Case 1:14-cv-03131-SMG Document 87 Filed 03/27/18 Page 1 of 20 PageID #: 1600
`
`Plaintiff,
`
`
`
`
`
`MEMORANDUM
`& ORDER
`14-CV-3131 (SMG)
`
`
`
`-against-
`
`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF NEW YORK
`---------------------------------------------------------------------- x
`SUSAN MOSES, on behalf of herself and all others
`:
`:
`similarly situated,
`:
`
`:
`:
`:
`:
`:
`:
`:
`x
`
`
`APPLE HOSPITALITY REIT, INC.,
`
`
`Defendant.
`----------------------------------------------------------------------
`GOLD, STEVEN M., U.S. Magistrate Judge:
`
`
`
`
`Representative plaintiff Susan Moses (“plaintiff” or “Moses”) brings this breach of
`
`INTRODUCTION
`
`contract action on behalf of participants in defendant Apple Hospitality REIT, Inc.’s
`
`(“defendant”) Dividend Reinvestment Plans (“DRIPs”). Second Amended Complaint ¶ 1,
`
`Docket Entry 21. Plaintiff contends that defendant overvalued DRIP shares, breaching the
`
`parties’ contract and causing damage to class members by charging inflated prices for the shares
`
`they acquired under the DRIPs. Id. ¶¶ 4, 12-13.1
`
`The parties eventually reached a settlement agreement and moved for preliminary
`
`approval of the settlement and preliminary certification of a settlement class. Docket Entry 47.
`
`The Court heard oral argument on plaintiff’s motion, Docket Entries 53-54, and received revised
`
`submissions addressing questions raised at that argument, Docket Entries 60-62. Thereafter, on
`
`September 19, 2017, this Court granted plaintiff Susan Moses’s motion for preliminary
`
`certification of a settlement class and preliminary approval of a class action settlement. See
`
`Order dated September 19, 2017, Docket Entry 68. The Court’s Order also approved the notice
`
`
`1 The Second Amended Complaint uses the terms “shares” and “units” interchangeably, and this Memorandum and
`Order does as well.
`
`

`

`Case 1:14-cv-03131-SMG Document 87 Filed 03/27/18 Page 2 of 20 PageID #: 1601
`
`that the parties proposed to have mailed to class members, as well as a summary notice they
`
`proposed for publication. Id.
`
`The settlement agreement provides for a $5,500,000 fund from which class members’
`
`claims, incentive awards, attorneys’ fees, and costs will be paid. Stipulation of Settlement ¶ 4,
`
`Docket Entry 63. The net fund, consisting of the portion of the fund remaining after
`
`disbursements for incentive awards, attorneys’ fees, and costs are made, will be allocated to the
`
`class members. Id. ¶¶ 4, 1(cc)-(ee). Of the net fund, 85% will be distributed to class members
`
`pro rata based on shares purchased during what the parties refer to as the tender offer period for
`
`each Real Estate Investment Trust (“REIT”). Id. Ex. D. The remaining 15% of the net fund will
`
`be distributed in the same manner based on shares purchased outside the tender offer period. Id.
`
`The settlement class is defined as follows: “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 inclusive.” Id. ¶ 1(e). The class excludes: “(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
`
`Class Notice.” Id. ¶ 1(f).
`
`Interim class counsel engaged a third-party settlement administrator, Kurtzman Carson
`
`Consultants LLC (“KCC”). Declaration of Justin Hughes dated December 29, 2017 (“Second
`
`Hughes Decl.”) ¶ 1, Docket Entry 72. After receiving lists containing the names and addresses
`
`of class members, KCC mailed the approved notice to 24,242 class members and re-mailed about
`
`five hundred notices that were initially returned as undeliverable. Id. ¶ 3. KCC further caused
`
`the summary notice approved by the Court to be transmitted over PR Newswire, established a
`
`
`
`2
`
`

