throbber
Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 1 of 29 PageID #: 1270
`
`
`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF NEW YORK
`
`
`
`
`
`
`
`
`
`
`
`SUSAN MOSES, on behalf of herself and all
`others similarly situated,
`
`Plaintiff,
`
`
`
`
`Case No. 1:14-cv-03131 (SMG)
`
`
`
`v.
`
`
`APPLE HOSPITALITY REIT INC.,
`
`
`
`
`
`
`Defendant.
`
`
`
`
`
`
`
`
`
`[PROPOSED] ORDER PRELIMINARILY APPROVING CLASS ACTION
`SETTLEMENT, PRELIMINARILY CERTIFYING SETTLEMENT CLASS, AND
`APPOINTING INTERIM CLASS COUNSEL
`
`
`GOLD, STEVEN M., U.S. Magistrate Judge:
`
`
`
`WHEREAS, the above-titled putative class action (the “Class Action” or the “Litigation”)
`
`is pending before the Court;
`
`
`
`WHEREAS, Plaintiff and Defendant have entered into a Stipulation of Settlement dated
`
`August 25, 2017 which is subject to review and approval under Rule 23 of the Federal Rules of
`
`Civil Procedure and which, together with the exhibits thereto, sets forth the terms and conditions
`
`for the proposed settlement of the Litigation (the “Settlement”) and the dismissal of the
`
`Litigation with prejudice;
`
`
`
`WHEREAS, the Court has read and considered the Stipulation of Settlement1 and
`
`exhibits thereto, and the accompanying documents;
`
`
`1 Unless otherwise stated, all capitalized terms used herein have the meanings defined in the Stipulation of
`Settlement.
`
`
`
`1
`
`

`

`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 2 of 29 PageID #: 1271
`
`
`
`WHEREAS, the Counsel for Plaintiff have submitted, and the Court has reviewed, a
`
`motion and accompanying memorandum of law supporting preliminary approval of the proposed
`
`Settlement; and
`
`
`
`WHEREAS, the Parties to the Settlement have consented to the entry of this Order, the
`
`Court:
`
`
`
`
`
`NOW, THEREFORE, HEREBY ORDERS, ADJUDGES AND DECREES THAT:
`
`1.
`
`Pursuant to Rule 23(a) and Rule 23(b)(3) of the Federal Rules of Civil
`
`Procedure, and for the purposes of the Settlement only, the Court preliminarily certifies the
`
`following Settlement Class (the “Class”): Any person in the United States who participated in the
`
`DRIPs for Apple REIT Seven and/or Apple REIT Eight from July 17, 2007 to June 27, 2013
`
`inclusive2.
`
`
`
`2.
`
`Pursuant to Fed. R. Civ. P. 23, and for purposes of this Settlement only, the Court
`
`hereby preliminarily appoints Susan Moses as class representative of the Class (“Class
`
`Representative”).
`
`
`
`3.
`
`The Court preliminarily finds that the prerequisites for maintaining a class action
`
`under Rule 23(a) of the Federal Rules of Civil Procedure have been satisfied for the Settlement
`
`Class in that: (a) the number of Class members is so numerous that joinder of all members is
`
`impracticable; (b) there are questions of law and fact common to each member of the Class; (c)
`
`the claims of the Class Representative are typical of the claims of the members of the Class she
`
`seeks to represent; and (d) Plaintiff will fairly and adequately represent the interests of the Class.
`
`
`2Excluded from the proposed Class are: (a) Defendant, any entity in which Defendant has a controlling interest or
`which has a controlling interest in Defendant; (b) Defendant’s legal representatives, predecessors, successors and
`assigns; and (c) any persons who affirmatively exclude themselves from the Class pursuant to the procedures
`described in the Notice.
`
`
`
`2
`
`

