Cleary Gottlieb represented Petróleo Brasileiro S.A. (Petrobras) which was granted final approval of the $2.95 billion settlement agreement on June 25, 2018 by Judge Jed S. Rakoff of the United States District Court for the Southern District of New York.
The agreement was entered into by Petrobras in In re Petrobras Securities Litigation, 14-cv-9662. In his opinion, Judge Rakoff rejected several objections to the settlement including that the class definition was overbroad because it included persons who did not have securities claims under United States law, that common issues of law and fact did not predominate over issues subject only to individualized proof, and that the class was not adequately represented because it included both persons who had U.S. claims and those who did not. In an important ruling, the Court held that the settlement class need not be confined to those who had meritorious claims as long as they had standing. The Court also reduced class counsel’s attorneys fees by one-third.
In his opinion, Judge Rakoff noted that Petrobras had raised “substantial defenses” that made any recovery by the class at trial “far from a certainty.” He also noted that even taking the allegations in the class’s complaint as fact, “only a portion of the losses suffered by Petrobras shareholders in recent years are attributable to defendants’ fraud” and that “[l]osses incurred due to economic and political factors cannot be recovered through class action litigation.” The Court stated Petrobras’ defenses presented a “sufficient risk at both the motion to dismiss phase and the motion for summary judgment phase.”
Judge Rakoff further complimented Cleary’s performance of its court-assigned task of reviewing plaintiffs’ fee request, stating that “the Court’s confidence was rewarded by the highly professional way in which defendants’ counsel undertook their Court-directed task.”