`

`Case 1:14-cv-03131-SMG Document 87 Filed 03/27/18 Page 3 of 20 PageID #: 1602
`
`toll-free telephone hotline offering information about the settlement, and created a website with
`
`links to the Notice and other key documents relevant to the litigation. Id. ¶¶ 5-7. As of
`
`December 29, 2017, the telephone hotline had received nine calls and the website had been
`
`visited 3,067 times. Id. ¶¶ 6-7.
`
`Four class members timely asked to be excluded from the settlement class. Declaration
`
`of Justin Hughes dated January 5, 2018 (“Third Hughes Decl.”) ¶ 4, Ex. A, Docket Entry 81.
`
`The Court received one objection, which is discussed below. Objection of Class Member
`
`Dorothy Wenzel (“Objection”), Docket Entry 69.
`
`The parties now seek an Order (1) finally certifying the class for settlement; (2)
`
`approving the terms of the revised settlement agreement; (3) approving the plan of allocation;
`
`and (4) appointing Moses as class representative and interim class counsel as class counsel. See
`
`Plaintiff’s Memorandum of Law in Support of Final Settlement Approval (“Final Approval
`
`Mem.”) at 2, Docket Entry 74.
`
`FACTUAL BACKGROUND
`
`Plaintiff filed a first amended complaint on June 27, 2014, and defendant moved to
`
`dismiss. Chief United States District Judge Dora L. Irizarry, to whom this matter was then
`
`assigned, granted defendant’s motion but afforded plaintiff leave to amend. Memorandum and
`
`Order dated March 9, 2015 (“First Order”), Docket Entry 19. Plaintiff then filed a second
`
`amended complaint (“SAC”), and defendant again moved to dismiss. Chief Judge Irizarry
`
`granted defendant’s motion in part, but denied the motion with respect to plaintiff’s claim for
`
`breach of contract. Memorandum and Order dated September 30, 2016 (“ Second Order”),
`
`Docket Entry 30.2
`
`
`2 The First Order is published at 2015 WL 1014327 (E.D.N.Y. Mar. 9, 2015), and the Second Order at 2016 WL
`8711089 (E.D.N.Y. Sept. 30, 2016).
`
`
`
`3
`
`

`

`Case 1:14-cv-03131-SMG Document 87 Filed 03/27/18 Page 4 of 20 PageID #: 1603
`
`I assume familiarity with the facts and procedural history of the case set forth in the First
`
`Order and Second Order. Accordingly, only those facts that are particularly germane to the
`
`motion now before the Court are set forth below.
`
`Plaintiff held shares in defendant’s Real Estate Investment Trusts, and purchased
`
`additional shares through defendant’s DRIPs. Second Order at 2. The terms of the DRIPs,
`
`including the means for determining share prices, were set forth in publically filed forms S-3. Id.
`
`In the First Order, Judge Irizarry found that the S-3s constituted a valid contract between the
`
`parties. First Order at 10. The S-3s set forth the means by which the price of shares sold through
`
`the DRIPs would be calculated, as follows:
`
`The price of units purchased under the plan directly from us by dividend
`reinvestments will be based on the fair market value of our units as of the
`reinvestment date as determined in good faith by our board of directors from time
`to time. Our units are not publicly traded; consequently, there is no established
`public trading market for our units on which we could readily rely in determining
`fair market value. Nevertheless, the board has determined that, for purposes of
`this plan, at any given time the most recent price at which an unrelated person has
`purchased our units represents the fair market value of our units. Consequently,
`unless and until the board decides to use a different method for determining the
`fair market value of our units, the per unit price will be determined at all times
`based on the most recent price at which an unrelated person has purchased our
`units. Notwithstanding the foregoing, the board of directors may determine a
`different fair market value and price for our units for purposes of this plan if (1) in
`the good faith judgment of the board an amount of time has elapsed since our
`units have been purchased by unrelated persons such that the price paid by such
`persons would not be indicative of fair value of our units or (2) our board
`determines that there are other factors relevant to such fair market value.
`
`SAC ¶ 23. The Apple REIT Seven Registration Statement states that “[t]he most recent price
`
`paid by an unrelated person for a unit was $11.00 on June 25, 2007. Accordingly, our board of
`
`directors has determined that the offering price for units purchased under the plan will initially
`
`be $11.00 per unit.” Second Order at 10.
`
`
`
`4
`
`