`

`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 3 of 29 PageID #: 1272
`
`
`
`4.
`
`Plaintiff also satisfies Federal Rule of Civil Procedure 23(b)(3). Common
`
`questions of law and fact predominate and a class action is the superior method available to fairly
`
`and efficiently litigate this class action involving the sale of securities.
`
`
`
`5.
`
`Having considered the factors set forth in Fed. R. Civ. P. 23(g)(1) and the
`
`qualifications of Plaintiff’s counsel submitted to the Court, the Court hereby preliminarily
`
`appoints Salas Wang LLC, Eccleston Law, LLC, and Law Office of Christopher J. Gray, P.C. as
`
`Interim Class Counsel.
`
`
`
`6.
`
`The Court preliminarily concludes that the Settlement was negotiated in good
`
`faith and is fair, reasonable and adequate, subject to proof to this Court’s satisfaction in
`
`connection with Final Approval. See Fed. R. Civ. P. 23(e). Accordingly, the Court hereby
`
`preliminarily approves the Settlement.
`
`
`
`7.
`
`The Court reserves the authority to approve the Settlement with or without
`
`modification and with or without further notice of any kind. The Court further reserves the
`
`authority to enter its Final Order and Judgment approving the Settlement and dismissing the
`
`Claims against Defendant on the merits and with prejudice regardless of whether it has awarded
`
`attorneys’ fees and expenses.
`
`
`
`8.
`
`A Final Fairness Hearing (which, from time to time, and without further notice to
`
`the Class other than by filing a notice on the docket in the Class Action in advance of the Final
`
`Fairness Hearing, may be continued or adjourned by order of this Court) will be held by this
`
`Court on January 16, 2018 at 4:30 p.m. for the following purposes:
`
`
`
`
`
`(a)
`
`to finally determine whether the Class satisfies the applicable prerequisites
`
`for certification under Fed. R. Civ. P. 23(a) and 23(b)(3);
`
`
`
`
`
`3
`
`

`

`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 4 of 29 PageID #: 1273
`
`
`
`
`
`(b)
`
`to finally determine whether the Settlement should be approved by the
`
`Court as fair, reasonable and adequate and in the best interests of the Class;
`
`
`
`
`
`(c)
`
`to determine whether a Final Order and Judgment should be entered
`
`pursuant to the Stipulation of Settlement, dismissing the Class Action with prejudice as against
`
`the Plaintiff and the Class;
`
`
`
`
`
`(d)
`
`to determine whether the proposed Plan of Allocation of the settlement
`
`fund set forth in the Notice is fair and reasonable, and should be approved by the Court;
`
`
`
`
`
`(e)
`
`to consider any request by counsel for an award of attorneys’ fees and
`
`reimbursement of litigation expenses;
`
`
`
`
`
`(f)
`
`to hear and determine any objections to the Settlement or to any request by
`
`counsel for an award of attorneys’ fees and reimbursement of litigation expenses; and
`
`
`
`
`
`
`
`(g)
`
`to rule on such other matters as the Court may deem appropriate.
`
`9.
`
`The Court approves the substance and requirements of the Notice, in the form
`
`annexed as Appendix “A” hereto.
`
`
`
`10. No later than October 10, 2017, Interim Class Counsel shall mail, or cause to be
`
`mailed, the Notice to those Class members who can be identified through reasonable effort. Not
`
`later than October 20, 2017, Interim Class Counsel shall also cause a summary notice in the form
`
`annexed hereto as Appendix “B” to be published via PR Newswire or another national wire
`
`service and shall establish a website that will (at a minimum) provide Class members with access
`
`to this Order, the Stipulation of Settlement, the Notice, and all of the papers before the Court on
`
`this motion.
`
`
`
`11.
`
`The Court finds that mailing and dissemination of the Notice, as described herein,
`
`constitutes the best notice practicable under the circumstances and is due and sufficient notice of
`
`
`
`4
`
`

`

`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 5 of 29 PageID #: 1274
`
`the matters set forth in the Notice to all Class Members, and fully satisfies the requirements of
`
`due process and of Rule 23 of the Federal Rules of Civil Procedure.
`
`
`
`12.
`
`The Court will consider any objections, and comments in support of or in
`
`opposition to the Settlement, the Plan of Allocation, or any request by counsel for an award of
`
`attorneys’ fees and reimbursement of litigation expenses, only if such comments and any
`
`supporting papers are in writing and filed with the Clerk of the Court, United States District
`
`Court for the Eastern District of New York, 225 Cadman Plaza East, Room 130, Brooklyn, NY
`
`11201, and copies of all such papers are served, on or before December 29, 2017 upon each of
`
`the following by U.S. Mail and e-mail:
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Jeffrey M. Salas
`SALAS WANG, LLC
`73 West Monroe, Suite 219
`Chicago, IL 60603
`(312) 803-4963
`(312) 244-3151 (fax)
`jsalas@salaswang.com
`
`James J. Eccleston
`Stephany D. McLaughlin
`ECCLESTON LAW, LLC
`55 West Monroe, Suite 610
`Chicago, IL 60603
`(312) 332-0000
`(312) 332-0003 (fax)
`jeccleston@ecclestonlaw.com
`
`Christopher J. Gray
`Michael J. Giarrusso
`LAW OFFICE OF CHRISTOPHER J. GRAY, P.C.
`360 Lexington Avenue, 14th Floor
`New York, New York 10017
`(212) 838-3221
`(212) 937-3139 (fax)
`chris@investorlawyers.net
`
`5
`
`

