, and to request that the Court approve the payment of Berdon's fees an d
9 expenses in the total amount of $74,453 .12 .
10 4. Berdon was appointed Claims Administrator to arrange for the printing and mailing o f
11 the Notice of Pendency of Class Action, Settlement and Hearing Thereon, and the Proof of Claim
12 and Release (collectively, the "Notice"), to arrange for publication of the Summary Notice of
13 Pendency of Class Action (the "Summary Notice"), to maintain a file in connection with requests
14 for exclusion, to submit periodic reports to Plaintiffs' Counsel in connection therewith, and to
15 administer the processing of Proof of Claim and Release forms ("Proof(s) of Claim," "claim
16 form(s)") and the distribution of the Net Settlement Fund to members of the Class who filed valid
17 Proofs of Claim.
18 5 . Berdon was primarily responsible for arranging the printing and mailing of the Notice ,
19 on March 25, 2005, to all persons who purchased the common stock of Read-Rite Corporatio n
20 ("Read-Rite") during the period from October 30, 2001 through June 17, 2003 . Berdon was als o
21 primari ly responsible for the publication of the Summary Notice in USA Today on April 4, 2005 .
22 6. In performing these tasks on behalf of Plaintiffs' Counsel, this office dealt directly wit h
23 a financial printer with regard to the Notice, and with an advertising agency in connection with the
24 Summary Notice, made formatting suggestions to counsel, and compiled counsel's comments on the
25 galley proofs of the Notice and Summary Notice . In addition, Berdon prepared mailing labels of
26 members and potential members of the Class from the names and addresses furnished by Read-Rite's
27 transfer agent, from the names and addresses in the databases we maintain of brokers, banks and
28 other nominees identified in the Participant Proxy List ofthe Depository Trust Company, and of thei r
MASTER FILE NO . 03-03148 RMW DECLARATION OF MICHAEL ROSENBAUM IN SUPPORT OF APPLICATION FOR AN
ORDER AUTHORIZING DISTRIBUTION OF NET SETTLEMENT FUND 2
1 compliance personnel ; from the names and addresses of financial institutions identified by Vickers
2 Directory of Institutional Investors ; and from lists of shareholders provided by Plaintiffs' Counsel .
3 These labels were utilized in the initial mailing of the Notice on March 25, 2005, and subsequently,
4 up to and including January 25, 2006, the Notice was also mailed to all other potential members of
5 the Class who contacted Berdon to request copies thereof .
6 7. Pursuant to instructions from Plaintiffs' Counsel, Berdon has reviewed and analyzed th e
7 Proofs of Claim received from potential members of the Class . We have also answered any
8 questions regarding the action, the Settlement and procedures for filling out the claim forms and
9 were also in contact with Plaintiffs' Counsel to review the status of the claims administration
10 process and to address concerns regarding claims that Berdon had deemed either questionable or
11 problematic . All large individual and institutional claims were reviewed individually and in great
12 detail . Our final report (the "Summary of the Claims Administration Process"), which is described
13 in detail below, is annexed hereto as Schedule 1 .
14 8. In reviewing the 2,577 Proofs of Claim submitted, Berdon determined that some wer e
15 deficient or incomplete . Among the various types of deficiencies found were : (a) claim forms were
16 not filled out completely; (b) the information provided was either insufficient or discrepant ; (c) claim
17 forms were not signed by the proper party, or at all ; (d) some individuals signing claim forms on
18 behalf of others did not submit proof of their authority to do so ; or (e) claimants had failed to submit
19 adequate documentation of their purchases, sales or holdings ofRead-Rite common stock during the
20 Class Period, or otherwise failed to give adequate information thereof . Berdon mailed letters to these
21 Claimants (Exhibit A), advising them of the deficiencies identified in their filings and requesting
22 additional information and/or documentation, and they were given at least 20 days to do so . In many
23 cases, the deficiencies were cured . If they were not cured, Berdon mailed final notices to these
24 Claimants (Exhibit B) and made follow-up telephone calls where further clarification was required .
25 9. Berdon's Summary of the Claims Administration Process (Schedule 1) sets forth the final
26 status of claims received by this office, detailed as follows :
27 a. Properly Documented Claims : Berdon has identified 1,953 properly documente d
28 claims, with Recognized Claims amounting to $145,880,438 .65 (Exhibit Q. Included in thi s
MASTER FILE NO. 03-03148 RMW DECLARATION OF MICHAEL ROSENBAUM IN SUPPORT OF APPLICATION FOR AN
ORDER AUTHORIZING DISTRIBUTION OF NET SETTLEMENT FUND 3
1 category are 1,589 claims that were filed timely and 364 claims received after the filing deadline .
2 We believe that the late filing of the claim forms was through no substantial fault of these Class
3 members, since it is our experience that certain Class members may not receive a Proof of Claim
4 from their brokers in a timely manner, and no other Class members will be unduly prejudiced by the
5 acceptance of these claims. Accordingly, we recommend that all valid, complete and properly
6 documented claims, although submitted late, be approved as calculated .