`

`Case 1:14-cv-03131-SMG Document 87 Filed 03/27/18 Page 5 of 20 PageID #: 1604
`
`Chief Judge Irizarry found these terms in the S-3 to be ambiguous and therefore denied
`
`defendant’s motion to dismiss:
`
`The Forms S-3 indicate that the price is “determined at all times based on the
`most recent price at which an unrelated person has purchased our units.” Here, the
`term “our units” is susceptible to more than one reasonable interpretation because
`nowhere does this provision or the S-3 define whether “our units” means units
`purchased directly from the company, or units purchased from third-parties. For
`instance, the fact that an individual may own A8 units and sell them to a third-
`party does not make those units any less Defendant’s units, or affect Defendant’s
`ability to refer to those units as “our units.” As such, this ambiguity presents an
`issue of fact that cannot be resolved properly at this stage of the litigation.
`
`
`Second Order at 11.
`
`Plaintiff’s sole remaining claim is that defendant is liable for breach of contract for
`
`failing to determine the prices of DRIP shares in the manner required by the terms of the S-3s.
`
`As indicated above, the Apple REIT Seven S-3 disclosed that the most recent price paid by an
`
`unrelated person for a unit was $11.00; based on this sale, defendant consistently priced shares at
`
`$11 per unit throughout the class period. Mem. in Supp. of Pl.’s Mot. For Final Approval (“Final
`
`Approval Mem.”) at 3, Docket Entry 74. Plaintiff contends that the $11.00 share price was
`
`artificial and did not reflect the most recent price at which a share was purchased by an unrelated
`
`person or a fair value determined in good faith by defendant. As a result, plaintiff argues, DRIP
`
`participants received fewer shares than they would have if the shares had been properly priced.
`
`Final Approval Mem. at 3.
`
`As noted above, 85% of the net settlement proceeds are allocated to DRIP shares
`
`purchased during a tender offer period and 15% are allocated to shared purchased before and
`
`after the tender offer period. Final Approval Mem. at 4. The basis for this allocation is that
`
`bidders paid between $3.00 and $5.50 per share during the tender offer period. SAC ¶ 29;
`
`Plaintiff’s Amended Memorandum in Support of Preliminary Approval at 21 (“Pl. Am. Mem.”),
`
`
`
`5
`
`

`

`Case 1:14-cv-03131-SMG Document 87 Filed 03/27/18 Page 6 of 20 PageID #: 1605
`
`Docket Entry 61; Declaration of William Jeffers (“Jeffers Decl.”) ¶ 10, Docket Entry 80.
`
`Plaintiff contends that these sales provide more compelling evidence that the $11.00 share price
`
`was higher than fair market value during the tender offer period than is available for the times
`
`before and after the tender offers were made. More specifically, proving damages for the periods
`
`before and after the tender offers would require evidence of prices paid for shares in a limited
`
`secondary market or proof that defendant acted in bad faith. Pl. Am. Mem. at 21.
`
`Despite evidence of substantially lower unit prices paid through the tender offers, even
`
`the settlement amount allocated to the tender offer period reflects only a small percentage of the
`
`damages that would be available if prices for the DRIP shares mirrored or approached the tender
`
`offer prices. Plaintiff has submitted a declaration of an expert in business valuation who
`
`estimated the potential recoverable damages in that action as ranging from $22.1 million to $40.6
`
`million, or approximately four to eight times the total amount of the parties’ settlement. Jeffers
`
`Decl. ¶ 4.
`
`Plaintiff explains the steep discount she asks the Court to approve by stressing the
`
`litigation risk the class would face if it proceeded with litigation. Plaintiff points out, for
`
`example, that even during the tender offer period, there may have been other prices paid by
`
`unrelated persons closer to or even equal to $11.00 per share. Such purchases would have the
`
`effect of resetting the share price for the DRIPs pursuant to the “most recent price” clause of the
`
`S-3s. Moreover, as reflected in the excerpt of the Second Order quoted above, Chief Judge
`
`Irizarry determined that it was unclear whether shares acquired from existing shareholders and
`
`not directly from the company itself even bear upon the pricing formula set forth in the S-3s.
`
`Indeed, revised language in the S-3s applicable to the period after the tender offers expressly
`
`provides that prices for DRIP shares will be determined by the most recent price at which an
`
`
`
`6
`
`

