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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

Before The Honorable Richard Seeborg, Judge

IN RE: OPTICAL DISK DRIVE )

PRODUCTS ANTITRUST LITIGATION, ) NO. 10-MD-02143 RS
)

San Francisco, California

Thursday, September 14, 2017

TRANSCRIPT OF PROCEEDINGS

APPEARANCES:

For Indirect Purchaser Plaintiffs:

Hagens Berman Sobol Shapiro LLP
715 Hearst Avenue, Suite 202
Berkeley, CA 94710
(510) 725-3000
(510) 725-3001 (fax)
BY: JEFF D. FRIEDMAN
SHANA E. SCARLETT

For Pioneer Defendants:

Jones Day
555 South Flower Street, Suite 4600
Los Angeles, CA 90013
(213) 489-3939
(213) 243-2539 (fax)
BY: ERIC PATRICK ENSON

For Teac Defendants:

Katten Muchin Rosenman LLP
1999 Harrison Street, Suite 700
Oakland, CA 94612
(415) 293-5810
(415) 520-5747 (fax)
BY: LILY NIU CHINN

Reported By: Lydia Zinn, CSR No. 9223, FCRR, Official Reporter
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1 APPEARANCES:

2 For PLDS Defendants:

Baker Botts LLP
3 1299 Pennsylvania Avenue NW
Washington, DC 20004
4 (202) 639-7700
(202) 639-7890 (fax)
5 BY: JOHN M. TALADAY

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1 Thursday - September 14, 2017 1:35 p.m.

2 P R O C E E D I N G S

3 ---000---

4 THE CLERK: Calling Case 10-MD-2143, In Re: Optical

5 Disk Drive Products Antitrust Litigation. Counsel, please

6 state your appearances.

7 MS. FRIEDMAN: Good afternoon, Your Honor.

8 Jeff Friedman, and with me, Shana Scarlett, from Hagens Berman,

9 on behalf of the Indirect Purchaser Plaintiffs.

10 MR. ENSON: Good afternoon, Your Honor. Eric Enson,

11 Jones Day, on behalf of the Pioneer Defendants.

12 THE COURT: Good afternoon.

13 MR. TALADAY: Your Honor, John Taladay, with

14 Baker Botts, on behalf of the PLDS Defendants.

15 THE COURT: Good afternoon.

16 MS. CHINN: Good afternoon. Lily Chinn, from Katten

17 Muchin Rosenman, on behalf the Teac defendants.

18 THE COURT: Good afternoon.

19 This matter is on for consideration of final approval of

20 the settlement pertaining to the defendants who have just made

21 their appearance, and also a motion for attorneys' fees. Let

22 me first address the -- put the attorneys' fees matter to one

23 side for a moment.

24 We went through this in some detail at the preliminary

25 approval stage. And this is also not written on a blank slate.

 PROCEEDINGS 4

1 This matter has been here for quite some time, so I don't

2 propose we need to go through all of the terms of the proposed

3 final settlement.

4 My understanding is that there was one objection -- is

5 that right, Mr. Friedman? -- but it's primarily to your fee

6 request.

7 MS. FRIEDMAN: Your Honor, there were actually two

8 objections; but yes, one as to -- that was -- Mr. Erwin has,

9 primarily to the fees; and then there was Mr. --

10 THE COURT: Field?

11 MS. FRIEDMAN: -- Field. Correct, Your Honor -- is

12 the second objection.

13 THE COURT: And what is the nature of Mr. Field's

14 objection?

15 MS. FRIEDMAN: So one was there wasn't enough

16 information about what an ODD was, which -- I think it's

17 extensively laid out in all of the filings, and also on the

18 website.

19 The second one is that the website did not show an

20 estimate of potential recovery per optical disk drive, which

21 was not true, as we put in our papers.

22 THE COURT: Right. It was $10.

23 MS. FRIEDMAN: It was $10. Correct, Your Honor.

24 And fees -- basically, he made fees objections. One was

25 that DOJ was of tremendous help to us, and therefore our fees
 PROCEEDINGS 5

1 should be lower than what we request.

2 And then the final one was that we don't make mention as

3 to what happens to undeliverable funds.

