Investors Seek Settlement Approval in Suit Against Perrigo

IN RE
PERRIGO COMPANY PLC SECURITIES LITIGATION

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

Class Action

LEAD PLAINTIFFS' UNOPPOSED MEMORANDUM OF LAW IN SUPPORT OF UNOPPOSED MOTION FOR (I) PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT AND (II) APPROVAL OF NOTICE TO THE CLASS

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TABLE OF CONTENTS

I. PRELIMINARY STATEMENT

II. HISTORY OF THE LITIGATION AND THE SETTLEMENT

III. SUMMARY OF THE PROPOSED NOTICE PROCESS

IV. ARGUMENT

V. NOTICE TO THE CLASS SHOULD BE APPROVED

V. PROPOSED SCHEDULE OF SETTLEMENT EVENTS

VI. CONCLUSION

TABLE OF AUTHORITIES

CASES

D'Amato v. Deutsche Bank, 236 F.3d 78 (2d Cir. 2001)

Detroit v. Grinnell Corp., 495 F.2d 448 (2d Cir. 1974)

In re AOL Time Warner, Inc. Sec. & ERISA Litig., 2006 WL 903236 (S.D.N.Y. Apr. 6, 2006)

In re China Sunergy Sec. Litig., 2011 WL 1899715 (S.D.N.Y. May 13, 2011)

In re Glob. Crossing Sec. & ERISA Litig., 225 F.R.D. 436 (S.D.N.Y. 2004)

In re IMAX Sec. Litig., 283 F.R.D. 178 (S.D.N.Y. 2012)

In re Initial Pub. Offering Sec. Litig., 243 F.R.D. 79 (S.D.N.Y. 2007)

In re Marsh & McLennan Cos., Inc. Sec. Litig., 2009 WL 5178546 (S.D.N.Y. Dec. 23, 2009)

In re Prudential Sec. Inc. Ltd. P'ships Litig., 163 F.R.D. 200 (S.D.N.Y. 1995)

In re Signet Jewelers Ltd. Sec. Litig., 2020 WL 4196468 (S.D.N.Y. July 21, 2020)

In re Sturm, Ruger, & Co., Inc. Sec. Litig., 2012 WL 3589610 (D. Conn. Aug. 20, 2012)

In re Warner Chilcott Ltd. Sec. Litig., 2008 WL 5110904 (S.D.N.Y. Nov. 20, 2008)

Nieves v. Cmty. Choice Health Plan of Westchester, Inc., 2012 WL 857891 (S.D.N.Y. Feb. 24, 2012)

Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96 (2d Cir. 2005)

RULES

Fed. R. Civ. P. 23

OTHER AUTHORITIES

4 Newberg on Class Actions § 13:13 (5th ed.)

4 Newberg on Class Actions § 13:39 (5th ed.)

Ann. Manual Complex Lit. § 21.632 (4th ed.)

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Lead Plaintiffs the City of Boca Raton General Employees' Pension Plan (“Boca Raton GE”) and Palm Bay Police and Firefighters' Pension Fund (“Palm Bay P&F”) (together, “Lead Plaintiffs”), respectfully submit this memorandum of law in support of their unopposed motion for: (i) preliminary approval of the proposed Settlement between Lead Plaintiffs on behalf of themselves and the proposed Class, and Defendants Perrigo Company plc (“Perrigo,” or the “Company”), Murray S. Kessler, and Ronald Winowiecki (the “Individual Defendants” and, collectively with Perrigo, “Defendants,” and together with Lead Plaintiffs, the “Parties”); (ii) approval of the form and manner of the settlement notices to members of the Class;¹ and (iii) the scheduling of a hearing (the “Settlement Hearing”) on the final approval of the Settlement, proposed Plan of Allocation, and Lead Counsel's application for an award of attorneys' fees and Litigation Expenses. The Parties' agreed-upon Order Preliminarily Approving Settlement and Providing for Notice (the “Preliminary Approval Order”) is attached as Exhibit A to the Stipulation and Agreement of Settlement filed herewith.