`

`Case 1:14-cv-03131-SMG Document 87 Filed 03/27/18 Page 7 of 20 PageID #: 1606
`
`unrelated person purchased shares from defendant. Pl. Am. Mem. at 21. Thus, plaintiffs
`
`contend, damages would be quite uncertain even if liability were established.
`
`I.
`
`Class Action Certification
`
`DISCUSSION
`
`“Before certification is proper for any purpose—settlement, litigation, or otherwise—a
`
`court must ensure that the requirements of Rule 23(a) and (b) have been met.” Denney v.
`
`Deutsche Bank AG, 443 F.3d 253, 270 (2d Cir. 2006); see also Wal-Mart Stores, Inc. v. Dukes,
`
`564 U.S. 338, 350–51 (2011) (quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 161 (1982))
`
`(“[C]ertification is proper only if ‘the trial court is satisfied . . . that the prerequisites of Rule
`
`23(a) have been satisfied.’”). Moreover, these requirements “should not be watered down by
`
`virtue of the fact that the settlement is fair or equitable.” Denney, 443 F.3d at 270.
`
`A. Rule 23(a) Requirements
`
`Rule 23(a) sets out four prerequisites for certifying a class action. A suit may be
`
`maintained as a class action only if:
`
`(1) the class is so numerous that joinder of all members is impracticable; (2) there
`are questions of law or fact common to the class; (3) the claims or defenses of the
`representative parties are typical of the claims or defenses of the class; and (4) the
`representative parties will fairly and adequately protect the interests of the class.
`
`
`Fed. R. Civ. P. 23(a)
`
`
`
`Numerosity is presumed met when a putative class contains at least forty members.
`
`See Consol. Rail Corp. v. Town of Hyde Park, 47 F.3d 473, 483 (2d Cir. 1995); Marin v. Apple-
`
`Metro, Inc., 2017 WL 4950009, at *40 (E.D.N.Y. Oct. 4, 2017). The class here far exceeds this
`
`threshold. Not only does plaintiff report that the class “is larger than 10,000 members,” but in
`
`addition, the settlement administrator distributed notices to 24,242 potential class members.
`
`Final Approval Mem. at 21; Second Hughes Decl. ¶ 3.
`
`
`
`7
`
`

`

`Case 1:14-cv-03131-SMG Document 87 Filed 03/27/18 Page 8 of 20 PageID #: 1607
`
`
`
`Rule 23(a)(2) requires that the claims asserted on behalf of class members share a
`
`common question, such that “determination of its truth or falsity will resolve an issue that is
`
`central to the validity of each one of the claims in one stroke.” Dukes, 564 U.S. at 350. A single
`
`common question will do. Id. at 359. As described above, the central issues to be determined in
`
`this case are what method for pricing DRIP shares the S-3s require and whether defendant
`
`followed that method properly. The interpretation of the pricing provision in the S-3s applies
`
`with equal force to the shares of all class members. Because the same contract existed between
`
`defendant and each class member, a resolution of the contract’s meaning as to one unit holder
`
`would resolve the meaning of the contract as to all. Similarly, the same method of calculating
`
`the price dictated by the terms of the S-3s would apply to all shareholders, particularly because
`
`the investment at issue was typically held over a substantial period of time. Transcript of July 7,
`
`2017 Preliminary Approval Motion Hearing (“Prelim. Approval Tr.”) 6:21-7:23, Docket Entry
`
`54. Thus, most class members are likely to have had dividends reinvested to purchase additional
`
`shares at various times during the class period. Any unique circumstances that might drive the
`
`determination of the DRIP share price at a particular moment in time would thus apply to most
`
`class members, regardless of when they acquired their shares. Accordingly, Rule 23(a)(2)’s
`
`requirement of commonality is met in this case.
`
`
`
`A representative party’s claims are typical of the class where her claims arise “from the
`
`same course of events and each class member makes similar legal arguments to prove the
`
`defendant's liability.” Marin, 2017 WL 4950009, at *45 (quoting In re Flag Telecom Holdings,
`
`Ltd. Sec. Litig. (Flag Telecom), 574 F.3d 29, 35 (2d Cir. 2009). Because Moses’s contracts with
`
`defendant—the S-3s—are the same contracts on which every other class member’s claim would
`
`be premised, her claim is typical of the claims of the class.
`
`
`
`8
`
`