7 Each Authorized Claimant's Recognized Claim was calculated pursuant to the Plan
8 I of Allocation set forth in the Notice . Berdon will determine each Authorized Claimant's pro rata
9 share of the Net Settlement Fund based upon each Authorized Claimant's Recognized Claim.
10 b. Claims Not Documented : Berdon has identified 87 inadequately documented o r
11 completely undocumented claims with trading activity that cannot be verified . We have therefore
12 estimated the Recognized Claims at $156,285 .04, and we recommend that these Claims be rejected
13 (Exhibit D) . As stated above, we have communicated with these claimants and advised them of our
14 determination. None has objected to or contested this determination .
15 However, we expect that , in response to the deficiency letters mailed to claimants (se e
16 paragraph 8 above), additional information may continue to arrive in support of claims previously
17 filed, even after we submit this final declaration . Therefore, we respectfully request that we be
18 permitted to process such data, thereby curing otherwise undocumented claims, until such time as
19 the Order of Distribution is entered, so that the greatest possible number of claimants will be able
20 to share in the proceeds of the Net Settlement Fund .
21 c. Ineligible Claims : Berdon has identified 537 claims which we recommend fo r
22 I complete rejection (Exhibit E) . Included in this category are: (i) claims with no purchases of Read-
23 Rite common stock during the Class Period ; and (ii) duplicate claims . All of these Class members
24 have been notified (Exhibit F), and none has objected to or contested this determination .
25 10 . Berdon has charged a fee in the total amount of $69,500 .00, as set forth in our invoic e
26 (Exhibit G). The fee covers a variety of services, including, but not limited to : (a) creating dat a
27 bases and computer programming services ; (b) arranging for the printing of the Notice an d
28 publication of the Summary Notice ; (c) creating mailing labels and generating lists of nominees an d
MASTER FILE NO . 03-03148 RMW DECLARATION OF MICHAEL ROSENBAUM IN SUPPORT OF APPLICATION FOR AN
ORDER AUTHORIZING DISTRIBUTION OF NET SETTLEMENT FUND 4
potential claimants for the initial mailing of the Notice ; (d) fulfilling all subsequent requests from
2 nominees and Read-Rite beneficial owners for copies of the Notice ; (e) reviewing and analyzing
3 claims; (f) conducting fax, e-mail and phone follow-ups of those nominees who were slow in
4 providing the names oftheir beneficial holders of Read-Rite common stock ; (g) providing telephone
5 and e-mail assistance to claimants ; (h) calculating the Recognized Claims for ultimate distribution
6 of the Net Settlement Fund to claimants ; (i) preparing all required reports and declarations ; (j)
7 preparing and mailing settlement checks to claimants ; (k) preparing income tax returns ; and (1) any
8 and all future services to be rendered .
9 11 . During the course of the administration of this_matter, and up to and including August
10 1 5, 2005, Berdon. incurred out-of-pocket expenses in the sum of $59,279 .92, which have already been
11 paid. However, since that date, this office has incurred and will incur the expenses included in
12 Exhibit Gin the total sum of $4,953 .12 .
13 12. Therefore, I respectfully request that Berdon's outstanding fees and expenses in the
14 aggregate amount of $74,453 .12 be approved for payment out of the Net Settlement Fund .
15
I declare under penalty of perjury that the foregoing is true to the best of my knowledge and
16
that this declaration was executed this 21st day of March, 2006 at Jericho, New York .
17
18
1 9
20
MICHAEL ROSENBAUM
21
22
23
24
25
26
27
28
MASTER FILE NO. 03-03148 RMW DECLARATION OF MICHAEL ROSENBAUM IN SUPPORT OF APPLICATION FOR AN
ORDER AUTHORIZING DISTRIBUTION OF NET SETTLEMENT FUND 5
Schedule l
READ-RITE CORPORATION SECURITIES LITIGATION
SUMMARY OF THE CLAIMS ADMINISTRATION PROCESS
AS OF MARCH 21, 200 6
NUMBER OF DOCUMENTED UNDOCUMENTED
CLAIMS CLAIMS CLAIMS TOTAL
Properly documented claims
which we recommend be in-
cluded in the calculation o f
each Claimant's allocable
share of the Net Settlement
Fund, including 364 claims
received past the filing dead -
line (Exhibit C) 1,953 $ 145,880,438 .65 - $ 145,880,438 .65
Undocumented claims which
did not include sufficient doc -
umentation of Class Period
trading activity and which we
recommend not be included in
the calculation of the allocabl e
share of the Net Settlemen t
Fund (Exhibit D) 87 - $ 156,285.04 156,285 .04
Ineligible claims (Exhibit E) 537 - - -
Total 2,577 $145,880,438.65 $ 156,285.04 $146,036,723.69
MASTER FILE NO. 03-03148 RMW DECLARATION OF MICHAEL ROSENBAUM IN SUPPORT OF APPLICATION FOR AN
ORDER AUTHORIZING DISTRIBUTION OF NET SETTLEMENT FUND 6