I. PRELIMINARY STATEMENT

Lead Plaintiffs and Defendants have negotiated, at arm's length and with the assistance of an experienced and neutral mediator, a proposed settlement of all claims in this action for $31,900,000.00 in cash. This resolution, which represents an outstanding result that recovers for the Class an exceptionally high percentage of maximum damages, was the result of two-and-a-half years of intensive litigation that involved, among other things: (i) a thorough pre-filing investigation of the claims in this matter, (ii) the filing of a detailed amended complaint, (iii) consultation with experts, (iv) the filing of a detailed second amended complaint upon discovery of critical new information; (v) successfully opposing in part Defendants' motion to dismiss; (vi) engaging in extensive document discovery, including the review and analysis of over 81,000 pages of documents produced by Defendants and multiple third parties — including thousands of pages of attorney-client privileged documents that Plaintiffs successfully moved to compel Defendants to produce — as well as obtaining letters rogatory to obtain discovery in Ireland; (vii) deposing ten fact witnesses, as well as Defendants' accounting expert and damages/loss causation expert; (viii) defending depositions of representatives of Plaintiffs, as well as Plaintiffs' accounting expert and damages expert; (ix) successfully opposing Defendants' motions for summary judgment and their motion to exclude Plaintiffs' accounting expert; (x) successfully moving for summary judgment on the issues of materiality and falsity; (xi) successfully moving to exclude Defendants' accounting expert; (xii) defeating Defendants' motion for reconsideration of the Court's decisions on summary judgment and the exclusion of Defendants' accounting expert; (xiii) the submission of detailed mediation statements setting forth the Parties' respective positions on the hotly disputed issues in the case; and (xiv) three formal day-long mediations involving rigorous and extensive negotiations. The terms of the Settlement are set forth in the Stipulation and Agreement of Settlement (“Stipulation”), filed simultaneously herewith.²

As the case proceeded toward an October 2021 trial date, Plaintiffs faced substantial risks at trial, including the significant risk that a jury would be persuaded by Defendants' scienter defense that they relied on the advice of their outside lawyers, auditors, and tax advisors in determining their disclosure obligations. Indeed, Defendants would have argued that they immediately disclosed receipt of the Audit Findings Letter to their outside advisors and counsel, who reviewed and provided advice regarding the challenged disclosure, and that Defendant Kessler purchased over $1 million worth of Perrigo stock after the Company's disclosure. Defendants would have emphasized to the jury that such behavior is entirely inconsistent with fraudulent intent. Given these and other risks inherent in this complex securities class action, and the Settlement's substantial value, the Settlement represents an excellent result for the Class.

At this preliminary approval stage, the Court need only make a preliminary evaluation of the Settlement's fairness, such that the Class should be notified of the proposed Settlement. In light of the substantial recovery obtained, and the risks and expenses posed by protracted litigation against Defendants, Lead Plaintiffs respectfully request that the Court grant preliminary approval of the Settlement and enter the Preliminary Approval Order, which will, among other things:

II. HISTORY OF THE LITIGATION AND THE SETTLEMENT

On January 3, 2019, this Action was commenced in this Court, styled Charles Masih v. Perrigo Company PLC, et al., Case No. 1:19-cv-00070. By Order dated March 26, 2019 (ECF No. 35), the Court appointed the Boca Raton GE and Palm Bay P&F as Lead Plaintiffs and approved Lead Plaintiffs' selection of Saxena White P.A. (“Saxena White”) as Lead Counsel for the proposed class.

Following an extensive investigation, and after consultation with experts, Lead Plaintiffs filed their Amended Class Action Complaint on April 12, 2019 (ECF No. 42), asserting claims against Defendants under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, and against the Individual Defendants under Section 20(a) of the Exchange Act.