`

`Case 1:14-cv-03131-SMG Document 87 Filed 03/27/18 Page 9 of 20 PageID #: 1608
`
`
`
`Finally, under Rule 23(a)(4), a representative party must adequately protect the interest of
`
`the class. A representative plaintiff is an adequate class representative when (1) that plaintiff’s
`
`interests are not antagonistic to the other class members, and (2) that plaintiff is represented by
`
`qualified, experienced attorneys. See Flag Telecom, 574 F.3d at 35; Melito v. American Eagle
`
`Outfitters, Inc., 2017 WL 3995619, at *8 (S.D.N.Y. Sept. 11, 2007). Because the representative
`
`plaintiff’s claim and anticipated recovery are the same as the other class members in this action,
`
`her interest in its outcome is not antagonistic to theirs. Moreover, proposed class counsel have
`
`submitted declarations which indicate that they are experienced in class action litigation, and in
`
`federal securities litigation in particular. See Declaration of Jeffrey Salas (“Salas Decl.”), Ex. A,
`
`Docket Entry 76; Declaration of James Eccleston (“Eccleston Decl.”), Ex. A, Docket Entry 77;
`
`Declaration of Christopher Gray dated December 29, 2017 (“Second Gray Decl.”), Ex. 1, Docket
`
`Entry 78.
`
`For the foregoing reasons the Court concludes that the certification requirements of Rule
`
`23(a) are met in this case.
`
`B. Rule 23(b) Requirements
`
`In addition to the requirements set out in Rule 23(a), a class must be appropriate under
`
`one of the provisions of Rule 23(b). In this case, plaintiff contends that the proposed class meets
`
`the requirements of Rule 23(b)(3), which provides for certification if
`
`the court finds that the questions of law or fact common to class members
`predominate over any questions affecting only individual members, and that a
`class action is superior to other available methods for fairly and efficiently
`adjudicating the controversy. The matters pertinent to these findings include:
`(A) the class members’ interests in individually controlling the prosecution or
`defense of separate actions; (B) the extent and nature of any litigation concerning
`the controversy already begun by or against class members; (C) the desirability or
`undesirability of concentrating the litigation of the claims in the particular forum;
`and (D) the likely difficulties in managing a class action.
`
`9
`
`
`
`
`
`