4 Those were his four principal objections.

5 THE COURT: Okay. Well, let's go back to the fee

6 objections in a moment --

7 MS. FRIEDMAN: Understood.

8 THE COURT: -- that deal with this. Okay. You have

9 reminded me that we're talking now about -- what was it? --

10 19 percent of the market is attributable to the settling

11 defendants; these three settling defendants. Is that right?

12 MS. FRIEDMAN: Your Honor, the market share is

13 approximately -- PLDS had, we estimated, an 18 percent market

14 share. Pioneer had a 6 percent market share. And Teac had a

15 2.5 percent market share.

16 THE COURT: And PLDS is the successor to PBDS --

17 MS. FRIEDMAN: Correct, Your Honor.

18 THE COURT: -- which remains in the case?

19 MS. FRIEDMAN: No, Your Honor. This -- this settles

20 -- PBDS --

21 THE COURT: Yes.

22 MS. FRIEDMAN: Your Honor, BenQ --

23 THE COURT: BenQ remains in the case, because --

24 MS. FRIEDMAN: Correct. And we say that they are

25 still potentially liable for the acts of PBDS --

 PROCEEDINGS 6

1 THE COURT: Yes. All right.

2 MS. FRIEDMAN: -- but as an entity, no, Your Honor.

3 THE COURT: Okay. So the total recovery up to now,

4 which is all of the settlements in your action -- the Indirect

5 Purchaser Actions -- is now $180 million?

6 MS. FRIEDMAN: Correct.

7 THE COURT: Okay. Well, with respect to the basic

8 terms of the settlement, I do find that they are fair,

9 reasonable, and adequate. And rather than reciting everything

10 here, I mean, this is a very substantial docket, and so I think

11 all of these issues have been set forth before.

12 To the extent the objection that you've just recited from

13 Mr. Field -- I will overrule that objection.

14 MS. FRIEDMAN: Thank you, Your Honor.

15 THE COURT: Before I move on to the fee issue,

16 anything that --

17 Yes.

18 MS. FRIEDMAN: There is one -- there is one technical

19 issue, Your Honor --

20 THE COURT: All right.

21 MS. FRIEDMAN: -- that I do want to highlight. It's

22 really -- it's to protect defendants, really; but the CAFA

23 notice had been filed by all three defendants. However, I

24 believe two defendants had not filed a CAFA notice in time for

25 the Court to enter final judgment 90 days thereafter. And

 PROCEEDINGS 7

1 therefore, the technical date that we would ask you to hold off

2 entering final judgment for these three defendants is

3 October 25th.

4 THE COURT: All right.

5 MS. FRIEDMAN: That will then meet the CAFA

6 requirements for all three of the defendants.

7 THE COURT: All right. Very well.

8 Anything defendants want to say with respect to the

9 settlement, itself, putting the fees aside for the moment?

10 MR. ENSON: Not from me, Your Honor. Thank you.

11 MR. TALADAY: No, Your Honor.

12 MS. CHINN: No, Your Honor.

13 THE COURT: Great. Okay. The fee award that you are

14 seeking in connection with this aspect -- this portion of the

15 action is $11,655,000?

16 MS. FRIEDMAN: Correct, Your Honor.

17 THE COURT: All right. And that would represent

18 21 percent of the settlements thus far?

19 MS. FRIEDMAN: 21 percent of these --

20 THE COURT: Of these. Excuse me.

21 MS. FRIEDMAN: -- three, Your Honor.

22 THE COURT: Right.

23 MS. FRIEDMAN: 23.8 percent of the total would be the

24 percentage.

25 THE COURT: Right. Okay.

 PROCEEDINGS 8

1 We talked at some length, but in conjunction with the last

2 set of settlements, about just the issue -- the general issue

3 that -- "concern," I should say. I had to adopt a mechanism

4 that made sure that as settlements were arrived at, and this

5 type of proceeding occurred, that we weren't looking at

6 compensation -- and I'm not suggesting in any way that there

7 would be any impropriety in your request, but just to make sure

8 that there wasn't, for want of a better way to describe it,

9 payment on a repeat basis for work that had already been done

10 in the case, or for which there had already been an

11 attorneys'-fee award. Because of the nature of this case, you

12 are doing it as you have done it; and therefore, you wouldn't

13 want to have the same legal work compensated four, five, six

14 times. And we had a discussion about that.

