Unreported / Non-Citable
Background
In this federal securities class action, Lead Plaintiff Daniel Warren alleged that Hawaiian Electric Industries, Inc. (HEI) and its top officials misled investors by suggesting the utility was taking appropriate action to mitigate wildfire risk. Those claims are allegations only; the order makes no merits findings. The court earlier dismissed the action with leave to amend. After amendment, defendants moved to dismiss again, and the parties settled while that second motion was pending. The court granted preliminary approval on March 3, 2026.
The settlement fund is $47,750,000 for purchasers of HEI securities between February 28, 2019 and September 4, 2023. After taxes, notice and administration costs, and fees and costs, the net fund is distributed pro rata under a plan of allocation based on recognized loss. The claims administrator, Verita, sent notice to 160,167 potential class members and received 67,472 claims, of which 24,306 were deemed valid. Twenty class members opted out and one objected. Before settling, counsel had briefed two motions to dismiss, consulted experts, conducted informal discovery, and attended three mediation sessions.
The Court’s Holding
The court granted final approval, finding the settlement fair, adequate, and reasonable under Rule 23(e), the notice adequate, and the earlier class analysis still sound. The recovery of roughly 2.8 percent of estimated damages of $1.716 billion compared favorably with a 1.2 percent median for 2024 securities settlements, and continued litigation carried real risk. The court accepted Verita's explanations for rejecting 43,166 claims, including no recognized loss, ineligible securities, and missing documentation, noting that no rejected claimant appealed and that valid claims covered about 75 percent of estimated damaged shares. It overruled the single objection because the objector, told why her claim was denied, never documented an original purchase within the class period. It found no collusion: the 30 percent fee request was a red flag but was addressed by reduction, there was no clear-sailing clause, and the settlement is non-reversionary. The plan of allocation was approved.
The court granted the fee motion only in part. It refused the requested 30 percent ($14,325,000) because counsel showed no special circumstances justifying a departure above the 25 percent benchmark: the recovery was under three percent of estimated damages and the case settled early. The claimed lodestar of $4,632,430 for 5,779.15 hours failed the cross-check. Levi & Korsinsky performed about 35 percent of the work and held itself out as co-lead counsel despite the court's order denying a co-lead proposal; hourly rates were unjustified; over half the entries were blocks of eight or more hours; roughly 1,946 hours, nearly $1.3 million, post-dated the November 2025 settlement notice; and multiple lawyers billed the same tasks. Calling the lodestar wildly overinflated and likely closer to $2.5 million, the court awarded 20 percent, $9,550,000, noting that the resulting multiplier remained at the high end.
The court awarded Pomerantz $133,938.30 in costs but declined Levi & Korsinsky's separately accrued costs. It capped settlement administration costs at the $500,000 previously approved, though Verita reported $681,026.85 through September 30, 2026. It denied Warren's $10,000 service award because the PSLRA permits only reasonable costs and expenses, including lost wages, and he claimed none.
Key Takeaways
- Fee awards in securities class actions can fall below the 25 percent benchmark when billing records show block billing, post-settlement time, duplication, and disregard of a leadership order.
- The PSLRA does not allow a lead plaintiff to recover an hourly-rate payment for time spent; only documented costs, expenses, and lost wages qualify.
- A recovery of about 2.8 percent of estimated damages was found reasonable when compared with median securities settlements and litigation risk.
- Funds left after two distributions cannot go to the claims administrator without a court order, and class counsel must report and propose a disposition.
- This order approves the settlement but is not the final judgment; the parties must submit a proposed judgment by November 6, 2026.
Why It Matters
The order shows a district court using a fee request as an occasion to test counsel's records line by line and to enforce its own case-management orders on lead counsel. The reduction from 30 to 20 percent came even though the court credited the result obtained, and the court said it would have reduced the award further without that result.
Much remains open. Class counsel must file post-distribution accountings and address any funds left after a second distribution, and the parties must submit a proposed judgment. This is an unpublished district court order, so it carries no precedential weight beyond the persuasiveness of its reasoning.