Free Brief in Support of Motion - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 04-cv-00665-RPM DAVID HELLER, On Behalf of Himself and All Others Similarly Situated, Plaintiff, v. QUOVADX, INC., LORINE R. SWEENEY and GARY T. SCHERPING, Defendants. LEAD COUNSEL'S MEMORANDUM OF LAW IN SUPPORT OF APPLICATION FOR AWARD OF ATTORNEYS' FEES AND REIMBURSEMENT OF EXPENSES

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TABLE OF CONTENTS Page I. II. INTRODUCTION ...............................................................................................................1 THE REQUESTED FEES SHOULD BE AWARDED BASED ON A PERCENTAGE OF THE RECOVERY OBTAINED.........................................................2 A. B. Lead Counsel Are Entitled to a Fee From the Common Fund They Created..........2 Fees in Common Fund Cases Should Be Based on a Percentage of the Recovery ..................................................................................................................3 1. The Supreme Court Has Repeatedly Held that Fees in Common Fund Cases Are Properly Calculated Based on a Percentage of the Recovery ......................................................................................................3 A Reasonable Percentage of the Fund Created Is the Preferred Method of Awarding Attorneys' Fees in Common Fund Cases..................4

2. III.

THE REASONABLENESS OF THE PERCENTAGE FEE REQUESTED IS CONFIRMED BY AN ANALYSIS OF THE JOHNSON FACTORS ...............................7 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. The Amount Involved and the Results Obtained.........................................8 The Time and Labor Involved ...................................................................10 The Novelty and Difficulty of Questions Raised by the Litigation ...........13 The Requisite Skill to Perform the Legal Services Properly .....................15 The Preclusion of Other Employment by Attorneys Due to Acceptance of the Case..............................................................................16 The Customary Fee for Similar Work .......................................................16 Whether the Fee is Fixed or Contingent ....................................................17 Time Limitation Imposed by the Client or Circumstances........................20 The Experience, Reputation and Ability of the Attorneys.........................20 The Undesirability of the Case ..................................................................21

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Page 11. 12. B. IV. The Nature and Length of the Professional Relationship with the Client..........................................................................................................22 Awards in Similar Cases............................................................................22

Lead Counsel's Expenses Are Reasonable and Were Necessarily Incurred in the Prosecution of the Action.............................................................................24

CONCLUSION..................................................................................................................26

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TABLE OF AUTHORITIES Page

Abrams v. Lightolier, Inc., 50 F.3d 1204 (3d Cir. 1995)...............................................................................................24 Angres v. Smallworldwide PLC, No. 99-K-1254 (D. Colo. June 7, 2003) ............................................................................23 Associated Builders & Contractors, Inc. v. Orleans Parish School Bd., 919 F.2d 374 (5th Cir. 1990) .............................................................................................24 Bateman Eichler, Hill Richards, Inc. v. Berner, 472 U.S. 299 (1985).............................................................................................................2 Bee v. Greaves, 910 F.2d 686 (10th Cir. 1990) ...........................................................................................24 Blum v. Stenson, 465 U.S. 886 (1984).......................................................................................................3, 16 Boeing Co. v. Van Gemert, 444 U.S. 472 (1980).........................................................................................................2, 3 Bratcher v. Bray-Doyle Indep. Sch. Dist. No. 42, 8 F.3d 722 (10th Cir. 1993) ...............................................................................................24 Brown v. Phillips Petroleum Co., 838 F.2d 451 (10th Cir. 1988) ...................................................................................4, 8, 10 Camden I Condo. Ass'n v. Dunkle, 946 F.2d 768 (11th Cir. 1991) .............................................................................................5 Cent. Bank, N.A. v. First Interstate Bank, N.A., 511 U.S. 164 (1994)...........................................................................................................20 Cent. R. R. & Banking Co. v. Pettus, 113 U.S. 116 (1885).............................................................................................................3 Cosgrove v. Sullivan, 759 F. Supp. 166 (S.D.N.Y. 1991).....................................................................................11 - iii -

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Page Daubert v. Merrell Dow Pharm., 509 U.S. 579 (1993)...........................................................................................................14 DeMarco v. Depotech Corp., 149 F. Supp. 2d 1212 (S.D. Cal. 2001), aff'd, 2002 U.S. App. LEXIS 2993 (9th Cir. 2002)...........................................................................................................18 Dolgow v. Anderson, 43 F.R.D. 472 (E.D.N.Y. 1968) ...........................................................................................2 Dura Pharm., Inc. v. Broudo, 544 U.S. 336 (2005)...........................................................................................................14 Edmonds v. United States, 658 F. Supp. 1126 (D.S.C. 1987).......................................................................................15 Florin v. Nationsbank, N.A., 34 F.3d 560 (7th Cir. 1994) .................................................................................................5 Goldstein v. MCI WorldCom, 340 F.3d 238 (5th Cir. 2003) .............................................................................................14 Gottlieb v. Barry, 43 F.3d 474 (10th Cir. 1994) ...........................................................................................4, 9 Gottlieb v. Wiles, 150 F.R.D. 174 (D. Colo. 1993), rev'd on other grounds sub nom. Gottlieb v. Barry, 43 F.3d 474 (10th Cir. 1994) ............................................................9, 24 Harman v. Lyphomed, Inc., 945 F.2d 969 (7th Cir. 1991) .............................................................................................22 Harris v. Marhoefer, 24 F.3d 16 (9th Cir. 1994) .................................................................................................24 Hensley v. Eckerhart, 461 U.S. 424 (1983).............................................................................................................8 In Qwest Commc'ns Int'l Sec. Litig., 396 F. Supp. 2d 1178 (D. Colo. 2004)...............................................................................14 - iv -

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Page

In re "Agent Orange" Prod. Liab. Litig., 611 F. Supp. 1296 (E.D.N.Y. 1985), aff'd in part and rev'd in part on other grounds 818 F.2d 226 (2d Cir. 1987) ..................................................................................6 In re Am. Bank Note Holographics, 127 F. Supp. 2d 418 (S.D.N.Y. 2001)..................................................................................5 In re Combustion, Inc., 968 F. Supp. 1116 (W.D. La. 1997)...................................................................................22 In re Cont'l Ill. Sec. Litig., 962 F.2d 566 (7th Cir. 1992) .............................................................................................17 In re Coram Healthcare Corp. Sec. Litig., No. 95-N-2074 (D. Colo. Jan. 24, 1997) ...........................................................................23 In re Einstein Noah Bagel Corp. Sec. Litig., No. 97-N-1614 (D. Colo. June 4, 1999) ............................................................................23 In re GMC Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768 (3d Cir. 1995)...............................................................................................5, 6 In re Harrah's Entm't, No. 95-3925, 1998 U.S. Dist. LEXIS 18774 (E.D. La. Nov. 25, 1998) ......................10, 11 In re Ikon Office Solutions, Inc., 194 F.R.D. 166 (E.D. Pa. 2000).............................................................................12, 13, 22 In re Intelcom Group, Inc. Sec. Litig., No. 95-D-1166 (D. Colo. Mar. 21, 1997) ..........................................................................23 In re King Res. Co. Sec. Litig., 420 F. Supp. 610 (D. Colo. 1976)........................................................................................9 In re Lease Oil Antitrust Litig., 186 F.R.D. 403 (S.D. Tex. 1999).......................................................................................23 In re Northwestern Corp. Sec. Litig., No. 03-4049 (D.S.D. Jan. 14, 2005) ..................................................................................12 -v-