`

`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 6 of 29 PageID #: 1275
`
` Any replies to any objections or comments shall be filed and served no later than January 5,
`
`2018.
`
`
`
`13.
`
`Attendance at the Final Fairness Hearing is not necessary; however, persons
`
`wishing to be heard orally with respect to the approval of the Settlement, the Plan of Allocation,
`
`and/or any request by counsel for an award of attorneys’ fees and reimbursement of litigation
`
`expenses, are required to indicate in their written comments or objections their intention to
`
`appear at the Final Fairness Hearing.
`
`
`
`14.
`
`Persons who intend to object to the Settlement, the Plan of Allocation, and/or any
`
`request by counsel for an award of attorneys’ fees and reimbursement of litigation expenses and
`
`desire to present evidence at the Final Fairness Hearing must include in their written objections
`
`the identity of any witnesses they may call to testify and exhibits they intend to introduce into
`
`evidence at the Final Fairness Hearing. Class members do not need to appear at the hearing or
`
`take any action to indicate their approval.
`
`
`
`15.
`
`Any person or entity who fails to object in the manner provided above shall be
`
`deemed to have waived such objection (including the right to appeal), and absent good cause
`
`found by the Court shall forever be barred from making any such objection in the Class Action
`
`or any other action or proceeding or otherwise contesting any aspect of the Settlement, but shall
`
`otherwise be bound by the Final Order and Judgment to be entered and the releases to be given.
`
`
`
`16. All parties are hereby notified that final approval of the Settlement would result in
`
`the dismissal, with prejudice, of all claims in the Litigation.
`
`
`
`17.
`
`This Order, the Stipulation of Settlement, and any negotiations, discussions, or
`
`proceedings in connection with this Settlement shall not be offered or received against Defendant
`
`as evidence of, or deemed to be any admission or confession by Defendant, of the truth of any of
`
`
`
`6
`
`

`

`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 7 of 29 PageID #: 1276
`
`the claims, allegations, facts, subjects, or issues that were or could have been set forth or raised
`
`in the Litigation.
`
`
`
`SO ORDERED.
`
`Dated: Brooklyn, New York
`
`September __, 2017
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`____________________________
` STEVEN M. GOLD
` United States Magistrate Judge
`
`
`
`
`
`
`
`7
`
`19
`
`

`

`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 8 of 29 PageID #: 1277
`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 8 of 29 PageID #: 1277
`
`APPENDIX ''A''
`APPENDIX “A”
`
`

`

`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 9 of 29 PageID #: 1278
`
`
`
`
`
`
`
`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF NEW YORK
`
`
`
`
`
`
`
`
`
`
`
`SUSAN MOSES, on behalf of herself and all
`others similarly situated,
`
`Plaintiff,
`
`
`
`
`Case No. 1:14-cv-03131 (SMG)
`
`
`
`
`v.
`
`
`APPLE HOSPITALITY REIT, INC.,
`
`
`
`
`
`
`
`
`
`Defendant.
`
`
`NOTICE OF PROPOSED SETTLEMENT OF CLASS ACTION
`AND PLAN OF ALLOCATION
`
`TO: ALL PERSONS IN THE UNITED STATES WHO ACQUIRED SHARES OF
`APPLE REIT SEVEN AND/OR APPLE REIT EIGHT PURSUANT TO THE
`APPLE REITS’ DISTRIBUTION REINVESTMENT PLANS (“DRIPs”)
`BETWEEN JULY 17, 2007 AND JUNE 27, 2013, INCLUSIVE.
`
`PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY.
`
`YOUR RIGHTS MAY BE AFFECTED BY THE LEGAL PROCEEDINGS IN
`THIS ACTION.
`
`IF YOU WISH TO COMMENT IN FAVOR OF THE SETTLEMENT OR
`OBJECT TO THE SETTLEMENT, YOU MUST FOLLOW THE DIRECTIONS
`IN THIS NOTICE.
`
`YOU MAY BE ELIGIBLE TO RECEIVE MONEY FROM THE SETTLEMENT
`OF THIS LAWSUIT.
`
`TO RECEIVE MONEY FROM THIS LAWSUIT, YOU DO NOT NEED TO
`SUBMIT ANYTHING. AS SHOWN BELOW, YOU WILL RECEIVE A
`VERIFICATION FORM INDICATING YOUR CALCULATED NET AFFECTED
`SHARE BALANCE FROM THE SETTLEMENT ADMINISTRATOR AFTER
`FINAL APPROVAL OF THE SETTLEMENT. YOU MAY DISPUTE THIS
`INFORMATION WITH THE SETTLEMENT ADMINISTRATOR.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`