`

`Case 1:14-cv-03131-SMG Document 87 Filed 03/27/18 Page 10 of 20 PageID #: 1609
`
`Fed. R. Civ. P. 23(b)(3).
`
`The predominance question raised by Rule 23(b)(3) asks “whether the common,
`
`aggregation-enabling, issues in the case are more prevalent or important than the non-common,
`
`aggregation-defeating, individual issues.” In re Petrobras Sec., 862 F.3d 250, 270 (2d Cir. 2017)
`
`(quoting Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1045 (2016)) (emphasis in original).
`
`This test is met where “resolution of some of the legal or factual questions that qualify each class
`
`member’s case as a genuine controversy can be achieved through generalized proof, and if these
`
`particular issues are more substantial than the issues subject only to individualized proof.”
`
`Mazzei v. Money Store, 829 F.3d 260, 272 (2d Cir. 2016). Moreover, a class action is superior to
`
`other methods of adjudicating a controversy where “substituting a single class action for
`
`numerous trials . . . will achieve significant economies of time, effort and expense, and promote
`
`uniformity of decision.” Melito, 2017 WL 3995619, at *9 (quoting In re U.S. Foodservice Inc.
`
`Pricing Litig., 729 F.3d 108, 130 (2d Cir. 2013)).
`
`As noted above, Judge Irizarry has already decided that the S-3s constituted a contract
`
`between defendant and each class member. The remaining claim in this action is for breach of
`
`that contract, and proof of that breach as to any one plaintiff would demonstrate breach as to all
`
`class members. Any differences among class members would likely be limited damages, which
`
`presumably would be calculated based upon how many units a particular class member acquired
`
`through the DRIP and when the acquisitions took place. These differences are far less prevalent
`
`or important than the issues class members have in common. Moreover, individual trials would
`
`be far less efficient than a class action, and might well lead to inconsistent results. Accordingly,
`
`questions common to class members predominate over any individual questions, and a Rule 23
`
`
`
`10
`
`

`

`Case 1:14-cv-03131-SMG Document 87 Filed 03/27/18 Page 11 of 20 PageID #: 1610
`
`class action is superior in this case to other forms of adjudication. The requirements of Rule
`
`23(b) are thus satisfied as well.
`
`II.
`
`Fairness and Adequacy of the Settlement
`
`A court may approve a class action settlement only upon a finding that the settlement is
`
`both procedurally and substantively fair, reasonable, and adequate. Fed. R. Civ. P. 23(e)(2); see
`
`also McReynolds v. Richards-Cantave, 588 F.3d 790, 804 (2d Cir. 2009); City of Detroit v.
`
`Grinnell Corp., 495 F.2d 448, 463 (2d Cir. 1974), abrogated on other grounds by Goldberger v.
`
`Integrated Res., Inc., 209 F.3d 43 (2d Cir. 2000)) (outlining factors for courts to consider in
`
`determining the substantive fairness of proposed settlements).
`
`A. Procedural Fairness
`
`There is “a presumption of fairness, reasonableness, and adequacy as to the settlement
`
`where a class settlement [is] reached in arm’s-length negotiations between experienced, capable
`
`counsel after meaningful discovery.” McReynolds, 588 F.3d at 803 (internal quotation marks
`
`omitted). Moreover, there is a “strong judicial policy” and public policy in favor of class
`
`settlements. Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 116-17 (2d Cir. 2005).
`
`Thus, while “[t]he Court must eschew any rubber stamp approval in favor of an independent
`
`evaluation, yet, at the same time, it must stop short of the detailed and thorough investigation
`
`that it would undertake if it were actually trying the case.” Grinnell, 495 F.2d at 462.
`
`The parties in this case engaged in some discovery, limited to a production of documents
`
`by defendant and David Lerner Associates, the sole managing dealer for the offerings in
`
`question. Pl. Am. Mem. at 1; Declaration of Christopher Gray (“First Gray Decl.”) ¶ 15, Docket
`
`Entry 73; Final Approval Mem. at 4. Further, the settlement in this case was negotiated by
`
`experienced counsel with substantial background in similar litigation. See Salas Decl., Ex. A;
`
`
`
`11
`
`