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Page

In re Prudential-Bache Energy Income P'ships Sec. Litig., No. 888, 1994 WL 202394 (E.D. La. May 18, 1994)..................................................16, 18 In re Prudential Sec. Ltd. P'ships Litig., 912 F. Supp. 97 (S.D.N.Y. 1996).......................................................................................22 In re RJR Nabisco Sec. Litig., M.D.L. No. 818, 1992 U.S. Dist. LEXIS 12702 (S.D.N.Y. Aug. 24, 1992) .....................11 In re Resort Income Investors, Inc. Sec. Litig., No. 97-B-1665 (D. Colo. Mar. 13, 1998) ..........................................................................23 In re Rite Aid Corp. Sec. Litig., 146 F. Supp. 2d 706 (E.D. Pa. 2001) .....................................................................11, 16, 22 In re Sumitomo Copper Litig., 74 F. Supp. 2d 393 (S.D.N.Y. 1999)..................................................................................22 In re Sunbeam Sec. Litig., 176 F. Supp. 2d 1323 (S.D. Fla. 2001) ..............................................................................22 In re Superior Beverage/Glass Container Consol. Pretrial, 133 F.R.D. 119 (N.D. Ill. 1990).........................................................................................12 In re Synthroid Mktg. Litig., 264 F.3d 712 (7th Cir. 2001) .............................................................................................17 In re Thirteen Appeals Arising out of the San Juan Dupont Plaza Hotel Fire Litig., 56 F.3d 295 (1st Cir. 1995)..............................................................................................5, 6 In re Warfarin Sodium Antitrust Litig., 212 F.R.D. 231 (D. Del. 2002), aff'd, 391 F.3d 516 (3d Cir. 2004) ..................................15 In re Warner Commc'ns Sec. Litig., 618 F. Supp. 735 (S.D.N.Y. 1985) , aff'd, 798 F.2d 35 (2d Cir. 1986). ............................15 In re Wash. Pub. Power Supply Sys. Sec. Litig., 19 F.3d 1291 (9th Cir. 1994) ...............................................................................................5 - vi -

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Page In re Xcel Energy, Inc., 364 F. Supp. 2d 980 (D. Minn. 2005)..........................................................................11, 12 J.I. Case Co. v. Borak, 377 U.S. 426 (1964).............................................................................................................2 Johnson v. Ga. Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974) .........................................................................................8, 10 Johnston v. Comerica Mortgage Corp., 83 F.3d 241 (8th Cir. 1996) .................................................................................................5 Jones v. Cent. Soya Co., 748 F.2d 586 (11th Cir. 1984) ...........................................................................................18 Kirchoff v. Flynn, 786 F.2d 320 (7th Cir. 1986) ........................................................................................5, 17 Lindy Bros. Builders v. Am. Radiator & Standard Sanitary Corp., 540 F.2d 102 (3d Cir. 1976).................................................................................................3 Maley v. Del Global Techs. Corp., 186 F. Supp. 2d 358 (S.D.N.Y. 2002)............................................................................5, 11 Miller v. Woodmoor Corp., No. 74-F-988, 1978 U.S. Dist. LEXIS 15234 (D. Colo. Sept. 28, 1978) ..........................13 Mills v. Elec. Auto-Lite Co., 396 U.S. 375 (1970).............................................................................................................2 Phemister v. Harcourt Brace Jovanovich, Inc., No. 77 C 39, 1984 U.S. Dist. LEXIS 23595 (N.D. Ill. Sept. 14, 1984).............................17 Piambino v. Bailey, 610 F.2d 1306 (5th Cir. 1980) ...........................................................................................18 Queen Uno Ltd. P'ship. v. Coeur D'Alene Mines Corp., No. 97-WY-1431-CB (D. Colo. Aug. 11, 1999) ...............................................................23

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Page Rasner v. FirstWorld Commc'ns, Inc., No. 00-K-1376 (D. Colo. Jan. 19, 2005) ...........................................................................23 Rawlings v. Prudential-Bache Props., 9 F.3d 513 (6th Cir. 1993) ...................................................................................................5 Ressler v. Jacobson, 149 F.R.D. 651 (M.D. Fla. 1992).......................................................................................18 Schaffer v. Evolving Systems, Inc., No. 98-WY-1338-CB (D. Colo. Oct. 4, 1999)...................................................................23 Schwartz v. Celestial Seasonings, Inc., No. 95-K-1045 (D. Colo. Apr. 25, 2000)...........................................................................23 Shaw v. Toshiba Am. Info. Sys., 91 F. Supp. 2d 942 (E.D. Tex. 2000)...................................................................................6 Sprague v. Ticonic Nat'l Bank, 307 U.S. 161 (1939).........................................................................................................2, 3 Swedish Hosp. Corp. v. Shalala, 1 F.3d 1261 (D.C. Cir. 1993) ...............................................................................................5 Trustees v. Greenough, 105 U.S. 527 (1882).........................................................................................................2, 3 Uselton v. Commercial Lovelace Motor Freight, 9 F.3d 849 (10th Cir. 1993) .............................................................................................4, 8 Vaszlavik v. Storage Tech. Corp., No. 95-B-2525, 2000 U.S. Dist. LEXIS 21140 (D. Colo. Mar. 9, 2000) ..........................23 Walters v. Atlanta, 652 F. Supp. 755 (N.D. Ga. 1985) .....................................................................................18 Weiss v. Mercedes-Benz of N. Am., 899 F. Supp. 1297 (D.N.J. 1995) .......................................................................................11

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Page Wolf v. E.A. Breitenbach, No. 95-D-2572 (D. Colo. May 29, 1997) ..........................................................................23

STATUTES, RULES AND REGULATIONS 15 U.S.C. §78j(b)..........................................................................................................................20, 21 §78u-4(a)(3) .......................................................................................................................25 §78u-4(a)(6) ...............................................................................................................4, 5, 26 Federal Rules of Civil Procedure Rule 1 .................................................................................................................................12

SECONDARY AUTHORITIES 1 Alba Conte, Attorney Fee Awards (2d ed. 1993) §2.02.....................................................................................................................................3 §2.06.............................................................................................................................12, 21 Charles Silver, CLASS ACTIONS IN THE GULF SOUTH SYMPOSIUM: Due Process and the Lodestar Method: You Can't Get There From Here (2000) 74 Tul. L. Rev. 1809 ............................................................................................................7 Elaine Buckberg, Todd Foster, and Stephanie Plancich, Recent Trends in Securities Class Action Litigation: 2003 Early Update (NERA Feb. 2004) ...................................9 John C. Coffee, Jr., Understanding the Plaintiff's Attorney: The Implications of Economic Theory for Private Enforcement of Law Through Class and Derivative Actions (1986) 86 Colum. L. Rev. 669.........................................................................................................7 Report of the Third Circuit Task Force, Court Awarded Attorney Fees (October 8, 1985) 108 F.R.D. 237.................................................................................................................3, 4 Thomas E. Willging, Laural L. Hooper & Robert J. Niemic, Empirical Study of Class Actions in Four Federal District Courts: Final Report to the Advisory Committee on Civil Rules (Federal Judicial Center 1996).............................................................22 - ix -

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I.