15 So perhaps I'm just inviting you to alleviate my concern

16 that this particular request, for example -- that's been taken

17 into account when I'm assessing.

18 MS. FRIEDMAN: Absolutely, Your Honor. So, first of

19 all -- again, all trying to alleviate your concerns -- what

20 we're asking for is what is done as a matter of all of the

21 cases with multiple defendants in conspiracy cases and all of

22 our cases, and where, in particular in conspiracy cases, the

23 work we did to secure settlements back against the other

24 defendants were just as vital and just as applicable to these

25 same defendants that we have here today. That -- so it was not

 PROCEEDINGS 9

1 done simply for that work and for those defendants.

2 THE COURT: Well, I totally understand that, but

3 let's assume just for purposes of discussion that you've billed

4 a one-hour time entry for researching the law of conspiracy.

5 And that is in your first fee petition --

6 MS. FRIEDMAN: Yes.

7 THE COURT: -- with respect to the first defendants.

8 And again, we have to assess this, because these funds are part

9 of the common fund.

10 MS. FRIEDMAN: Yes.

11 THE COURT: So, theoretically, money that goes to

12 counsel could potentially be available to the Class.

13 MS. FRIEDMAN: Yes.

14 THE COURT: So that's why I have to look at this,

15 obviously.

16 MS. FRIEDMAN: Of course.

17 THE COURT: So, going back to my example, what

18 mechanism can I use to make sure that that generalized

19 research, which, indeed, may well be applicable to every --

20 and, indeed, is -- for every settlement that you enter into, is

21 not three times paid?

22 MS. FRIEDMAN: Absolutely. So let me see if I can

23 take it more directly, Your Honor.

24 THE COURT: Okay.

25 MS. FRIEDMAN: The mechanism the courts use is the

 PROCEEDINGS 10

1 same mechanism that is applied to the first, second, or any

2 other settlement, or even a trial victory, which is you look at

3 the totality. And the Court raised it back in December,

4 wanting to make sure to look at the totality.

5 THE COURT: Oh, they did?

6 MS. FRIEDMAN: What that means, Your Honor, is, What

7 is the total settlement amount that is being sought as a basis

8 of fees? Meaning: What's the percentage? And what's the

9 multiplier?

10 And so the --

11 THE COURT: In other words, you're saying -- no.

12 What my question assumes sort of a lodestar analysis.

13 MR. FRIEDMAN: Cross-check.

14 THE COURT: Cross-check. I know that's what I'm to

15 use the lodestar for; but you're suggesting, if I'm

16 understanding you correctly, that perhaps I shouldn't look at

17 it from a lodestar analytical perspective; I should look at it

18 from the perspective of the percentage of the recovery?

19 MS. FRIEDMAN: Correct, Your Honor. And in

20 particular, so let's assume we settled with every single

21 defendant, you know, six months ago. You look at, What

22 percentage were you asking for? Is it reasonable? And what is

23 the multiplier or the lodestar cross-check?, to see. The same

24 analysis applies.

25 So what happens if we came in, and instead of it being a

 PROCEEDINGS 11

1 $55 million settlement, it was a billion-dollar settlement, and

2 we asked for 25 percent of that fund?

3 And then the Court looks at it and says, The multiplier in

4 that would be -- I'm making it up -- 10.

5 At that point, we're now in a world where you're seeing

6 that we're getting paid 10 times for every dollar we put into

7 the case. And we would say -- at that point in time, Your

8 Honor, there's plenty of case law that would say that would be

9 unreasonable. And we wouldn't be asking for a 10 multiplier

10 from you.

11 So that's the way the Court ensures, looking at the

12 totality as this is moving down the line, we always stay within

13 the Court's duty to assess the reasonableness, using those two

14 key benchmarks.

15 THE COURT: Okay.

16 MS. FRIEDMAN: Does that --

17 THE COURT: Yes, it addresses my concern.

18 MS. FRIEDMAN: Thank you, Your Honor.

19 THE COURT: I appreciate you engaging in it, rather

20 than saying, you know, You're off on the wrong angle.

21 MS. FRIEDMAN: Understood.

22 THE COURT: Now, going to the objections for a

23 moment.

