     15-3983(L)
     In re Facebook, Inc., IPO Securities and Derivative Litigation

                         UNITED STATES COURT OF APPEALS
                             FOR THE SECOND CIRCUIT

                                  SUMMARY ORDER
     RULINGS  BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER
     FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF
     APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY
     ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX
     OR AN ELECTRONIC DATABASE (WITH THE NOTATION ‘SUMMARY ORDER’). A PARTY CITING A SUMMARY
     ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 1        At a stated term of the United States Court of Appeals for
 2   the Second Circuit, held at the Thurgood Marshall United States
 3   Courthouse, 40 Foley Square, in the City of New York, on the
 4   27th day of December, two thousand sixteen.
 5
 6   PRESENT: DENNIS JACOBS,
 7            JOSÉ A. CABRANES,
 8            BARRINGTON D. PARKER, JR.,
 9                          Circuit Judges.
10
11   - - - - - - - - - - - - - - - - - - - -X
12   In re Facebook, Inc., IPO Securities and
13   Derivative Litigation
14
15   Facebook, Inc., Mark Zuckerberg, Sheryl
16   K. Sandberg, David Ebersman, David M.
17   Spillane, Marc L. Andreessen, Erskine
18   B. Bowles, James W. Breyer, Donald E.
19   Graham, Reed Hastings, Peter A. Thiel,
20   Morgan Stanley & Co. LLC, J.P. Morgan
21   Securities LLC, Goldman, Sachs & Co.,
22   Merrill Lynch, Pierce, Fenner & Smith
23   Incorporated, Barclays Capital Inc.,
24   Allen & Company LLC, Citigroup Global
25   Markets Inc., Credit Suisse Securities
26   (USA) LLC, Deutsche Bank Securities
27   Incorporated, RBC Capital Markets LLC,
28   Wells Fargo Securities, LLC, Blaylock
29   Robert Van LLC, BMO Capital Markets
30   Corp., C.L. King & Associates, Inc.,

                                                1
 1   Cabrera Capital Markets, LLC, Castleoak
 2   Securities, L.P., Cowen And Company,
 3   LLC, E*Trade Securities LLC, Itau Bba
 4   USA Securities, Inc., Lazard Capital
 5   Markets LLC, Lebenthal & Co., LLC, Loop
 6   Capital Markets LLC, M.R. Beal &
 7   Company, Macquarie Capital (USA) Inc.,
 8   Muriel Siebert & Co., Inc., Oppenheimer
 9   & Co. Inc., Pacific Crest Securities
10   LLC, Piper Jaffray & Co., Raymond James
11   & Associates, Inc., Samuel A. Ramirez
12   & Company, Inc., Stifel, Nicolaus &
13   Company, Incorporated, The Williams
14   Capital Group, L.P., William Blair &
15   Company, LLC,
16             Intervenors-Appellants,
17
18                 -v.-                             15-3983(L)
19                                                  15-3986(con)
20                                                  15-3987(con)
21                                                  15-3990(con)
22   North Carolina Department of State
23   Treasurer, Arkansas Teacher Retirement
24   System, Fresno County Employees’
25   Retirement Association, Sharon Morley,
26   Jose G. Galvan, Mary Jane Lule Galvan,
27   Eric Rand, Paul Melton, Lynn Melton,
28             Intervenors-Appellees,
29
30   NASDAQ OMX Group, Inc., The NASDAQ Stock
31   Market, LLC, Robert Greifeld, Anna M.
32   Ewing,
33             Defendants-Appellees,
34
35   T3 Trading Group, LLC, Avatar
36   Securities LLC, Philip Goldberg, Steve
37   Jarvis, Atish Gandhi, Colin Suzman,
38   Meredith Bailey, Faisal Sarni,
39            Plaintiffs-Appellees.*
40
41   - - - - - - - - - - - - - - - - - - - -X

