This Action has not gone to trial, and the Court has not decided in favor of either side. Instead, legal counsel for all the parties, along with Defendants’ insurance carriers, participated in an all-day mediation before an experienced JAMS mediator and, after further negotiations thereafter, the Settling Parties agreed to the Settlement to avoid the costs and risks of further litigation.
Plaintiffs and Lead Counsel believe that the Settlement is in the Settlement Class Members’ best interest and provides them with a substantial benefit now, instead of engaging in years of further uncertain and expensive litigation - including Defendants’ motion for reconsideration (pending as of the date the parties agreed to settle) of the Court’s order denying their latest motion to dismiss; Plaintiffs’ class certification motion, which Defendants would oppose; the parties’ cross- motions for summary judgment; pre-trial motions and a lengthy trial; likely appeals; and attempts to enforce any judgment – all with the possibility of no recovery at all. By settling the Action with the Settling Defendants at this point, Plaintiffs are not admitting that the Action lacked merit, or that the Settlement Class’s ultimate recovery would not have been greater than the Settlement Amount had litigation continued. Neither the Stipulation, nor any of its terms or provisions, nor any of the negotiations or proceedings connected with it, shall be construed as an admission or concession by the Plaintiffs or the Settlement Class Members that any of their claims lack merit; that any defenses asserted by any of the Defendants in the Action have any merit; or that damages recoverable in the Action would not have exceeded the Settlement Fund.
The Settling Defendants have denied and continue to deny all of the allegations made and claims brought by Plaintiffs, maintain that they have meritorious defenses, and believe they would prevail at trial. Nonetheless, the Settling Defendants have concluded that further litigation of this Action would be protracted and expensive, taking into account the uncertainty and risks inherent in any litigation, especially in complex cases like this Action. The Settling Defendants have, therefore, determined that it is desirable and beneficial that the Action be fully and finally settled under the terms and conditions of this Settlement. The Settlement shall in no event be construed as, or deemed to be evidence of, an admission or concession by Settling Defendants with respect to any claim of any fault or liability or wrongdoing or damage to the Plaintiffs or the Settlement Class Members in this Action.
The Settlement must be compared to the risk of no recovery after contested dispositive motions, trial, and likely appeals. A trial is a risky proposition. The claims in the Action involve numerous complex legal and factual issues, many of which would require expert testimony. The Settling Parties disagree on both liability and damages, and do not agree on the average amount of damages per share, if any, that would be recoverable if Plaintiffs were to have prevailed on each claim alleged against the Settling Defendants. Among their many other disagreements are: (1) whether the Settling Defendants violated the securities laws or otherwise engaged in wrongdoing; (2) whether the misrepresentations and omissions alleged by the Plaintiffs were material, false, misleading or otherwise actionable; (3) the extent (if any) that the alleged misrepresentations and omissions influenced Higher One’s stock price during the Settlement Class Period; and (4) the method for determining whether, and the extent to which, purchasers of Higher One stock suffered injury and damages that could be recovered at trial.