`

`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 10 of 29 PageID #: 1279
`
`
`
`
`
`
`
`
`
`
`
`I.
`
`IF YOU DO NOT WISH TO PARTICIPATE IN THE SETTLEMENT, YOU MAY
`REQUEST TO BE EXCLUDED FROM THE SETTLEMENT BY SUBMITTING
`A VALID REQUEST FOR EXCLUSION THAT MUST BE POSTMARKED ON
`OR BEFORE DECEMBER 29, 2017. IF YOU RECEIVED THIS NOTICE ON
`BEHALF OF A SETTLEMENT CLASS MEMBER WHO IS DECEASED, YOU
`SHOULD PROVIDE THE NOTICE TO THE AUTHORIZED LEGAL
`REPRESENTATIVE OF THAT SETTLEMENT CLASS MEMBER.
`
`THE PURPOSE OF THIS NOTICE
`
`This Notice is being sent pursuant to Rule 23 of the Federal Rules of Civil Procedure and an
`Order of the United States District Court for the Eastern District of New York (the "District
`Court") to inform you: (a) of the pendency of a class action lawsuit currently pending in the
`District Court under the above caption (the “Action” or the "Class Action") against Apple
`Hospitality REIT, Inc. (“AHR” or “Defendant”); (b) that the Class Action has been preliminarily
`certified by the District Court to proceed as a class action on behalf of the Class of persons in the
`United States who acquired shares of Apple REIT Seven, Inc. (“A7”) and/or Apple REIT Eight,
`Inc. (“A8” or, jointly with A7, the “Apple REITs”) pursuant to the Apple REITs’ Distribution
`Reinvestment Plants (the “DRIPs”) between July 17, 2007 and June 27, 2013, inclusive
`(“Class”); and (c) that a proposed settlement (the "Settlement'') has been reached by Plaintiff and
`Defendant (the “Parties”) in the Action.
`
`The District Court has preliminarily approved the Settlement, whose terms are set forth in the
`Settlement Agreement, which is available at www.AppleReitSettlement.com. You have received
`this Notice because Defendant's records indicate that you may be a member of the Class. This
`Notice is designed to inform you of your rights, how you can agree to or dispute the Verification
`Form, and how you can comment in favor of the Settlement or object to the Settlement.
`
`If the Settlement is finally approved by the District Court, the Settlement will be binding upon
`you, unless you exclude yourself, even if you dispute the Verification Form and even if you
`object to the Settlement. If finally approved, the Settlement resolves the Class's claims asserted
`against the Defendant.
`
`There will be a hearing on the Settlement (the "Settlement Hearing") before the Hon. Steven M.
`Gold, United States Magistrate Judge, at 4:30 p.m. on January 16, 2018, in Courtroom 13-D of
`the United States Courthouse, 225 Cadman Plaza East. Brooklyn, New York.
`
`THE FOLLOWING RECITATION DOES NOT CONSTITUTE FINDINGS OF THE
`COURT AND SHOULD NOT BE UNDERSTOOD AS AN EXPRESSION OF ANY
`OPINION OF THE COURT AS TO THE MERITS OF ANY CLAIMS OR DEFENSES
`ASSERTED BY ANY OF THE PARTIES. IT IS BASED ON STATEMENTS OF THE
`PARTIES AND IS SENT FOR THE SOLE PURPOSE OF INFORMING YOU OF THE
`EXISTENCE OF THE LAWSUIT AND OF THE UPCOMING SETTLEMENT
`HEARING CONCERNING THE SETTLEMENT SO THAT YOU MAY MAKE
`APPROPRIATE DECISIONS AS TO STEPS YOU MAY, OR MAY NOT, WISH TO
`TAKE IN RELATION TO THE CLASS ACTION.
`
`
`
`
`2
`
`