24 MS. FRIEDMAN: Yes.

25 THE COURT: There is some suggestion -- and it's not

 PROCEEDINGS 12

1 Mr. Field's objection, but the other objector. Who's that?

2 MS. FRIEDMAN: Conner Erwin.

3 THE COURT: Yes, who I know you style as a serial

4 objector, and are taking the position that their not being here

5 is indicative of concern about a possible sanctions exposure,

6 and the like. So I understand the scenario in which we're

7 operating here, but one thing that he brings up is something

8 that I haven't really focused on thus far, and it's a function

9 of how these cases -- as you know, as well as I -- sometimes

10 develop, in the sense that one judge may begin them. Because

11 they're so massive and they stay around for a long time, there

12 may be more than one judicial officer that touches it.

13 And indeed in this case, Judge Walker was the first Judge

14 who had this, only briefly, because he was leaving, and I was

15 arriving; but he is the Judge that made the attorney selection,

16 lead counsel, and structure, and all of the rest; and

17 apparently engaged in a fairly robust proceeding where there

18 was some -- where the proposals were made, and there were some

19 different slates being proposed, and the like. And the Hagens

20 Berman contingent prevailed. And there were various

21 representations made to him.

22 I haven't plumbed the depths of that back-and-forth with

23 Judge Walker before, but the objector seems to suggest that

24 certain commitments were made by your firm, and that some of

25 those commitments took the form of what -- depending upon the

 PROCEEDINGS 13

1 scenarios of how this case would shake out, that there would be

2 a certain amount requested. And Judge Walker indicated kind of

3 on that basis that he was -- that was one of the factors that

4 he was looking at to make his decision as to who was

5 appropriate going forward. So what am I to do with that

6 objection?

7 MS. FRIEDMAN: Yes, Your Honor. So a couple things.

8 I lead with the following, which is: We at all times, both

9 when Judge Walker clearly had the case -- and we had no idea

10 that Judge Walker was going to retire -- and clearly when this

11 Court ultimately landed with the gift of having this case that

12 keeps giving, obviously, to the Court --

13 THE COURT: Mm-hm, right.

14 MS. FRIEDMAN: -- we always believed that the -- the

15 guidelines that were submitted during the -- the

16 interim-counsel selection process were going to be guidelines

17 that we were going to have to both support to the Court,

18 whether it was to go up from the guideline, ask for the

19 guideline amount, or respond to a Court who said, I want to

20 have you get lower than the guideline amount.

21 So our view at the time was always that the guideline was

22 not binding on the Court; and that from our perspective,

23 especially after what the Court ordered, that it was one in

24 which the Court's inherent authority -- which is what is clear;

25 is your authority to decide reasonableness -- would always be

 PROCEEDINGS 14

1 litigated or argued or considered by the Court down the line.

2 So -- and so that was the backdrop behind the proposal and

3 what we understood Judge Walker ordered.

4 In our previous fee application to you, Your Honor, one of

5 the things we said, Your Honor, was to the extent the Court

6 wanted to plumb into the thought processes, and whether or not

7 Judge Walker had a different take on what was going on at the

8 time, we had no objection, whatsoever, for the Court to assure

9 itself, if the Court felt it wanted to, or what-have-you, to

10 speak with Judge Walker. We had no problem with that,

11 whatsoever. And so, of course, it's the Court's discretion if

12 the Court believes it's important to do so.

13 The other thing I would say to you, Your Honor, is that

14 what we have done -- and we've taken very seriously on this --

15 is that we have considered that guideline in our request to

16 you.

17 THE COURT: "That guideline" being?

18 MS. FRIEDMAN: The guideline we submitted to

19 Judge Walker at the time, which listed various potential fee

20 requests, depending upon how much recovery there was.

21 And so we considered it, Your Honor, in each of our

22 requests.

23 We didn't ask for 25 percent [sic] last time -- I mean

24 30 percent. Excuse me. We made -- even though our multiplier

25 was far below what the law and I think a cross-check supports,
 PROCEEDINGS 15

1 we didn't ask for that.