INTRODUCTION Pursuant to the Court's Order of November 20, 2006, Lead Counsel submit this

memorandum in support of their application for an award of attorneys' fees and reimbursement of expenses for consideration at a future hearing to be set if the Court should approve the settlement at the February 23, 2007 hearing. As set forth in Lead Counsel's declaration and memorandum filed in support of approval of the settlement, Lead Counsel negotiated an extraordinary settlement with Defendants. Lead Counsel obtained a Settlement Fund that represents approximately 77.5% of likely provable damages without the expenses of expert discovery, summary judgment or trial. For their efforts in achieving a recovery that exceeds the average class action settlement by almost 75%, Lead Counsel seek a 25% fee, which, given the result, is within the range of reasonable fees and is below the average fee approved by other courts where the results obtained are far below that achieved here. Lead Counsel also seek reimbursement of out-of-pocket expenses of $361,279.25 and reimbursement of time and expenses of Lead Plaintiff David Heller in the amount of $8,820.00. Moreover, in response to more than 5,500 notices sent to Class Members, there are no objections to Lead Counsel's fee and expense request. As explained below and in the Declaration of Jeffrey W. Lawrence in Support of Lead Counsel's Application for an Award of Attorneys' Fees and Reimbursement of Expenses ("Lawrence Fee Decl."), filed herewith, the fee requested is fair and reasonable under applicable standards, particularly in view of the outstanding result obtained for the Class. Lead Counsel respectfully submit that the requested attorneys' fees and expenses should be awarded.

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II.

THE REQUESTED FEES SHOULD BE AWARDED BASED ON A PERCENTAGE OF THE RECOVERY OBTAINED A. Lead Counsel Are Entitled to a Fee From the Common Fund They Created

Courts have long recognized that attorneys who represent a class and achieve a benefit for class members are entitled to be compensated for their services, and that where a class plaintiff successfully recovers a fund, the costs of litigation should be spread among the fund's beneficiaries. Under this "common fund" doctrine, established more than a century ago in Trustees v. Greenough, 105 U.S. 527 (1882), attorneys who obtain a recovery for a class in the form of a common fund are entitled to an award of fees and expenses from that fund as compensation for their work. See Boeing Co. v. Van Gemert, 444 U.S. 472 (1980); Mills v. Elec. Auto-Lite Co., 396 U.S. 375 (1970); Sprague v. Ticonic Nat'l Bank, 307 U.S. 161 (1939). Courts have also recognized that in addition to providing just compensation, awards of attorneys' fees from a common funds also serve to encourage skilled counsel to represent those who seek redress for damages inflicted on entire classes of persons, and to discourage future misconduct of a similar nature. See, e.g., Dolgow v. Anderson, 43 F.R.D. 472, 481-84 (E.D.N.Y. 1968). Indeed, the Supreme Court has emphasized that private securities actions, such as the instant action, provide a "`most effective weapon in the enforcement' of the securities laws and are `a necessary supplement to [SEC] action.'" Bateman Eichler, Hill Richards, Inc. v. Berner, 472 U.S. 299, 310 (1985) (quoting J.I. Case Co. v. Borak, 377 U.S. 426, 432 (1964)).

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B.

Fees in Common Fund Cases Should Be Based on a Percentage of the Recovery 1. The Supreme Court Has Repeatedly Held that Fees in Common Fund Cases Are Properly Calculated Based on a Percentage of the Recovery

The Supreme Court has consistently held that where a common fund has been created for the benefit of a class as a result of counsel's efforts, the award of counsel's fee should be determined on a percentage-of-the-fund basis. See, e.g., Greenough, 105 U.S. at 532; Cent. R. R. & Banking Co. v. Pettus, 113 U.S. 116, 124-25 (1885); Sprague, 307 U.S. at 166-67; Boeing, 444 U.S. at 478-79. Indeed, by 1984 this notion was so well established that the Supreme Court needed no more than a footnote to make this point in Blum v. Stenson, 465 U.S. 886, 900 n.16 (1984) ("[U]nder the `common fund doctrine,' . . . a reasonable fee is based on a percentage of the fund bestowed on the class."). See also Report of the Third Circuit Task Force, Court Awarded Attorney Fees, 108 F.R.D. 237, 242 (October 8, 1985) (hereinafter the "Task Force Report") (fee awards in common fund cases have historically been computed based upon a percentage of the fund); 1 Alba Conte, Attorney Fee Awards §2.02, at 31-32 (2d ed. 1993) (same). Moreover, in the wake of the Supreme Court's decisions in Boeing, 444 U.S. 472, and Blum, 465 U.S. 886, which reaffirmed the appropriateness of the percentage method in common fund cases, in 1984, Judge Aldisert of the Third Circuit convened a task force of prominent judges and practitioners to reconsider Lindy Bros. Builders v. Am. Radiator & Standard Sanitary Corp., 540 F.2d 102, 116-18 (3d Cir. 1976) (en banc) ("Lindy II") because "a number of difficulties [had] been encountered in applying the [lodestar method]." Task Force Report, 108 F.R.D. at 238. The Third Circuit Task Force, headed by Professor Arthur Miller of Harvard Law School, identified at least nine perceived deficiencies of the Lindy II "lodestar" approach, and found that there was a -3-

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"widespread belief" that these deficiencies "either offset or exceed [the] benefits" of the lodestar method. Task Force Report, 108 F.R.D. at 246. Accordingly, the Third Circuit Task Force concluded that although Lindy II continued to have merit in statutory fee-shifting cases, and should be followed in such cases, fee awards in common fund cases should be based on a percentage of recovery. Task Force Report, 108 F.R.D. at 254-59. 2. A Reasonable Percentage of the Fund Created Is the Preferred Method of Awarding Attorneys' Fees in Common Fund Cases

In Brown v. Phillips Petroleum Co., 838 F.2d 451, 454 (10th Cir. 1988), the Tenth Circuit affirmed the propriety of awarding attorneys' fees on a percentage basis in a common fund case.1 Cases following Brown confirm a "preference" in the Tenth Circuit for the percentage method. In Gottlieb v. Barry, 43 F.3d 474 (10th Cir. 1994) the court stated: In our circuit, following Brown and Uselton, either [the percentage or lodestar] method is permissible in common fund cases; however, Uselton implies a preference for the percentage of the fund method. Id. at 483.2 Moreover, the Private Securities Litigation Reform Act of 1995 ("PSLRA") has made the percentage method the standard for determining whether attorneys' fees are reasonable. See 15 U.S.C. §78u-4(a)(6). The PSLRA states that "[t]otal attorneys' fees and expenses awarded by the court to counsel for the plaintiff class shall not exceed a reasonable percentage of the amount" recovered for the class. 15 U.S.C. §78u-4(a)(6). Courts have concluded that, by drafting the PSLRA
1 2

See Brown, 838 F.2d at 454-55. See also Uselton v. Commercial Lovelace Motor Freight, 9 F.3d 849, 853 (10th Cir. 1993).