`

`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 11 of 29 PageID #: 1280
`
`
`
`II.
`
`BACKGROUND OF THE ACTION
`
`The Class Action arises out of sales of shares in the Apple REITs by A7 and A8 pursuant to their
`respective DRIPs. As part of the DRIPs, Defendant represented to Plaintiff and the Class that the
`DRIP sale price “[would] be based on the fair market value of [the REITs’] units as of the
`reinvestment date as determined in good faith by [their] board[s] of directors from time to time.”1
`But Plaintiff alleges that, in reality, the $11.00 DRIP share sale price did not reflect a meaningful
`estimate of the underlying or realizable value of the units. The Apple REITs further agreed to
`price the DRIP shares utilizing the most recent price at which an unrelated person had purchased
`units of the Apple REITs or, if that price was not indicative of fair value, to utilize good faith
`judgment in determining the share price of the DRIP. Despite these agreements, throughout the
`life of the DRIPs, Apple REITs shares were consistently sold at an artificial price of $11 per
`share that did not reflect fair value. It was not until March of 2013 that Defendant, for the first
`time, admitted in public filings that—despite representations that the boards of the Apple REITs
`would use the stated calculations to determine fair market value—the DRIP price was not
`actually based on any appraisal or valuation of the shares.
`
`Plaintiff alleges that as a result of Defendant’s misconduct, DRIP participants were overcharged
`for each share they received. By virtue of Defendant’s failure to follow the methodology in the
`S-3, Plaintiff and the Class were further damaged by receiving fewer Apple REITs shares in
`connection with the DRIPs than they would have received if the shares had been valued in good
`faith and in accordance with the methodology set forth in the Apple REITs’ respective Form S-
`3’s.
`
`Plaintiff commenced this action on April 22, 2014 by filing a class action complaint against
`AHR and certain of its officers and directors in New York Supreme Court, Kings County.
`Defendant removed the action to this Court on May 19, 2014. Plaintiff filed an Amended
`Complaint on June 27, 2014. Defendant moved to dismiss the complaint, and Judge Irizarry
`granted Defendant’s motion to dismiss but granted Plaintiff leave to amend her complaint to add
`further detail to her claim for breach of contract in an Order dated March 9, 2015.
`
`Plaintiff filed a Second Amended Complaint on April 6, 2015, and Defendant again filed a
`motion to dismiss. On September 30, 2016, Judge Irizarry issued a Memorandum Opinion
`granting in part and denying in part Defendant’s Motion to Dismiss Plaintiff’s Second Amended
`Complaint.
`
`In January 2017, the Parties engaged in a private mediation with Hon. Theodore H. Katz, U.S.
`Magistrate Judge (Ret.) and reached an agreement in principle to settle the Class Action on the
`terms that have now been preliminarily approved by the Court.
`
`
`
`
`1See Apple REIT Seven, Inc., Registration Statement (Form S-3), at 9 (July 17, 2007); Apple REIT Eight, Inc.,
`Registration Statement (Form S-3), at 8 (Apr. 23, 2008).
`
`
`
`
`3
`
`