          *    The Clerk of Court is respectfully directed to amend
     the official caption to conform with the above.
                                    2
 1
 2   FOR INTERVENORS-APPELLANTS: RICHARD D. BERNSTEIN, Willkie Farr
 3                               & Gallagher LLP, Washington, DC,
 4
 5                                Andrew Brian Clubock, Susan E.
 6                                Engel, Kirkland & Ellis LLP, New
 7                                York, NY and Washington, DC,
 8
 9                                James P. Rouhandeh, Charles
10                                Duggan, Andrew Ditchfield, Davis
11                                Polk & Wardwell LLP, New York, NY.
12
13
14   FOR INTERVENORS-APPELLEES:   JOHN J. RIZIO-HAMILTON, Salvatore
15                                J. Graziano, Bernstein Litowitz
16                                Berger & Grossmann LLP, New York,
17                                NY,
18
19                                Thomas A. Dubbs, James W. Johnson,
20                                Thomas G. Hoffman Jr., Labaton
21                                Sucharow LLP, New York, NY,
22
23                                Steven E. Fineman, Lieff Cabraser
24                                Heimann & Bernstein LLP, New York,
25                                NY,
26
27                                Frank R. Schirripa, Hach Rose
28                                Schirripa & Cheverie LLP, New York,
29                                NY.
30
31   FOR DEFENDANTS-APPELLEES:    PAUL LANTIERI III, William A.
32                                Slaughter, Stephen J. Kastenberg,
33                                Ballard Spahr LLP, Philadelphia,
34                                PA.
35
36   FOR PLAINTIFFS-APPELLEES:    Vincent R. Cappucci, Jordan
37                                Abraham Cortez, Entwistle &
38                                Cappucci LLP, New York, NY,
39
40                                Douglas G. Thompson, Michael G.
41                                Mclellan, Finkelstein Thompson
42                                LLP, Washington, DC,
43



                                   3
 1                                Christopher Lovell, Victor E.
 2                                Stewart, Lovell Stewart Halebian
 3                                Jacobson LLP, New York, NY.
 4
 5
 6        Appeal from a judgment of the   United States District Court
 7   for the Southern District of New     York (Sweet, J.).
 8        UPON DUE CONSIDERATION, IT IS   HEREBY ORDERED, ADJUDGED AND
 9   DECREED that the judgment of the     district court be AFFIRMED.
10
11        Facebook, Inc., et al. appeal as intervenors from the final
12   judgment of the United States District Court (Sweet, J.)
13   approving a class action settlement in this securities case
14   stemming from the initial public offering (“IPO”) of Facebook
15   stock. We assume the parties’ familiarity with the underlying
16   facts, the procedural history, and the issues presented for
17   review.
18        The appellants intervene to vindicate their interests as
19   defendants in separate but related litigation. The Judicial
20   Panel on Multidistrict Litigation transferred two groups of
21   actions relating to the Facebook IPO to the same judge in the
22   Southern District of New York, who consolidated them into two
23   class actions: a “Nasdaq action” (pleading claims against
24   various Nasdaq defendants arising from investor losses allegedly
25   caused by technical malfunctions on the exchange on the day of
26   the IPO) and a “Facebook action” (pleading claims against various
27   Facebook and underwriter defendants arising from investor losses
28   allegedly caused by misrepresentations and omissions in the IPO
29   prospectus). This appeal arises from the settlement of the
30   Nasdaq action. The parties in this action are satisfied with
31   the settlement. The appellants are the defendants in the
32   Facebook action, which is ongoing.
33        The appellants do not challenge the terms of the settlement
34   vis-à-vis the parties in the settled case. Though they objected
35   to it in the district court and now at least formally challenge
36   its approval, they do not object to its substance--that is, no
37   one disputes the settlement’s fairness, nor is there a genuine
38   dispute about its form. The dispute on appeal concerns the
39   judgment credit provision, which, consistent with the Private
40   Securities Litigation Reform Act (“PSLRA”) and the law of this
41   Circuit, provides that any judgment against the Facebook
42   defendants arising from the same matters alleged in the Nasdaq
43   complaint will be reduced by the greater of (a) the amount that
44   corresponds to the percentage of responsibility of the Nasdaq