On May 3, 2019, Defendants moved to dismiss the Amended Class Action Complaint (ECF Nos. 51-53). In response to information Plaintiffs learned from exhibits filed with Defendants' motion to dismiss, Plaintiffs filed their Second Amended Class Action Complaint (the “Complaint”) on May 31, 2019 (ECF No. 59). The Complaint alleged, among other things, that Defendants made false and misleading statements or omissions in several of Perrigo's 2018 SEC filings concerning a tax audit Perrigo faced in Ireland. In particular, the Complaint alleged that, on or about October 31, 2018, Defendants received an “audit findings letter” notifying Perrigo, at the conclusion of a year-long audit, that Irish Revenue had determined Perrigo owed approximately €1.6 billion in taxes, and that, in spite of this, (1) Defendants falsely and misleadingly stated in Perrigo's November 8, 2018 Form 10-Q that its liability “cannot not be quantified,” and only “could be material” and (2) Defendants' public statements regarding the audit and Audit Findings Letter violated GAAP provisions governing disclosure of contingent liabilities. The Complaint further alleged that Perrigo's stock price was artificially inflated as a result of Defendants' false and misleading statements, and that Perrigo's stock price declined when the truth regarding Defendants' alleged misrepresentations was revealed.

On June 28, 2019, Defendants moved to dismiss the Complaint, which motion Plaintiffs opposed. See ECF Nos. 64-66, 68, 69. By Order dated January 23, 2020, the Court denied in part and granted in part Defendants' motion to dismiss, and upheld Plaintiffs' allegations that statements in Perrigo's November 8, 2018 10-Q were false and misleading and violated GAAP (ECF No. 73).

On March 12, 2020, Lead Counsel, Defendants' counsel, and a representative of Lead Plaintiffs participated in an initial in-person mediation session with nationally recognized mediator, and former Ambassador (Ret.) David Carden in New York.³ In advance of the mediation, the Parties prepared and exchanged detailed mediation statements. This mediation session did not result in a resolution.

Thereafter, the Parties engaged in extensive negotiations and litigation regarding discovery; the service of and response to requests for production and interrogatories; and extensive document review. Lead Plaintiffs further successfully moved to compel Defendants to produce over a thousand documents that would otherwise be subject to attorney-client privilege. See Memorandum Opinion and Order dated December 8, 2020, ECF No. 169. Plaintiffs deposed the Individual Defendants, as well as certain key employees of Perrigo and representatives of their outside disclosure counsel and auditor, and also sought letters rogatory in order to seek discovery from Perrigo's Irish tax advisor, comprising a total of ten fact witness depositions. Both Plaintiffs and Defendants retained experts who provided opinions regarding class certification, loss causation, damages, and the GAAP issues underlying the merits of the case. Lead Plaintiffs filed a motion for class certification on July 10, 2020, which Defendants opposed (ECF Nos 111-114, 131-137). In connection with that motion, Defendants deposed Lead Plaintiffs' representatives, and the parties deposed each other's respective class certification experts. On September 25, 2020, the Court granted Plaintiffs' motion and certified the Class. ECF No. 147.

On January 20, 2021, Plaintiffs moved for leave to amend the Complaint in order to attempt to extend the Class Period back to March 1, 2018. ECF Nos. 174-177. Defendants opposed this motion, and on February 10, 2021, the Court denied leave to amend. ECF No. 196.

On March 31, 2021, Defendants moved for summary judgment and also moved to preclude the testimony of Plaintiffs' accounting expert, and loss causation and damages expert. ECF Nos. 212-219, 221-234, 236, 237, 241. Plaintiffs opposed all three of those motions. ECF Nos. 253-255. On March 31, 2021, Plaintiffs moved for partial summary judgment and moved to exclude Defendants' accounting expert. ECF Nos. 201-211, 238-240. On July 11, 2021, the Court granted Plaintiffs' motion to preclude and denied Defendants' motion to preclude. ECF No. 274. On July 13, 2021, the Court denied Defendants' motion for summary judgment and denied Defendants' motion to exclude Plaintiffs' loss causation expert. On July 15, 2021, the Court granted Plaintiffs' motion for summary judgment on the elements of falsity and materiality. ECF No. 277. On July 14, 2021, the Court advised the parties that the case was to be set for trial between October 1 and December 17, 2021. ECF No. 276. On July 26, 2021, Defendants moved for reconsideration of the Court's summary judgment ruling in favor of Lead Plaintiffs on the issue of falsity and of the order excluding Defendants' expert accounting witness from testifying at trial (which motion Plaintiffs opposed), and on August 24, 2021, the Court denied the motion with respect to the prior grant of summary judgment as to falsity. ECF No. 303.⁴