`

`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 12 of 29 PageID #: 1281
`
`
`
`III. SUMMARY OF SETTLEMENT TERMS AND FREQUENTLY ASKED
`
`QUESTIONS (FAQS)
`
`Defendant will pay $5,500,000.00 in cash to resolve the claims of Plaintiff and the Class. The
`Class (and each member of the Class) is limited solely to the Settlement Fund for the satisfaction
`of all Released Claims against all Released Parties (which include Defendant and its
`predecessors Apple REIT Seven, Inc. and Apple REIT Eight, Inc. and affiliates, including but
`not limited to Apple Seven Advisors, Inc., Apple Eight Advisors, Inc., and Apple Fund
`Management, LLC, and the Apple REITs’ present and former directors, partners, principals,
`officers, employees, agents, trustees, attorneys, insurers, reinsurers, parents, subsidiaries,
`affiliates, divisions, representatives, predecessors, administrators, and assigns).
`
`Under the proposed Plan of Allocation, the proposed Settlement Administrator will calculate
`each Class Member's “Allowed Payment Amount” (share of the Net Settlement Fund) in the
`following matter:
`
`85% of the Net Settlement Fund will be allocated to DRIP shares purchased between July 22,
`2011 and January 13, 2012 for Apple REIT Seven and between July 22, 2011 and February 19,
`2013 for Apple REIT Eight less any shares redeemed.
`
`15% of the Net Settlement Fund will be allocated to DRIP shares purchased between July 17,
`2007 and July 21, 2011 as well as January 14, 2012 to June 27, 2013 for Apple REIT Seven and
`April 23, 2008 to July 21, 2011 as well as February 20, 2013 to June 27, 2013 for Apple REIT
`Eight less any shares redeemed.
`
`The Plan is not a part of or a condition of approval of the Settlement. Under the Agreement, the
`Net Settlement Fund may be distributed in accordance with the proposed Plan or such other plan
`as the Court may approve.
`
`
`Why Did I Get This Notice?
`
`
`This Notice is being sent to you pursuant to an Order of the District Court because you, someone
`in your family, or an investment account for which you serve as a custodian may have acquired
`shares of the Apple REITs pursuant to the Apple REITs’ DRIPs between July 17, 2007 and June
`27, 2013. The District Court has directed us to send you this Notice because, as a potential Class
`Member, you have a right to know about your options before the District Court rules on the
`proposed Settlement. Additionally, you have the right to understand how a class action lawsuit
`may generally affect your legal rights. If the District Court approves the Settlement and the Plan
`of Allocation (or some other plan of allocation), the Settlement Administrator selected by the
`Parties and approved by the Court will make payments pursuant to the Settlement and the court-
`approved Plan of Allocation after any objections and appeals are resolved. This Notice is also
`being sent to inform you of a hearing to be held by the District Court to consider the fairness,
`reasonableness, and adequacy of the Settlement, the proposed Plan of Allocation, and the Fee and
`Expense Application.
`
`In a class action lawsuit, the court selects one or more people, known as class representatives, to
`sue on behalf of all people with similar claims, commonly known as the class or the class members.
`
`
`
`4
`
`

`

`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 13 of 29 PageID #: 1282
`
`
`
`A class action lawsuit is a type of lawsuit in which the claims of a number of individuals are
`resolved together, thus providing the class members with both consistency and efficiency. Once
`the class is certified, the court must resolve all issues on behalf of the class members, except for
`any Persons who choose to exclude themselves from the class. In this case, the District Court has
`appointed Susan Moses to serve as Class Representative, and has appointed the law firms of Salas
`Wang LLC, Eccleston Law, LLC, and Law Office of Christopher J. Gray, P.C. to serve as Interim
`Class Counsel. The District Court has also preliminarily certified this case to proceed as a class
`action, for settlement purposes only.
`
`This Notice does not express any opinion by the District Court concerning the merits of any claim
`in the Class Action. The District Court must decide whether to approve the Settlement. If the
`Court approves the Settlement and the Plan of Allocation, payments to Class Members will be
`made after any appeals are resolved.
`
`
`What Does The Settlement Provide?
`
`
`Defendant shall cause to be delivered to Class Counsel, a check or wire transfer in the amount of
`$5,500,000.00, which will earn interest for the benefit of the Class (the “Settlement Fund”), and
`all Class Members who do not validly exclude themselves from the Class. The claims of all Class
`Members who do not timely exclude themselves will be released.
`
`
`Am I Included In The Settlement?
`
`
`You are included in the Class if you, or an investment account for which you serve as a custodian,
`acquired shares of the Apple REITs, specifically Apple REIT Seven, Inc. and Apple REIT Eight,
`Inc., pursuant to the Apple REITs’ DRIPs between July 17, 2007 and June 27, 2013, inclusive.
`
`PLEASE NOTE: RECEIPT OF THIS NOTICE DOES NOT MEAN THAT YOU ARE A
`CLASS MEMBER OR THAT YOU WILL BE ENTITLED TO RECEIVE PROCEEDS
`FROM THE SETTLEMENT FUND. IF YOU ARE A CLASS MEMBER, YOU WILL
`RECEIVE A VERIFICATION FORM SUBSEQUENT TO THIS NOTICE IF THE COURT
`APPROVES THE SETTLEMENT. TO BE ELIGIBLE TO PARTICIPATE IN THE
`DISTRIBUTION OF PROCEEDS FROM THE SETTLEMENT, YOU NEED NOT
`RESPOND TO THIS NOTICE OR TO THE VERIFICATION FORM. IF YOU DO NOT
`RESPOND TO OR DISPUTE THE VERIFICATION FORM, YOU WILL BE DEEMED
`TO HAVE CONSENTED TO THE TERMS OF THE SETTLEMENT. IF YOU DISPUTE
`THE ACCOUNT INFORMATION INCLUDED WITH THE VERIFICATION FORM,
`YOU MAY RESPOND TO THE SETTLEMENT ADMINISTRATOR PURSUANT TO
`INSTRUCTIONS THAT WILL BE INCLUDED IN THE VERIFICATION FORM.
`
`
`What Might Happen If There Were No Settlement?
`
`
`If there were no Settlement, the litigation would proceed to judgment. If Plaintiff failed to establish
`any essential legal or factual element of her claims against the Defendant, neither she nor the Class
`would recover anything from the Defendant. Also, if the Defendant were successful in proving
`
`
`
`5
`
`