2 The same thing that I told you at the hearing last time is

3 that we would take in all factors in. And we have made a

4 request even below the 25 percent benchmark. So --

5 THE COURT: Which --

6 MS. FRIEDMAN: And --

7 THE COURT: I appreciate you doing that, but there's

8 also a recognition, I take it, that it's not just because

9 you're good guys. It's because the law suggests that when

10 you're talking about a megacase -- and this is a megacase --

11 that sometimes those benchmarks have to be viewed from that

12 perspective.

13 I mean, and I'm not suggesting there's anything wrong with

14 this, but these are enormous sums, relatively.

15 MS. FRIEDMAN: So, Your Honor -- and so I would say

16 to you that in footnote 179 -- or 79, Your Honor, in our brief

17 to you, we list scores of cases that are megafund cases in this

18 District that the award, Your Honor, for higher than the

19 amounts we're talking about here have resulted in 30 percent

20 requests. Twenty-five. Granted.

21 And so, Your Honor, what I'd say to you is -- is that I

22 recognize that the -- there is some seesaw effect in megafund

23 cases. The Court clearly has discretion to use that.

24 But what the Ninth Circuit has said in Online DVD -- in

25 megafund cases, the way the Court assures itself that it

 PROCEEDINGS 16

1 doesn't find itself in a windfall position, where we have a

2 billion-dollar settlement, and asking for 250 million in fees,

3 or something like that, is you look at the cross-check; the

4 lodestar cross-check.

5 And what's interesting, Your Honor -- and again, I'm not

6 saying it's a good guy. I'm actually -- more wanted to go to

7 my earlier point, which was addressing your question -- is that

8 in the studies, Your Honor, and in the megafund context, the

9 lodestar multipliers between 1 and 4 is essentially the range.

10 And what the studies have shown is that as the settlement

11 dollars or recovery dollars go up, the lodestar cross-check

12 goes up.

13 And it's true that the percentage does go down. That is a

14 trend. But there's dozens of cases that have you at 25, 27,

15 and 30 to 33 percent. So it isn't because we're good guys. I

16 agree. I'm not saying that to the Court.

17 What I'm saying to the Court is we considered the fact

18 that initially in the case that we -- we said to Judge Walker

19 as one element, we will try and essentially go below market in

20 an award. And that's -- and we believe we're doing that.

21 I'm not saying it's not a lot of money, Your Honor. You

22 know. I'd never say that to you.

23 But the reason we are asking for 1.53, and at 21 percent,

24 is -- which is --

25 1.53 is below market, Your Honor.

 PROCEEDINGS 17

1 And 21 percent that we're asking for -- we're not

2 asking -- it is looking at all of the statistics, and even the

3 recent cases -- CRT. I mean, LCD. All of those cases, Your

4 Honor -- it's below market.

5 And so what I'm saying to you is we're doing that for a

6 reason, because we recognize we were appointed in a way in

7 which we said to the Court, We will seriously look at a market

8 below rate [sic], and we're going to deliver that to the Court.

9 THE COURT: Okay. Some smaller items. You know, the

10 incentive awards that you are requesting are certainly within

11 appropriate bounds, and so I have no problem with those.

12 MS. FRIEDMAN: Thank you, Your Honor.

13 THE COURT: The expenses are understandable, and I

14 also don't have any reason to question those.

15 So anything further from the defense side on the

16 discussion of the --

17 MR. ENSON: No, Your Honor. Thank you.

18 THE COURT: Okay. I'll assume that was a "No" for

19 the rest of you. Doesn't surprise me. Okay.

20 Well, I will go ahead and approve the request as you've

21 set forth, both with respect to the settlement of this case,

22 and then also the fees that you request; and by doing so, I am

23 overruling the objections by the two objectors.

24 MS. FRIEDMAN: Thank you, Your Honor.

25 THE COURT: And I will go ahead with the timing you

 PROCEEDINGS 18

1 have requested, and will implement that. And it's approved.

2 MS. FRIEDMAN: Thank you, Your Honor. We appreciate

3 it. We'll see you on September 26th, I believe.

4 THE COURT: You will, indeed.

5 MS. FRIEDMAN: Looking forward to it.

6 (At 1:55 p.m. the proceedings were adjourned.)

7 I certify that the foregoing is a correct transcript from the

8 record of proceedings in the above-entitled matter.

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11 January 3, 2018
Signature of Court Reporter/Transcriber Date
12 Lydia Zinn

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