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in such a manner, Congress expressed a preference for the percentage, as opposed to the lodestar, method of determining attorneys' fees in securities class actions. See Maley v. Del Global Techs. Corp., 186 F. Supp. 2d 358, 370 (S.D.N.Y. 2002); In re Am. Bank Note Holographics, 127 F. Supp. 2d 418, 430 (S.D.N.Y. 2001). In addition, supporting authority for the percentage method in other circuits and by commentators is overwhelming. Since the issuance of the Task Force Report in 1985, virtually every circuit court has joined the United States Supreme Court in approving use of the percentageof-the-fund method in common fund cases. See, e.g., In re Thirteen Appeals Arising out of the San Juan Dupont Plaza Hotel Fire Litig., 56 F.3d 295, 307 (1st Cir. 1995); In re GMC Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 821-22 (3d Cir. 1995); Rawlings v. Prudential-Bache Props., 9 F.3d 513, 515-17 (6th Cir. 1993); Florin v. Nationsbank, N.A., 34 F.3d 560, 564-65 (7th Cir. 1994); Johnston v. Comerica Mortgage Corp., 83 F.3d 241, 246 (8th Cir. 1996); In re Wash. Pub. Power Supply Sys. Sec. Litig., 19 F.3d 1291, 1296 (9th Cir. 1994); Camden I Condo. Ass'n v. Dunkle, 946 F.2d 768, 774 (11th Cir. 1991) ("After reviewing Blum, the [Third Circuit] Task Force Report, and . . . cases from other circuits, we believe that the percentage of the fund approach is the better reasoned in a common fund case."); Swedish Hosp. Corp. v. Shalala, 1 F.3d 1261, 1271 (D.C. Cir. 1993) (percentage of the fund recovered is the only permissible measure of awarding fees in common fund cases). As these and many other courts have noted, the percentage method directly aligns the interests of the class and its counsel and provides a powerful incentive for efficient prosecution, thereby benefiting both litigants and the judicial system. For example, in Kirchoff v. Flynn, 786 F.2d

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320, 325 (7th Cir. 1986), the Seventh Circuit succinctly summarized some of the benefits of the percentage method: The contingent fee uses private incentives rather than careful monitoring to align the interests of lawyer and client. The lawyer gains only to the extent his client gains. . . . The unscrupulous lawyer paid by the hour may be willing to settle for a lower recovery coupled with a payment for more hours. Contingent fees eliminate this incentive and also ensure a reasonable proportion between the recovery and the fees assessed to defendants. Conversely, numerous courts have criticized the lodestar method for encouraging plaintiffs' attorneys to needlessly drag out complex litigation for years in order to run up "lodestar" hours, even when their clients' and the class's interests would be much better served by an earlier, more efficient, settlement of a case based on arm's-length negotiations conducted by experienced counsel.3 One of the nation's foremost scholars in the field of class actions and attorneys' fees, Professor Charles Silver of the University of Texas School of Law, has also concluded that - among its many other benefits - the percentage method is also far superior to the lodestar method in aligning the interests of class counsel with the interests of absent class members. Indeed, as Professor Silver notes:

See, e.g., In re "Agent Orange" Prod. Liab. Litig., 611 F. Supp. 1296, 1306 (E.D.N.Y. 1985) (criticizing lodestar approach as one that "tends to encourage excess discovery, delays and late settlements, while it discourages rapid, efficient and cheaper resolution of litigation") (Weinstein, C.J.), aff'd in part and rev'd in part on other grounds, 818 F.2d 226 (2d Cir. 1987); GMC, 55 F.3d at 821 (noting that lodestar method has been criticized for giving plaintiffs' counsel "the incentive to delay settlement in order to run up fees"); Thirteen Appeals, 56 F.3d at 307 (lodestar method creates "`a disincentive for the early settlement of cases'") (citation omitted); Shaw v. Toshiba Am. Info. Sys., 91 F. Supp. 2d 942, 964 (E.D. Tex. 2000) ("Again, simply put, the lodestar method rewards plodding mediocrity and penalizes expedient success.") (Heartfield, J.).

3

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The consensus that the contingent percentage approach creates a closer harmony of interests between class counsel and absent plaintiffs than the lodestar method is strikingly broad. It includes leading academics, researchers at the RAND Institute for Civil Justice, and many judges, including those who contributed to the Manual for Complex Litigation, the Report of the Federal Courts Study Committee, and the report of the Third Circuit Task Force. Indeed, it is difficult to find anyone who contends otherwise. No one writing in the field today is defending the lodestar on the ground that it minimizes conflicts between class counsel and absent claimants. In view of this, it is as clear as it possibly can be that judges should not apply the lodestar method in common fund class actions. The Due Process Clause requires them to minimize conflicts between absent claimants and their representatives. The contingent percentage approach accomplishes this. Charles Silver, CLASS ACTIONS IN THE GULF SOUTH SYMPOSIUM: Due Process and the Lodestar Method: You Can't Get There From Here, 74 Tul. L. Rev. 1809, 1819-20 (2000) (footnotes omitted). Indeed, Professor John C. Coffee, a distinguished scholar in the field, argues that a percentage of the recovery is the only reasonable method of awarding fees in common fund cases: If one wishes to economize on the judicial time that is today invested in monitoring class and derivative litigation, the highest priority should be given to those reforms that restrict collusion and are essentially self-policing. The percentage of the recovery fee award formula is such a "deregulatory" reform because it relies on incentives rather than costly monitoring. Ultimately, this "deregulatory" approach is the only alternative.4 III. THE REASONABLENESS OF THE PERCENTAGE FEE REQUESTED IS CONFIRMED BY AN ANALYSIS OF THE JOHNSON FACTORS The Tenth Circuit has recognized that in determining the appropriate percentage of attorneys' fees in common fund cases, the court should be informed by an analysis of the factors articulated by

John C. Coffee, Jr., Understanding the Plaintiff's Attorney: The Implications of Economic Theory for Private Enforcement of Law Through Class and Derivative Actions, 86 Colum. L. Rev. 669, 724-25 (1986).