`

`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 14 of 29 PageID #: 1283
`
`
`
`any of its defenses, the Class could recover substantially less than the amounts provided in the
`Settlement, or nothing at all.
`
`
`What Is The Legal Effect Of The Settlement On My Rights?
`
`
`If you are a member of the Class, the Settlement will affect you. If the District Court grants final
`approval of the Settlement, the Class Action will be dismissed with prejudice and all Class
`Members will fully release and discharge the Defendant (and the other Released Parties) from all
`claims for relief arising out of or based on Plaintiff’s allegations. When a Party to the litigation
`“releases” claims, that means that Party cannot sue the Defendant or the other Released Parties for
`any of the claims covered by the release. If you are a Class Member and you agree to a Verification
`Form (by not disputing the amounts on that Form), you will receive a payment based upon the
`distribution formula described below or as otherwise approved by the Court.
`
` What If I Purchased Shares After The Class Period?
`
`The Class Period covered by the Settlement runs from July 17, 2007 until June 27, 2013
`inclusive, and the claims of all Settlement Class members concerning purchases of Apple REIT 7
`and/or Apple REIT 8 shares during that period will be released under the terms of the Settlement
`unless Settlement Class members affirmatively exclude themselves and opt out of the Settlement
`Class. The period June 28, 2013 through February 12, 2014, which was formerly defined as part
`of the class period in Plaintiff’s Second Amended Complaint, is not part of the Class Period
`covered by the Settlement. You will not receive any compensation for purchases of Apple REIT
`7 and/or Apple REIT 8 shares between June 28, 2013 and February 12, 2014 in connection with
`the Settlement, and if you wish to pursue claims concerning purchases during this period you
`would need to commence a separate legal action within the applicable statute of limitations.
`
`
`What Will I Receive From The Settlement?
`
`
`At this time, it is not possible to determine precisely how much each Class Member may receive
`from the Settlement. However, using a conservative estimate assuming that every Class Member
`participates, and assuming that a request for attorneys’ fees for the maximum potential sum
`permitted under the Settlement Agreement ($1.833 million) is granted, and that an application for
`reimbursement of expenses in the amount of $150,000 is granted, then Class Members would
`receive at least $1.26 per share for DRIP shares purchased between July 22, 2011 and January 13,
`2012 for Apple REIT Seven and between July 22, 2011 and February 19, 2013 for Apple REIT
`Eight. Class members would receive at least $0.02 per share for DRIP shares purchased between
`July 17, 2007 and July 21, 2011 as well as January 14, 2012 to June 27, 2013 for Apple REIT
`Seven and April 23, 2008 to July 21, 2011 as well as February 20, 2013 to June 27, 2013 for Apple
`REIT Eight.
`
`Pursuant to the Settlement, Defendant shall cause to be delivered to Lead Counsel a check or wire
`transfer in the amount of $5,500,000.00, which will be deposited into an interest-bearing escrow
`account. If the Settlement is approved by the District Court, the Net Settlement Fund (i.e., the
`Settlement Fund less: (a) all federal, state, and local taxes on any income earned by the Settlement
`Fund and the reasonable costs incurred in connection with determining the amount of and paying
`
`
`
`6
`
`