`

`Case 1:14-cv-03131-SMG Document 87 Filed 03/27/18 Page 12 of 20 PageID #: 1611
`
`Eccleston Decl., Ex. A; Second Gray Del., Ex. 1. The settlement was reached after the parties
`
`engaged in an entire day of mediation before the Honorable Theodore H. Katz, Retired United
`
`States Magistrate Judge. Final Approval Mem. at 4. Under these circumstances, I conclude that
`
`the settlement is entitled to a presumption of fairness.
`
`B. Substantive Fairness
`
`A court determines whether a proposed settlement is substantively fair by considering the
`
`following Grinnell factors:
`
`(1) the complexity, expense and likely duration of the litigation; (2) the reaction
`of the class to the settlement; (3) the stage of the proceedings and the amount of
`discovery completed; (4) the risks of establishing liability; (5) the risks of
`establishing damages; (6) the risks of maintaining the class action through the
`trial; (7) the ability of the defendants to withstand a greater judgment; (8) the
`range of reasonableness of the settlement fund in light of the best possible
`recovery; (9) the range of reasonableness of the settlement fund to a possible
`recovery in light of all the attendant risks of litigation.
`
`
`McReynolds, 588 F.3d at 804 (citing Grinnell, 495 F.2d at 463 (internal citations omitted)); see
`
`also Wal-Mart Stores, 396 F.3d at 118-19 (combining the fourth, fifth and sixth factors and
`
`combining the eighth and ninth factors); In re Elec. Books Antitrust Litig., 639 F. App’x 724, 727
`
`(2d Cir. 2016) (“[E]valuation of the fairness and adequacy of every settlement requires a court to
`
`assess the likely outcome of future legal proceedings, namely, the relative probabilities of various
`
`outcomes if there were no settlement and the parties went to trial.”) (emphasis omitted); In re Glob.
`
`Crossing Sec. & ERISA Litig., 225 F.R.D. 436, 456 (S.D.N.Y. 2004) (“[T]he court should consider
`
`the totality of these factors in light of the particular circumstances.”).
`
`A majority of the Grinnell factors weigh heavily in favor of approving the settlement in this
`
`case. The reaction of the class to the settlement is particularly significant here. This settlement
`
`concerns 20.8 million of defendant’s unredeemed shares. See Declaration of Justin Hughes dated
`
`August 21, 2017 (“First Hughes Decl.”) ¶¶ 4-5, Docket Entry 62. The Claims administrator sent a
`
`
`
`12
`
`

`

`Case 1:14-cv-03131-SMG Document 87 Filed 03/27/18 Page 13 of 20 PageID #: 1612
`
`total of 24,767 notices to class members. Third Hughes Decl. ¶ 2. The notices explained the
`
`settlement and the timing of the fairness hearing, as well as procedures for objecting or excluding
`
`oneself from the settlement. The Court has received just one objection from the holder of at most,
`
`seven hundred shares. Id. ¶ 3; Transcript of January 16, 2018 Fairness Hearing (“Fairness Tr.”)
`
`4:17-5:14, Docket Entry 84. Only four potential class members chose to exclude themselves.
`
`Third Hughes Decl. ¶¶ 3-4.
`
`A very low number of objections and exclusions ordinarily evinces a class’s tacit
`
`acceptance of a settlement. See In re Elec. Books Antitrust Litig., 639 F. App’x at 727 (approving
`
`of the trial court’s conclusion that “the class implicitly approved the settlement” where there were
`
`“few exclusions and few objections”). The few exclusions and lone objection in this case
`
`recommend final approval even more strongly than they might in another case because the
`
`settlement concerns complex financial instruments held by sophisticated investors who were
`
`largely assisted by advisors. See Fairness Tr. 23:13-14. In this context, the class’s reaction to the
`
`settlement strongly favors final approval.
`
`Moreover, many of the remaining factors also counsel approval of this settlement. The
`
`case is complex and would be costly to bring to trial. Proving damages in this case depends, in
`
`part, on determining whether defendant’s board acted in good faith. In addition, if defendant
`
`produced evidence of third-party sales of REIT shares at prices that approached or equaled
`
`$11.00 per share, plaintiff’s damages theory would be substantially or entirely undermined.
`
`Finally, to make use of the tender offer evidence or other evidence of purchases from third
`
`parties, the class would have to prevail on their reading of the term “our units” as used in the
`
`S-3s, and defeat defendant’s argument that the only prices relevant to DRIP shares are those that
`
`were paid to acquire units directly from defendant. As noted above, Chief Judge Irizarry has
`
`
`
`13
`
`