During July and August 2021, the parties negotiated and litigated various issues regarding the upcoming trial. For example, Defendants sought the Court's permission to present witnesses from Ireland via live video testimony at trial, which Plaintiffs opposed, and on August 6, 2021 the Court denied Defendants' request. ECF No. 289. Similarly, Defendants sought to take de bene esse depositions of four witnesses located in Ireland — which Plaintiffs also opposed — and on August 20, 2021, the Court denied Defendants' request to redepose the two of those witnesses who had already been deposed. See Court's Order, ECF No. 296. On August 6, 2021, the Court ordered the case to be ready for trial by October 11, 2021. ECF No. 289.

On August 11, 2021, Lead Counsel, Defendants' counsel, and a representative of Plaintiffs participated in a second, day-long mediation session with Ambassador Carden, which did not lead to a resolution; on August 27, 2021, the parties convened again for a third day-long session. After these two full days of extensive, hard-fought, arm's length negotiations before Ambassador Carden, the Parties accepted the mediator's recommendation to settle the Action for $31,900,000.00 in cash for the benefit of the Class, subject to certain terms and conditions and the execution of certain related papers.

III. SUMMARY OF THE PROPOSED NOTICE PROCESS

The Notice explains that the Net Settlement Fund will be distributed to eligible members of the Class who submit valid and timely Claim Forms pursuant to the proposed Plan of Allocation included in the Notice and subject to this Court's approval.⁵

If the Court grants preliminary approval, A.B. Data, the Claims Administrator (which the Court previously approved as Class Notice Administrator), will mail the Notice and Claim Form (Exhibits A-1 and A-2 to the proposed Preliminary Approval Order) to members of the Class who can be identified with reasonable effort.⁶ Specifically, the Claims Administrator will utilize multiple sources of data to reasonably identify potential members of the Class, including: (i) lists provided by Perrigo identifying potential Class Members; and (ii) a proprietary list maintained by the Claims Administrator of the largest and most common U.S. banks, brokers, and other nominees, and the Depository Trust Company, which acts as a clearinghouse to process and settle trades in securities.

Additionally, Lead Counsel will cause the Summary Notice (Exhibit A-3 to the proposed Preliminary Approval Order) to be published in Investor's Business Daily and over the PR Newswire.

The Notice advises members of the Class of the terms of the Settlement, Lead Counsel's forthcoming application for an award of attorneys' fees and reimbursement of expenses, and the proposed Plan of Allocation for distributing the Net Settlement Fund. The Notice further details (i) the procedures for objecting to the Settlement, the Plan of Allocation, or Lead Counsel's application for an award of attorneys' fees and reimbursement of expenses; and (ii) the date, time, and location of the Settlement Hearing.⁷

IV. ARGUMENT

A. Preliminary Approval is Warranted and Will Allow Lead Plaintiffs to Notify the Class

In the Second Circuit, there is a “strong judicial policy in favor of settlements, particularly in the class action context.” See Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 116 (2d Cir. 2005). See also In re IMAX Sec. Litig., 283 F.R.D. 178, 188 (S.D.N.Y. 2012) (same); In re Prudential Sec. Inc. Ltd. P'ships Litig., 163 F.R.D. 200, 209 (S.D.N.Y. 1995) (“It is well established that there is an overriding public interest in settling and quieting litigation, and this is particularly true in class actions.” (citations omitted)).

Federal Rule of Civil Procedure 23(e) requires judicial approval of a class action settlement. The approval process typically takes place in two stages. In the first stage, a court preliminarily approves the settlement pending a fairness hearing and authorizes notice to be given to the class. Ann. Manual Complex Lit. § 21.632 (4th ed.). Once the class has received notice, the court then holds a final settlement hearing. Id. at § 21.633; see also 4 Newberg on Class Actions § 13:39 (5th ed.) (endorsing two-step process).