`

`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 15 of 29 PageID #: 1284
`
`
`
`taxes owed by the Settlement Fund (including reasonable expenses of tax attorneys and
`accountants); (b) the costs and expenses incurred in connection with providing Notice to Class
`Members and administering the Settlement on behalf of Class Members; and (c) any attorneys’
`fees and expenses awarded by the District Court) will be distributed to Class Members as set forth
`in the proposed Plan of Allocation, or such other plan as the District Court may approve.
`
`After approval of the Settlement by the District Court and upon satisfaction of the other conditions
`to the Settlement, the Net Settlement Fund will be distributed to Authorized Class Members in
`accordance with the Plan of Allocation approved by the District Court. Under the proposed Plan
`of Allocation, 85% of the Net Settlement Fund will be allocated to DRIP shares purchased between
`July 22, 2011 and January 13, 2012 for Apple REIT Seven and between July 22, 2011 and February
`19, 2013 for Apple REIT Eight less any shares redeemed. 15% of the Net Settlement Fund will be
`allocated to DRIP shares purchased between July 17, 2007 and July 21, 2011 as well as January
`14, 2012 to June 27, 2013 for Apple REIT Seven and April 23, 2008 to July 21, 2011 as well as
`February 20, 2013 to June 27, 2013 for Apple REIT Eight less any shares redeemed.
`
`The Net Settlement Fund will not be distributed until the District Court has approved a plan of
`allocation, and the time for any petition for rehearing, appeal, or review, whether by certiorari or
`otherwise, concerning the terms of the Settlement and the District Court’s approval thereof, has
`expired.
`
`Approval of the Settlement is independent from approval of the Plan of Allocation. Any
`determination with respect to the Plan of Allocation will not affect the Settlement, if approved.
`
`After this notice, but prior to payment, you will receive a communication that includes a Verification
`Form from the Settlement Administrator with your distribution amount and the basis for that
`calculation. Unless you dispute that amount with the Settlement Administrator within the time stated
`in the letter, you will receive payment based on that calculation.
`
`Unless the District Court otherwise orders, any Class Member who agrees to a valid Verification
`Form by not disputing the amount on the form prior to the date stated in the Verification Form,
`shall be fully and forever barred from receiving additional payments pursuant to the Settlement,
`but will in all other respects remain a Class Member and be subject to the provisions of the
`Settlement Agreement that is approved, including the terms of any judgment entered and releases
`given.
`
`The District Court has reserved jurisdiction to allow, disallow, or adjust the claim of any Class
`Member on equitable grounds.
`
`Each Class Member shall be deemed to have submitted to the jurisdiction of the District Court
`with respect to his, her, or its Verification Form. Upon request of the Settlement Administrator,
`each Person that agrees to a Verification Form shall subject his, her, or its Claim to investigation
`as to his, her, or its status as a Claimant and the allowable amount of his, her, or its Claim. Disputes
`will be handled by the Settlement Administrator upon proof submitted supporting

This document is available on Docket Alarm but you must sign up to view it.


Or .

Accessing this document will incur an additional charge of $.

After purchase, you can access this document again without charge.

Accept $ Charge

This document could not be displayed.

We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.

Your account does not support viewing this document.

You need a Paid Account to view this document. Click here to change your account type.

Your account does not support viewing this document.

Set your membership status to view this document.

With a Docket Alarm membership, you'll get a whole lot more, including:

  • Up-to-date information for this case.
  • Email alerts whenever there is an update.
  • Full text search for other cases.
  • Get email alerts whenever a new case matches your search.

Become a Member

One Moment Please

The filing “” is large (MB) and is being downloaded.

Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.

Sealed Document

We are unable to display this document, it may be under a court ordered seal.

If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.


Access Government Site

We are redirecting you
to a mobile optimized page.





Document Unreadable or Corrupt

Try refreshing this document from the court, or go back to the docket to see other documents.

We are unable to display this document.

Go back to the docket to see more.