`

`Case 1:14-cv-03131-SMG Document 87 Filed 03/27/18 Page 14 of 20 PageID #: 1613
`
`already determined that defendant’s reading is a “reasonable interpretation” of the terms of the
`
`S-3s. Second Order at 11.
`
`C. Wenzel’s Objection
`
`The sole objector in this case, Dorothy Wenzel, argues primarily that the settlement fund
`
`inadequately reflects the recovery that would be available if the class were to succeed at trial.
`
`More specifically, at the fairness hearing held on January 16, 2018, objector presented her own
`
`calculation of damages based on different sources for the data used to determine fair market value
`
`of the DRIP shares. Fairness Tr. 15:22-16:13. Based on her own experts’ analysis, as well as
`
`some of plaintiff’s early estimates, objector argues that plaintiff could potentially prove damages in
`
`excess of $80 million. Id. at 16:23-17:1. Moreover, objector contends that plaintiff’s case is
`
`bolstered by Judge Irizarry’s earlier opinion denying defendant’s motion to dismiss, arguing that
`
`“the judge is basically conceding that they’re going to see a jury on [the contract’s interpretation].”
`
`Fairness Tr. at 9:4-5.
`
`As noted above, while a court must conduct an independent evaluation of the fairness of a
`
`proposed class action settlement, “it must stop short of the detailed and thorough investigation
`
`that it would undertake if it were actually trying the case.” Grinnell, 495 F.2d at 462. This
`
`Court’s view is that Wenzel’s objection underestimates the degree of risk plaintiffs would face if
`
`they proceeded to trial. Indeed, objector previously brought her own suit asserting, among other
`
`causes of action, breach of contract based on the same S-3s at issue in this suit. Wenzel v. Knight,
`
`2015 WL 3466863, at *4 (E.D. Va. June 1, 2015). The judge in that action dismissed Wenzel’s
`
`breach of contract claim, concluding that her position was “not supported by any contractual
`
`language . . . . The defendants priced the DRIP units precisely in the manner contemplated by the
`
`Form S-3 and, therefore, did not breach the agreement.” Id. at *7. Moreover, although objector
`
`
`
`14
`
`

`

`Case 1:14-cv-03131-SMG Document 87 Filed 03/27/18 Page 15 of 20 PageID #: 1614
`
`correctly notes that Chief Judge Irizarry identified a question of fact with regard to the
`
`interpretation of the S-3s at issue, one “reasonable interpretation” noted by Judge Irizarry would
`
`undermine plaintiff’s theory of breach and lead to judgment for defendant. Second Opinion
`
`at 10-11.
`
`In short, the litigation risk here is significant. Two courts have already considered breach
`
`of contract claims arising out of the S-3s at issue in this case. The first dismissed the claim
`
`altogether, and the second held that the S-3s are susceptible to an interpretation that would be fatal
`
`plaintiff’s case. Although those rulings do not foreclose the possibility that plaintiffs would
`
`succeed in this case, they lend support to plaintiff’s evaluation of the severity of the litigation risk.
`
`In addition, as noted above, if defendant can produce evidence of sales above the tender offer
`
`price, those sales would reset “the most recent price at which an unrelated person has purchased
`
`. . . units” to a higher one, lowering or eliminating the damages the class could claim. Fairness
`
`Tr. at 26:8-11. Even assuming objector’s theory of damages to be correct, the serious litigation
`
`risks outlined above justify settlement at a price that reflects plaintiff’s assessment of the case.
`
`III.
`
` Attorneys’ Fees, Service Awards, and Costs
`
`A. Attorneys’ Fees
`
`A Court’s discretion in assessing an application for attorneys’ fees in this context is
`
`guided by six non-exclusive factors: “(1) the time and labor expended by counsel; (2) the
`
`magnitude and complexities of the litigation; (3) the risk of the litigation; (4) the quality of
`
`representation; (5) the requested fee in relation to the settlement; and (6) public policy
`
`considerations.” In re Tremont Sec. Law, State Law & Ins. Litig., 699 F. App’x 8, 16