At the preliminary approval stage, the Court's function is “to ascertain whether there is any reason to notify the class members of the proposed settlement and to proceed with a fairness hearing.” Prudential, 163 F.R.D. at 209 (internal quotation marks and citation omitted). “Preliminary approval of a class action settlement . . . is at most a determination that there is what might be termed 'probable cause' to submit the proposal to class members and hold a full-scale hearing as to its fairness.” Nieves v. Cmty. Choice Health Plan of Westchester, Inc., 2012 WL 857891, at *4 (S.D.N.Y. Feb. 24, 2012) (internal quotation marks and citation omitted). In making this preliminary determination, “[w]here the proposed settlement appears to be the product of serious, informed, non-collusive negotiations, has no obvious deficiencies, does not improperly grant preferential treatment to class representatives or segments of the class and falls within the range of possible approval, preliminary approval is granted.” In re Initial Pub. Offering Sec. Litig., 243 F.R.D. 79, 87 (S.D.N.Y. 2007) (internal quotations omitted); accord Nieves, 2012 WL 857891, at *4.

Thus, at this stage, the Court need not answer the ultimate question of whether the Settlement is fair, reasonable, and adequate. When the Court makes that ultimate determination at a later stage, it will be asked to review the following “Grinnell factors”: “(1) the complexity, expense and likely duration of the litigation, (2) the reaction of the class to the settlement, (3) the stage of the proceedings and the amount of discovery completed, (4) the risks of establishing liability, (5) the risks of establishing damages, (6) the risks of maintaining the class action through the trial, (7) the ability of the defendants to withstand a greater judgment, (8) the range of reasonableness of the settlement fund in light of the best possible recovery, [and] (9) the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation.” In re Signet Jewelers Ltd. Sec. Litig., 2020 WL 4196468, at *2 (S.D.N.Y. July 21, 2020) (quoting Detroit v. Grinnell Corp., 495 F.2d 448, 463 (2d Cir. 1974)); see also D'Amato v. Deutsche Bank, 236 F.3d 78, 86 (2d Cir. 2001). “In finding that a settlement is fair, not every factor must weigh in favor of settlement, 'rather the court should consider the totality of these factors in light of the particular circumstances.'” In re Glob. Crossing Sec. & ERISA Litig., 225 F.R.D. 436, 456 (S.D.N.Y. 2004) (citation omitted).

Here, Lead Plaintiffs are requesting only that the Court take the first step in the settlement approval process and grant preliminary approval of the proposed Settlement. As stated above, the proposed Settlement provides a Settlement Amount of $31.9 million in cash, a substantial recovery that is unquestionably beneficial to the Class, and plainly “within the range of possible approval.” Initial Pub. Offering, 243 F.R.D. at 87 (citations omitted).

B. The Proposed Settlement is the Result of Good Faith, Arm's-Length Negotiations

Courts presume that a proposed settlement is fair and reasonable when it is the result of arm's-length negotiations between counsel. Wal-Mart, 396 F.3d at 116 (stating that a “presumption of fairness, adequacy, and reasonableness may attach to a class settlement reached in arm's-length negotiations between experienced, capable counsel after meaningful discovery”). As described above, the Settlement here was reached only after protracted, arm's-length negotiations before Ambassador Carden in three separate mediation sessions. See, e.g., D'Amato, 236 F.3d at 85 (stating that a “mediator's involvement in . . . settlement negotiations helps to ensure that the proceedings were free of collusion and undue pressure”). As part of those negotiations, Lead Counsel and Defendants' counsel prepared and presented detailed submissions concerning, among other things, their respective views regarding the merits of the litigation, Defendants' defenses, and significant issues pertaining to loss causation and damages. After intense back-and-forth negotiations, the Parties reached an agreement in principle to settle the Action.