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the Fifth Circuit in Johnson v. Ga. Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974). See Brown, 838 F.2d at 454-55, Uselton, 9 F.3d at 853. These factors are commonly referred to as the Johnson factors. As shown below, application of the Johnson factors as a cross-check amply supports the fairness and reasonableness of the percentage fee requested. The twelve Johnson factors are: (1) The time and labor required. . . . (2) The novelty and difficulty of the questions. . . . (3) The skill requisite to perform the legal service properly. . . . (4) The preclusion of other employment by the attorney due to acceptance of the case. . . . (5) The customary fee [for similar work in the community]. . . . (6) Whether the fee is fixed or contingent. . . . (7) Time limitations imposed by the client or the circumstances. . . . (8) The amount involved and the results obtained. . . . (9) The experience, reputation, and ability of the attorneys. . . . (10) The "undesirability" of the case. . . . (11) The nature and length of the professional relationship with the client. . . . [and] (12) Awards in similar cases. Johnson, 488 F.2d at 717-19. The relevance of each of the Johnson factors will vary in any particular case, and, rather than requiring a rigid application of each factor, the Tenth Circuit has left it to the lower court's discretion to apply those factors in view of the circumstances of a particular case. Brown, 838 F.2d at 456; see also Uselton, 9 F.3d at 853 ("applicability and weight" of the Johnson factors will "undoubtedly be different" in common fund and statutory fee determinations). As discussed below, consideration of the applicable Johnson factors confirms the reasonableness of the fee requested here. 1. The Amount Involved and the Results Obtained

While listed as the eighth Johnson factor, Lead Counsel discuss this factor first because, as many courts recognize, the result achieved for the class is the most important factor in determining an appropriate fee award. Hensley v. Eckerhart, 461 U.S. 424, 436 (1983) ("most critical factor is the degree of success obtained"); Brown, 838 F.2d at 456 (in a common fund case the results -8-

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obtained may be given greater weight); Gottlieb v. Wiles, 150 F.R.D. 174, 181 (D. Colo. 1993) (proper focus in awarding fees is amount of restitution made to class), rev'd on other grounds sub nom. Gottlieb v. Barry, 43 F.3d 474 (10th Cir. 1994); In re King Res. Co. Sec. Litig., 420 F. Supp. 610, 630 (D. Colo. 1976) ("the amount of the recovery, and end result achieved are of primary importance, for these are the true benefit to the client"). A Settlement Fund of $9 million has been obtained through the diligent efforts of Lead Counsel without the necessity and risk of prolonged litigation, trial and appeals. The exceptional nature of this settlement is supported by a review of recoveries in other securities class action settlements. Setting aside the fact that provable damages could end up to be a fraction of Lead Plaintiff's preliminary damage analysis had the case moved forward through expert discovery and trial, a recent study by National Economic Research Associates states that in 2003, the median percentage of investor losses recovered in shareholder class action settlements was 2.8%, up from 2.7% in 2002. See Elaine Buckberg, Todd Foster, and Stephanie Plancich, Recent Trends in Securities Class Action Litigation: 2003 Early Update, at 8 (NERA Feb. 2004). Attached as Exhibit 1 to the Declaration of Joy Ann Bull in Support of Lead Counsel's Motion for Award of Attorneys' Fees and Reimbursement of Expenses ("Bull Decl."), filed herewith. The present settlement represents approximately 77.5% of damages assuming complete success on all liability and damage theories for the Class. When measured against the results in comparable cases, Lead Counsel achieved a remarkable recovery for Class Members, a result that fully supports the 25% fee award requested.

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2.

The Time and Labor Involved

While the time and labor required to successfully prosecute this Action and obtain the outstanding settlement for the benefit of the Class fully justifies the requested fee, the Tenth Circuit has found this Johnson factor to be of less importance in a common fund case, such as this case. Although the Johnson factors are relevant in determining a reasonable fee in a common fund case, the inherent differences between statutory fee and common fund cases could justify a trial judge's decision to assign different relative weights to those factors in the two types of cases. For example, the first factor ­ time and labor required ­ is an essential touchstone for recovery in a statutory fee case where reasonableness is measured in part by reference to the lodestar analysis. In a common fund case, however, although time and labor required are appropriate considerations, the ninth Johnson factor ­ the amount involved and the results obtained ­ may be given greater weight when, as in this case, the trial judge determines that the recovery was highly contingent and that the efforts of counsel were instrumental in realizing recovery on behalf of the class.5 Lead Counsel vigorously prosecuted this case on behalf of the Class. Lead Counsel performed an extensive factual investigation, successfully opposed Defendants' motions to dismiss; reviewed and analyzed over 350,000 pages of documents obtained from Defendants and third parties; worked with forensic accountants in analyzing the Ernst & Young workpapers; obtained certification of the Class; participated in mediation; and negotiated a settlement that results in an extraordinary recovery of approximately 77.5% of aggregate Class damages. See generally Lawrence Fee Declaration and Declaration of Jeffrey W. Lawrence in Support of Lead Plaintiff's Motion for Final Approval of Class Action Settlement and Plan of Allocation filed on February 14, 2007, for discussion of Lead Counsel's efforts.

5

Brown, 838 F.2d at 456. See also In re Harrah's Entm't, No. 95-3925, 1998 U.S. Dist. LEXIS 18774, at *15 (E.D. La. Nov. 25, 1998) ("Because counsel prosecuted this action on a contingent fee basis, the Court would rather focus on results obtained.").

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In total, Lead Counsel and their para-professionals devoted 2,518 hours to this Action with a resulting lodestar of $1,055,510.00.6 The requested fee represents a multiple of approximately 2.13 times Lead Counsel's lodestar. The multiplier reflected here falls within the range of multipliers found reasonable for cross-check purposes by courts in common fund cases and is fully justified here given the effort required, the risks faced and overcome, and the results achieved.7 Moreover, reliance on the amount of attorney time in determining the fee award has been substantially abandoned in common fund cases because it encourages delay, inefficiency, and recalcitrance toward early settlement. Thus, if class counsel can obtain an excellent result for the settlement class early in a case, the fact that the time involved is less than if the case had unnecessarily dragged on for several more years should not diminish the percentage to be awarded. To the contrary, such efficiency and effectiveness should be rewarded and the percentage method accomplishes this result. See Harrah's Entm't, 1998 U.S. Dist. LEXIS 18774, at *15 ("Because counsel prosecuted this action on a contingent fee basis, the Court would rather focus on results

6

At the outset of the case, Lead Counsel retained Dyer & Shuman, LLP as local counsel. Ademi & O'Reilly, LLP contacted Lead Counsel on Mr. Heller's behalf regarding his interest in bringing this Action. Lead Counsel will share the attorneys' fees awarded with these two firms. In addition, any expenses incurred by Dyer & Shuman, LLP or Ademi & O'Reilly, LLP will be reimbursed by Lead Counsel out of Lead Counsel's fee award.

7

See, e.g., In re Rite Aid Corp. Sec. Litig., 146 F. Supp. 2d 706, 735-36 (E.D. Pa. 2001) (25% fee representing 10.73 multiplier); In re Xcel Energy, Inc., 364 F. Supp. 2d 980, 999 (D. Minn. 2005) (awarded 25% fee of $80 million settlement representing a 4.7 multiplier); Maley, 186 F. Supp. 2d at 371 ("it clearly appears that the modest multiplier of 4.65 is fair and reasonable"). In re RJR Nabisco Sec. Litig., M.D.L. No. 818, 1992 U.S. Dist. LEXIS 12702, at *22, (S.D.N.Y. Aug. 24, 1992) (approving fees of over $17.7 million, notwithstanding objection that such an award of fees represented a multiplier of six); Weiss v. Mercedes-Benz of N. Am., 899 F. Supp. 1297, 1304 (D.N.J. 1995) (awarding fee resulting in 9.3 multiplier); Cosgrove v. Sullivan, 759 F. Supp. 166, 167 n.1 (S.D.N.Y. 1991) (multiplier of 8.74).

