NYLJ “Proposed Settlement of Class Action Concerning Alleged Bribery Scheme Approved as ‘Fair and Reasonable’”
By Thomas E.L. Dewey and Christopher DeNicola
After information implicating Tenaris S.A. (Tenaris) executives in an alleged scheme to bribe Argentinian government officials was disclosed in 2018, Tenaris’s stock price dropped. Later that year, plaintiff Charles Atanasio filed a securities class action in the U.S. District Court for the Eastern District of New York against Tenaris and other defendants. That action was later consolidated with another class action concerning nearly identical claims.
After several years of litigation—including extensive discovery and motion practice—the parties notified the court in November 2022 that they had reached a $9.5 million settlement in principle. Subsequently, the lead plaintiffs filed an unopposed motion for settlement approval, which the court preliminarily approved. Thereafter, lead plaintiffs filed a motion seeking final approval of the proposed settlement, and lead counsel filed a motion for attorneys’ fees.
In In re Tenaris S.A. Securities Litigation, Judge Kiyo Matsumoto found that the proposed settlement satisfied both procedural and substantive fairness. As to procedural fairness, the court found that the settlement resulted from arm’s-length negotiations enhanced by substantial discovery and that lead plaintiffs and lead counsel had adequately represented the settlement class because they had engaged in “vigorous advocacy” on its behalf.
As to substantive fairness, the court found that the settlement was “fair, reasonable, and adequate” because there were significant risks associated with establishing liability and damages and collecting on a judgment in foreign jurisdictions; lead counsel had conducted a thorough investigation and extensive discovery; and not a single settlement class member objected to the settlement.
In addition, the court granted lead counsel’s request for a one-third recovery of the settlement amount plus interest as attorneys’ fees. In reaching that decision, the court stated that district courts in the Second Circuit “routinely approve” fee awards in that percentage as reasonable.
This article first appeared in the New York Law Journal on July, 3 2024. Thomas E.L. Dewey is a partner at Dewey Pegno & Kramarsky. Christopher DeNicola, counsel at the firm, assisted in the preparation of the article.
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