The Parties and their counsel were knowledgeable about the strengths and weaknesses of the case prior to reaching an agreement to settle. Indeed, the Settlement was reached only after the parties had completed fact and expert discovery, summary judgment motions had been decided, and the parties were preparing for a trial that was scheduled to begin in just a few weeks. First, Lead Plaintiffs conducted an extensive investigation prior to drafting and filing the Second Amended Complaint, which included, among other things, a thorough review of (i) Perrigo's public filings with the SEC; (ii) presentations, press releases, and media and analyst reports made by or about the Company; (iii) transcripts of Perrigo's conference calls with analysts and investors; (iv) publicly available data relating to Perrigo's securities; (v) documents filed with the Court by Defendants concerning the Irish Tax Audit; (vi) consultations with relevant experts; (viii) review of other materials and data concerning the Company; and (ix) research of the applicable law with respect to the claims asserted in the Action, and the potential defenses thereto.

Second, the Parties engaged in extensive discovery. After numerous meet-and-confer sessions and pre-motion discovery correspondence to resolve numerous disputes over the scope of discovery, Defendants ultimately produced over 10,000 documents to Lead Plaintiffs, comprising a total of over 81,000 pages, as well as a lengthy privilege log. Lead Plaintiffs and their experts also produced more than 500 documents, totaling over 33,000 pages to Defendant, and the parties also served interrogatories and responded to each other's interrogatories. In addition, Lead Counsel consulted with an expert consultant on the issues of materiality, loss causation, and damages, consulted with an accounting expert on the GAAP issues underlying the case, and consulted with Irish lawyers concerning Irish tax matters and Irish procedural matters relating to discovery and their letters rogatory. Lead Plaintiffs had taken the depositions of 10 fact witnesses (including current and former employees of Perrigo and third-party advisors to Perrigo, some of whom resided in Ireland) and Defendants' loss causation and accounting experts, and Defendants had taken the depositions of Lead Plaintiffs' representatives and their market efficiency, damages, and accounting experts.

Third, the parties engaged in extensive summary judgment briefing. Specifically, Defendants moved for summary judgment on the elements of falsity, scienter, and loss causation, and in addition filed Daubert motions to exclude Plaintiffs' accounting and loss causation and damages experts, while Plaintiffs moved for summary judgment on the elements of falsity, materiality, and loss causation, and filed a Daubert motion to exclude Defendants' accounting expert. The Court denied Defendants' motions and granted Plaintiffs' motions on the elements of falsity and materiality, and granted Plaintiffs' Daubert motion.

Finally, Lead Plaintiffs also reviewed Defendants' mediation submissions and participated in three formal mediation sessions involving extensive negotiations. Lead Plaintiffs and Lead Counsel therefore had an adequate basis for assessing the strength of the Class's claims and Defendants' defenses thereto when they agreed to the Settlement.

Under these circumstances, a presumption of fairness attaches to the proposed Settlement. See Wal-Mart, 396 F.3d at 116 (stating that a “presumption of fairness, adequacy, and reasonableness may attach to a class settlement reached in arm's-length negotiations between experienced, capable counsel after meaningful discovery” (citation omitted)); In re Marsh & McLennan Cos., Inc. Sec. Litig., 2009 WL 5178546, at *4 (S.D.N.Y. Dec. 23, 2009) (same). Moreover, the Settlement was negotiated at the direction of the Lead Plaintiffs, who are sophisticated institutional investors. This fact further strengthens the presumption of fairness. See Glob. Crossing, 225 F.R.D. at 462 (participation of sophisticated institutional investor lead plaintiffs in settlement process supports approval of settlement).

C. The Settlement is Within the Reasonable Range of Recovery

For preliminary approval purposes, the Court need not decide the Grinnell factors. Rather, if the Court finds that the Settlement is “within the range of possible approval” that might be approved under Grinnell, it should grant preliminary approval. See 4 Newberg on Class Actions § 13:13 (5th ed.). Here, the Settlement is well within the range of approval.

1. The Complexity, Expense, and Likely Duration of the Litigation

The Settlement provides the Class with substantial relief, without the delay and expense of trial and post-trial proceedings. Here, pursuant to the Court's August 6, 2021 Order, a trial was scheduled for October 11, 2021, a date that was fast approaching at the time of the Settlement.

If the Parties did not agree to settle, they would have faced an expensive trial with an uncertain outcome. The jury would have had to determine numerous complex securities law issues, the intricacies of foreign tax issues, and navigate a battle of the experts regarding loss causation and damages. Additionally, the significant expense of trial preparation would have further eaten into the recovery available to the Class.