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obtained. To overly emphasize the amount of hours spent on a contingency fee case would penalize counsel for obtaining an early settlement and would distort the value of the attorneys' services."). Judge David S. Doty of the District of Minnesota recently observed, in Xcel, 364 F. Supp. 2d at 992, that early settlements are consistent with the purposes of the Federal Rules of Civil Procedure, which "`shall be construed and administered to ensure the just, speedy, and inexpensive determination of every action.'" (quoting Fed. R. Civ. P. 1) (emphasis in original). In awarding a 25% fee on an $80 million settlement Judge Doty complimented counsel for the efficient prosecution of the case and the prompt resolution of the litigation. Similarly, in a recent case involving an earnings restatement of a South Dakota-based utility, and a shareholder recovery of $49 million, Chief Judge Lawrence Piersol awarded a 24.25% fee in a case that settled while the initial motion to dismiss was pending. "The Court finds that Plaintiffs' counsel competently and vigorously represented the class and proceeded expeditiously to reach a resolution of this action." In re Northwestern Corp. Sec. Litig., No. 03-4049 (D.S.D. Jan. 14, 2005). Bull Decl., Ex. 2 at p.2. As the court noted in In re Superior Beverage/Glass Container Consol. Pretrial, 133 F.R.D. 119, 131 (N.D. Ill. 1990): "There should be no arbitrary ceiling on multipliers." This is especially true here when a lodestar/multiplier analysis is used merely as a cross-check on reasonableness. See In re Ikon Office Solutions, Inc., 194 F.R.D. 166, 196 (E.D. Pa. 2000) ("The court will not reduce the requested award simply for the sake of doing so when every other factor ordinarily considered weighs in favor of approving class counsel's request of thirty percent."); 1 Alba Conte, Attorney Fee Awards §2.06, at 39 (2d ed. 1993) ("When a large common fund has been recovered and the hours

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are relatively small, some courts reach a reasonable fee determination based on large multiples of 5 or 10 times the lodestar."). 3. The Novelty and Difficulty of Questions Raised by the Litigation

The novelty and difficulty of the issues in a case is a significant factor to be considered in making a fee award. Courts have long recognized that securities class actions present inherently complex and novel issues. Retired Judge Finesilver noted in Miller v. Woodmoor Corp.: The benefit to the class must also be viewed in its relationship to the complexity, magnitude, and novelty of the case. . . . Despite years of litigation, the area of securities law has gained little predictability. There are few "routine" or "simple" securities actions. Courts are continually modifying and/or reversing prior decisions in an attempt to interpret the securities law in such a way as to follow the spirit of the law while adapting to new situations which arise. Indeed, many facets of securities law have taken drastically new directions during the pendency of this action.8 Judge Finesilver's comments ring even more true today. The adoption of the PSLRA has made the successful prosecution of securities cases even more complex and uncertain. See Ikon, 194 F.R.D. at 194 ("securities actions have become more difficult from a plaintiff's perspective in the wake of the PSLRA"). The gravamen of Lead Plaintiff's case is that Quovadx issued false or misleading statements and used a variety of accounting manipulations in violation of Generally Accepted Accounting Principles ("GAAP") that materially misrepresented its business and financial condition. The accounting transactions at issue were complex and because "GAAP generally tolerates a range of

8

Miller v. Woodmoor Corp., No. 74-F-988, 1978 U.S. Dist. Lexis 15234, at *11-12 (D. Colo. Sept. 28, 1978).

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reasonable treatments" would be complex to prove. In Qwest Commc'ns Int'l Sec. Litig., 396 F. Supp. 2d 1178, 1186 (D. Colo. 2004). Thus, when Lead Counsel undertook this representation, there was no assurance that the Action would survive Defendants' attacks on the pleadings, motions for summary judgment, trial and appeal. Indeed, in Goldstein v. MCI WorldCom, 340 F.3d 238 (5th Cir. 2003), the Fifth Circuit affirmed a dismissal with prejudice of a securities fraud class action complaint against Bernard Ebbers and WorldCom arising out of a massive securities fraud which later was revealed and admitted to by the company and for which Ebbers was later convicted. Even though Lead Plaintiff successfully defeated Defendants' motions to dismiss, at trial the Lead Plaintiff would have the substantial burden of proving, inter alia, that each of the Defendants was responsible for an omission or a misstatement that was material, that the omissions or misstatements impacted the market price of Quovadx securities and caused damage to the Class, and, that each Defendant acted with scienter. The complex factual and legal questions at issue would have continued to be the subject of substantial disagreement among the parties. Assuming Lead Plaintiff was able to prove liability, he still would have had to confront expert testimony by Defendants that all or most of the damages the Class suffered were not caused by any alleged misleading statements but instead by market factors unrelated to the fraud and that Lead Plaintiff's method of calculating damages is invalid in the wake of Supreme Court cases such as Daubert v. Merrell Dow Pharm., 509 U.S. 579 (1993) and Dura Pharm., Inc. v. Broudo, 544 U.S. 336 (2005). To the extent that the Defendants could prevail on issues relating to liability or show that assumptions made by Lead Plaintiff's experts were incorrect or unreliable or could show that any portion of the market drop was due to factors other than the alleged fraud, Lead Plaintiff's claimed damages could be significantly reduced. - 14 -

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Further, in complex and substantial cases such as this, it must be recognized that even a victory at the trial stage does not guarantee ultimate success. Both trial and judicial review are unpredictable and could seriously and adversely affect the scope of an ultimate recovery, if not the recovery itself. Indeed, as the court observed in In re Warner Communications Sec. Litig.: Even a victory at trial is not a guarantee of ultimate success. If plaintiffs were successful at trial and obtained a judgment for substantially more than the amount of the proposed settlement, the defendants would appeal such judgment. An appeal could seriously and adversely affect the scope of an ultimate recovery, if not the recovery itself.9 Despite the difficulty of the issues raised, Lead Counsel secured an outstanding recovery for the Class. As a result, this factor supports the requested award. 4. The Requisite Skill to Perform the Legal Services Properly

Lead Counsel effectively prosecuted this Action, culminating in a superb recovery for the Class. See In re Warfarin Sodium Antitrust Litig., 212 F.R.D. 231, 261 (D. Del. 2002) (class counsel showed their effectiveness through the favorable cash recovery obtained), aff'd, 391 F.3d 516 (3d Cir. 2004). As the court recognized in Edmonds v. United States, 658 F. Supp. 1126, 1137 (D.S.C. 1987), "prosecution and management of a complex national class action requires unique legal skills and abilities." Those unique skills were called upon here. The quality of Lead Counsel's work on this case was excellent and is ultimately reflected in the result. The notable recovery obtained for the Class is the direct result of the efforts of highly skilled and specialized attorneys who possess substantial

In re Warner Commc'ns Sec. Litig., 618 F. Supp. 735, 747-48 (S.D.N.Y. 1985) (citing numerous examples), aff'd, 798 F.2d 35 (2d Cir. 1986).