                                    4
 1   defendants for the damages awarded in the Facebook action [the
 2   “proportional responsibility” deduction], or (b) the amount
 3   paid by the Nasdaq defendants to the common plaintiffs for common
 4   damages [the “pro-tanto” deduction] (or (c) a third quantity
 5   not relevant here). See generally 15 U.S.C. § 78u-4(f)(7)(B).
 6   Appellants object to the inclusion of the phrase “for common
 7   damages,” but they do not argue that they are entitled to a
 8   judgment credit for damages that are not common; nor does there
 9   appear to be any serious contention that the wording of the
10   settlement fails to conform to the law. Rather, appellants
11   object to any implication that the damages alleged in the two
12   actions may not be common, and that the issue is left to be
13   litigated and decided in the Facebook action. They argue that
14   all of the damages to the common plaintiffs are common, that
15   appellants should therefore receive judgment credit in the
16   Facebook action for the full amount of the Nasdaq settlement
17   paid to common plaintiffs, and that the district court was
18   obligated to decide that issue in connection with the Nasdaq
19   settlement.
20        Appellants’ objection, therefore, is not truly an objection
21   to the terms of settlement at all, but is to the district court’s
22   decision to defer the question of common damages to be decided
23   in the Facebook action. They argue that the district court
24   lacked the authority to enter final judgment without first
25   deciding whether the damages in the two actions are indeed common
26   damages, because the PSLRA requires the district court to resolve
27   such issues and because the failure to resolve them violates
28   principles of finality. We disagree.
29        The PSLRA provides that nonsettling defendants are entitled
30   to a judgment credit for a settlement by another defendant. See
31   15 U.S.C. § 78u-4(f)(7)(B). This in effect codifies the
32   common-law “one satisfaction rule, which provides that a
33   plaintiff is entitled to only one satisfaction for each
34   injury.” Singer v. Olympia Brewing Co., 878 F.2d 596, 600 (2d
35   Cir. 1989). Under this rule, “a nonsettling defendant is
36   entitled to a credit of the settlement amount against any
37   judgment obtained by the plaintiff against the nonsettling
38   defendant as long as both the settlement and judgment represent
39   common damages.” Id.
40        Class settlements of federal securities claims have
41   frequently been approved when they have provided a judgment
42   reduction formula that gives nonsettling defendants credit for
43   the greater of (1) “the settlement amount for common damages,”
44   or (2) “the ‘proportionate share’ of the settling defendants’

                                    5
 1   fault as proven at trial.” Gerber v. MTC Elec. Techs. Co.,
 2   Ltd., 329 F.3d 297, 302-3 (2d Cir. 2003). This “capped
 3   proportionate share” formula complies with the one satisfaction
 4   rule because it “ensures that a judgment credit is at least the
 5   amount of the settlement for common damages.” Id. at 303. The
 6   settlement under review calls for application of that formula.
 7        Appellants cite Denney v. Deutsche Bank AG, 443 F.3d 253
 8   (2d Cir. 2006), for a more expansive view of what the PSLRA
 9   requires, but they misconstrue the case. Denney observed that,
10   “[o]rdinarily, the potential harshness of a bar order [depriving
11   non-settling defendants of contribution claims against settling
12   defendants] is mitigated by a judgment credit provision that
13   protects a nonsettling party from paying damages exceeding its
14   own liability”; but that the judgment credit provision under
15   review in that case
16                  simply provide[d] that nonsettling parties shall
17                  be “sufficiently” compensated, without
18                  specifying how such compensation shall be
19                  calculated. The use of the word
20                  “sufficiently”--if read to mean “fully,” as the
21                  district court urges--might provide nonsettling
22                  parties with some peace of mind. But they are
23                  unfairly prejudiced by the failure to specify how
24                  that full and sufficient compensation will be
25                  calculated.
26
27   Id. at 274. Denney emphasized the utility of knowing in advance
28   of trial whether a proportionate, pro rata, or pro tanto
29   methodology will apply to any judgment credit and accordingly
30   remanded “for modification of the judgment credit and/or bar
31   order provisions.” Id. at 276. Denney did not, however,
32   require deciding whether or to what extent damages are common
33   between two actions before approving settlement in one of them.
34   It required only that a settlement with a bar order specify the
35   methodology of any eventual judgment credit. The settlement
36   under review does so specify the methodology.
37        Appellants’ argument that the settlement approval violates
38   principles of finality is no more persuasive. Indeed, the
39   Nasdaq action is done, and the judgment is final. All parties
40   in that action are satisfied, and the judgment can be executed.
41   “[F]inality implies that, after the entry of judgment, the court
42   will concern itself with nothing other than the mechanics of
43   execution.” Int’l Controls Corp. v. Vesco, 535 F.2d 742, 747
44   (2d Cir. 1976). With respect to the Nasdaq action, that finality

                                    6
1   is achieved. The open question of whether and to what extent
2   damages are common with the Facebook action will have no effect
3   whatsoever on the Nasdaq action, and can be litigated just as
4   well in the Facebook action.
5        Accordingly, and finding no merit in Appellants’ other
6   arguments, we hereby AFFIRM the judgment of the district court.

7                                FOR THE COURT:
8                                CATHERINE O’HAGAN WOLFE, CLERK




                                  7