9

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experience in the prosecution of complex securities class actions. See Rite Aid, 146 F. Supp. 2d at 735 (in awarding 25% of a $193 million settlement fund, the court noted the skill and efficiency of plaintiffs' counsel and the outstanding results). This settlement represents an excellent result for the Class, one that is attributable to the diligence, determination and hard work of Lead Counsel. 5. The Preclusion of Other Employment by Attorneys Due to Acceptance of the Case

When Lead Counsel undertook to represent the Lead Plaintiff in this Action, it was with the expectation that they would have to devote a significant amount of time and effort, and advance large sums in out-of-pocket expenses, to its prosecution. The dedication of time needed to successfully prosecute this Action monopolized the resources of Lead Counsel on many occasions and precluded them from working on other matters. The time spent by Lead Counsel on this case was at the expense of the time that counsel could have devoted to other matters. 6. The Customary Fee for Similar Work

In local, regional and national markets, complex commercial cases require a contingent fee between 30 and 40 percent of the gross recovery (even more when the attorney must bear the litigation expenses). As Justices Brennan and Marshall observed in their concurring opinion in Blum: "`In tort suits, an attorney might receive one-third of whatever amount the plaintiff recovers. In those cases, therefore, the fee is directly proportional to the recovery.'" Blum, 465 U.S. at 903* (citation omitted). See also In re Prudential-Bache Energy Income P'ships Sec. Litig., No. 888, 1994 WL 202394, at *2 (E.D. La. May 18, 1994) ("Prudential II") ("Were this not a class action,

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attorney's fees would range between 30% and 40%, the percentages commonly contracted for in contingency cases.").10 Circuit courts and scholars have encouraged the "mimic the market" approach in setting fees in common fund class action cases. The Seventh Circuit has consistently taken this approach. See In re Cont'l Ill. Sec. Litig., 962 F.2d 566, 568 (7th Cir. 1992) ("[I]t is not the function of judges in fee litigation to determine the equivalent of the medieval just price. It is to determine what the lawyer would receive if he were selling his services in the market rather than being paid by court order."); In re Synthroid Mktg. Litig., 264 F.3d 712, 718 (7th Cir. 2001) ("[W]hen deciding on appropriate fee levels in common-fund cases, courts must do their best to award counsel the market price for legal services, in light of the risk of nonpayment and the normal rate of compensation in the market at the time."). Thus, the customary contingent fee in the marketplace supports a fee award of 25% of the Class recovery. 7. Whether the Fee is Fixed or Contingent

Lead Counsel undertook this matter on a contingent fee basis, assuming a substantial risk that they would have to devote a significant amount of time and incur substantial expenses in prosecuting this Action without any assurance of being compensated for their efforts. The contingent nature of

See also Phemister v. Harcourt Brace Jovanovich, Inc., No. 77 C 39, 1984 U.S. Dist. LEXIS 23595, at *40-41 (N.D. Ill. Sept. 14, 1984) ("Contingent fee arrangements in non-class action damage lawsuits use the simple method of paying the attorney a percentage of what is recovered for the client. The more the recovery, the more the fee. The percentages agreed on vary, with one-third being particularly common."); Kirchoff, 786 F.2d at 323 (observing that "40% is the customary fee in tort litigation" and noting, with approval, contract providing for one-third contingent fee if litigation settled prior to trial).

10

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Lead Counsel's fees should be given substantial weight in assessing the requested fee award.11 Courts across the country have consistently recognized that the risk of receiving little or no recovery is a major factor in awarding attorneys' fees. For example, in awarding counsel's attorneys' fees in Prudential II, the court noted the risks that plaintiffs' counsel had taken: Although today it might appear that risk was not great based on Prudential Securities' global settlement with the Securities and Exchange Commission, such was not the case when the action was commenced and throughout most of the litigation. Counsel's contingent fee risk is an important factor in determining the fee award. Success is never guaranteed and counsel faced serious risks since both trial and judicial review are unpredictable. Counsel advanced all of the costs of litigation, a not insubstantial amount, and bore the additional risk of unsuccessful prosecution. Prudential II, 1994 WL 202394, at *6. Indeed, the risk of no recovery in complex cases of this type is very real. There are numerous class actions in which Lead Counsel have expended thousands of hours and received no remuneration whatsoever despite their diligence and expertise. Subsequent to the passage of the PSLRA, many cases have been dismissed at the pleading stage in response to defendants' arguments that the complaints do not meet the PSLRA's pleading standards. For example, Lerach Coughlin was co-lead counsel in DeMarco v. Depotech Corp., 149 F. Supp. 2d 1212 (S.D. Cal. 2001), aff'd, 2002 U.S. App. LEXIS 2993 (9th Cir. 2002). Depotech was dismissed with prejudice and the district court's decision was upheld by the Ninth Circuit. The Lerach Coughlin firm incurred more than $726,000 in lodestar and out-of-pocket expenses which will remain unpaid. In addition, Lerach Coughlin was co-lead counsel in Lemmer v. Nu-Kote Holdings, No. 3-98-V0161-L (N.D. Tex.).

See Jones v. Cent. Soya Co., 748 F.2d 586, 591 (11th Cir. 1984); Piambino v. Bailey, 610 F.2d 1306, 1328 (5th Cir. 1980); Walters v. Atlanta, 652 F. Supp. 755, 759 (N.D. Ga. 1985); Ressler v. Jacobson, 149 F.R.D. 651, 656 (M.D. Fla. 1992).

11

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This case was dismissed with prejudice and affirmed by the Fifth Circuit. Lerach Coughlin incurred over $714,000 in unreimbursed time and out-of-pocket expenses in that matter. As noted above, securities cases have always been complex and difficult and the PSLRA has only increased the risk in successfully prosecuting a securities class action. Even a successful settlement does not guarantee recoupment of all time and expenses incurred. For example, Lerach Coughlin recently settled In re Cisco Systems, Inc. Sec. Litig., No. C01-20418-JW(PVT), which was pending in the Northern District of California. The case was settled for $99.25 million after five years of vigorous litigation efforts. At the outset of the case, the lead plaintiffs and Lerach Coughlin negotiated a percentage fee equal to 15.1%. And while Lerach Coughlin obtained an excellent result for the class, their unreimbursed billable time exceeded the agreed upon and awarded fee percentage by over $3 million. In addition, Lerach Coughlin was co-lead counsel in Thomas & Thomas Rodmakers, Inc. v. Newport Adhesives and Composites, Inc., No. CV-99-07796-FMC (RNBx) (C.D. Cal.). This case recently settled after five years of intense litigation for a combined amount of $69 million. While the class was made virtually whole by the settlement, due to the extensive litigation required to bring that case to a successful conclusion, the total percentage fee award equal to the 31% that was requested and approved by the court did not cover plaintiffs' counsel's collective lodestar. Lerach Coughlin will not be paid for over $800,000 in lodestar. Similarly, Lerach Coughlin was court-appointed lead counsel in Employer-Teamsters Joint Council No. 84 Pension Trust Fund v. America West Holdings Corp., No. CIV-99-0399-PHX-EHC (OMP) (D. Ariz.). The America West case was filed in early 1999 and aggressively litigated for six years, which included a dismissal with prejudice in the district court, an appeal to the Ninth Circuit, - 19 -

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reversal of the district court's dismissal, discovery, summary judgment and preparation for trial. After the trial court substantially shortened the class period and excluded a significant amount of plaintiffs' evidence during the pre-trial proceedings, the case was settled. While receiving the requested fees and expenses of 30% of the settlement fund, Lerach Coughlin remains unpaid for over $8 million in lodestar incurred during the litigation of that matter. The risks of contingent litigation also are highlighted by the fact that a dramatic change in the law can result in the dismissal of a claim after a great deal of time and effort have been expended on the case. For example, the United Stated Supreme Court eliminated aiding and abetting liability under §10(b) of the Securities Exchange Act of 1934. Cent. Bank, N.A. v. First Interstate Bank, N.A., 511 U.S. 164 (1994). As a result, many courts dismissed long pending cases that otherwise stated a proper cause of action at the time they were brought. Because the fee in this matter was entirely contingent, the only certainty was that there would be no fee without a successful result and that such a result would be realized only after considerable and difficult effort. Lead Counsel have received no compensation during the course of this Action and have committed substantial resources of both time and money to the vigorous and successful prosecution of this Action for the benefit of the Class. The contingent nature of Lead Counsel's representation strongly favors the requested percentage fee award. 8. Time Limitation Imposed by the Client or Circumstances

This factor does not pertain to this case. 9. The Experience, Reputation and Ability of the Attorneys

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fields of securities class actions and complex litigation. Lead Counsel's efforts in diligently protecting the Class's interest and bringing this Action to a successful conclusion are the best indicator of the ability of the attorneys involved.12 10. The Undesirability of the Case

The issues presented in this case rendered the case inherently risky, if not "undesirable," from the start. In fact, eight of the nine §10(b) plaintiffs voluntarily dismissed their cases after the Court's early ruling that the cases would not be consolidated and a lead plaintiff would be appointed only after successfully stating a cause of action following Defendants' motions to dismiss. In addition, this case involved a panoply of difficult issues of fact and law. The risks assumed by Lead Counsel in prosecuting this case on a contingent fee basis were substantial. When counsel undertook representation of the Lead Plaintiff and the Class in this Action, it was with the knowledge that they would have to spend substantial time and money and face significant risks without any assurance of being compensated for their efforts. There is no question that this case was risky when Lead Counsel accepted this retention, and the risks Lead Counsel faced must be assessed as they existed at the time they undertook the Action and not in light of the recovery ultimately achieved. See, e.g.,

12

Professor Conte acknowledged the propriety of adequate fees in common fund cases to encourage lawyers to prosecute such cases. [C]ourts have been careful to award a fully compensable reasonable fee based on the underlying economic inducement for class action lawyers to pursue potentially expensive or complex common fund class litigation. These lawyers assume the risk of no compensation unless they successfully confer common fund benefits on the class, based on their reasonable expectation that they will share in the recovery in a fair proportion, in contrast to receiving a fee based initially on time-expended criteria that fail to give the results obtained factor primary consideration. 1 Alba Conte, Attorney Fee Awards §1.09, at 16 (2d ed. 1993) (emphasis in original). - 21 -

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Harman v. Lyphomed, Inc., 945 F.2d 969, 974 (7th Cir. 1991) (the riskiness of a case must be judged ex ante not ex post). The "undesirability" factor supports the requested fee percentage. 11. The Nature and Length of the Professional Relationship with the Client

Lead Counsel have not represented Mr. Heller in other cases. 12. Awards in Similar Cases

The requested fee percentage also falls below the average of fee awards in a study of security class actions conducted in 1996 by National Economic Research Associates, an economics consulting firm. Using data from 433 shareholder class actions, the study reports on the issue of attorneys' fees: "Regardless of case size, fees average approximately 32 percent of the settlement." , Bull Decl., Ex. 3. These figures are in accord with a Federal Judicial Center study that found in federal class actions generally (including non-securities actions) median attorney fee awards were in the range of 27% to 30%. Thomas E. Willging, Laural L. Hooper & Robert J. Niemic, Empirical Study of Class Actions in Four Federal District Courts: Final Report to the Advisory Committee on Civil Rules, at 69 (Federal Judicial Center 1996), Bull Decl., Ex. 4. Furthermore, there are numerous recent published fee awards where courts have awarded fees equal to or above the fees requested here. See, e.g., Rite Aid, 146 F. Supp. 2d at 735-36 (25% fee awarded in $193 million settlement); In re Sunbeam Sec. Litig., 176 F. Supp. 2d 1323, 1345 (S.D. Fla. 2001) (25% fee awarded); Ikon, 194 F.R.D. at 197 (30% of net settlement of $111 million awarded); In re Sumitomo Copper Litig., 74 F. Supp. 2d 393 (S.D.N.Y. 1999) (27% fee awarded in $116 million settlement); In re Prudential Sec. Ltd. P'ships Litig., 912 F. Supp. 97 (S.D.N.Y. 1996) (27% fee on $110 million settlement); In re Combustion, Inc., 968 F. Supp. 1116 (W.D. La. 1997)

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(fee of 36% of $127 million settlement); In re Lease Oil Antitrust Litig., 186 F.R.D. 403 (S.D. Tex. 1999) (fee of 25% of $190 million settlement). The requested fee percentage is also less than percentages awarded in other securities class action cases from within this district. See Rasner v. FirstWorld Commc'ns, Inc., No. 00-K-1376 (D. Colo. Jan. 19, 2005) (fee equal to 33% of recovery plus expenses), Bull Decl., Ex. 5; Angres v. Smallworldwide PLC, No. 99-K-1254 (D. Colo. June 7, 2003) (awarding fees of 33-1/3% of the recovery fund), Bull Decl., Ex. 6; Vaszlavik v. Storage Tech. Corp., No. 95-B-2525, 2000 U.S. Dist. LEXIS 21140, *4 (D. Colo. Mar. 9, 2000) (awarding 30% fee, noting, "[f]ees for class action settlements generally range from 20% - 50%" and "class action fee awards are typically 30% of the fund created by the settlement"); Schwartz v. Celestial Seasonings, Inc., No. 95-K-1045 (D. Colo. Apr. 25, 2000) (awarding fees of 33-1/3% of the settlement fund), Bull Decl., Ex. 7; In re Intelcom Group, Inc. Sec. Litig., No. 95-D-1166 (D. Colo. Mar. 21, 1997) (awarding fees of 33-1/3% of the recovery), Bull Decl., Ex. 8; Schaffer v. Evolving Systems, Inc., No. 98-WY-1338-CB (D. Colo. Oct. 4, 1999) (fee equal to 30% of recovery plus expenses), Bull Decl., Ex. 9; Queen Uno Ltd. P'ship. v. Coeur D'Alene Mines Corp., No. 97-WY-1431-CB (D. Colo. Aug. 11, 1999) (fee of 30% plus expenses), Bull Decl., Ex. 10; In re Einstein