2. Stage of Proceedings and Amount of Discovery Completed

The settlement of this case was reached after significant proceedings had occurred. As set forth above, class certification and summary judgment motions had been decided, and only trial remained. The trial stage of the litigation would have been time consuming and expensive, particularly given the international nature of the litigation.

3. The Risks of Establishing Liability and Damages

Although Lead Plaintiffs and Lead Counsel believe their case against Defendants is strong, they acknowledge that Defendants have put forth substantial arguments concerning liability and damages. In particular, Defendants were prepared to present extensive evidence concerning their purported lack of scienter, and specifically that they were not reckless because they relied on their outside counsel, auditor, and tax advisors in determining their disclosure obligations regarding the Audit Findings Letter. Moreover, the Individual Defendants would have argued that they lacked any motive to deceive the investing public, as they not only did not sell shares of Perrigo stock during the Class Period, but, in fact, CEO Murray Kessler actually purchased shares during that time. Lead Plaintiffs had strong responses to those arguments, but there is no question these issues would persist throughout the Action and created a real risk that Lead Plaintiffs could ultimately recover materially less than the Settlement Amount — or nothing at all.

With respect to loss causation and damages, Defendants argued that the entirety of the stock drop following Defendants' December 20, 2018 disclosure could not be attributed to the alleged fraud, because that disclosure also included new information, namely, that, in addition to the Audit Findings Letter, Defendants had now received a Notice of Amended Assessment that actually assessed Perrigo with the €1.6 billion liability (whereas, Defendants argued, the Audit Findings Letter had stated a “proposed” tax treatment and invited further discussion). The litigation therefore included substantial risks that Lead Plaintiffs would not ultimately recover the total recoverable damages, even if Lead Plaintiffs prevailed on liability. If any of these arguments were to be accepted in whole or in part at trial, it could eliminate or dramatically reduce any potential recovery against Defendants.

4. The Risks of Maintaining the Class Action Through Trial

As discussed above, Lead Plaintiffs faced a substantial risk of not prevailing against Defendants at trial. Even if Plaintiffs did prevail, there were risks in connection with the appeals that would likely follow.

5. Reasonableness of the Settlement

Defendants have agreed to settle this action for $31.9 million in cash, which constitutes a recovery exceeding 22% of maximum provable damages. This substantial recovery is an excellent benefit to the Class, especially in light of the significant risks posed by continued litigation against Defendants.

Lead Plaintiffs' consultation with their expert indicated that the maximum provable damages for the Class were $142 million. Moreover, the $142 million estimate assumed that the entirety of the losses suffered after Defendants' December 20, 2018 disclosure would be found attributable to Defendants' false and misleading statements on November 8, 2018. However, as noted above, Defendants argued that additional information was disclosed on December 20, 2018 that caused, at a minimum, part of the stock price decline, including the fact that, weeks after the Audit Findings Letter, Irish Revenue issued a Notice of Amended Assessment that actually assessed €1.6 billion in back taxes rather than merely presenting that amount as a “proposed” liability. As such, Lead Plaintiffs recognized that there was a risk that a jury could award less than the full amount of damages Plaintiffs believed were suffered by the Class.

In comparison, the median recovery in similarly-sized securities class actions in 2020 was approximately 5.8% of estimated damages. See “Securities Class Action Settlements: 2020 Review and Analysis” (Cornerstone Research 2020) at p. 6, Fig. 5; see also In re Sturm, Ruger, & Co., Inc. Sec. Litig., 2012 WL 3589610, at *7 (D. Conn. Aug. 20, 2012) (noting that a settlement obtaining 3.5% of the “most aggressive estimate of maximum provable damages . . . exceeds the average recovery in shareholder litigation” and affirming an average range of 3% to 7% recoveries) (citing In re China Sunergy Sec. Litig., 2011 WL 1899715, at *5 (S.D.N.Y. May 13, 2011)).

Given the complexities of the Action and the continued risks if the Parties were to proceed to trial, the Settlement represents a more than reasonable resolution of this Action and eliminates the risk that the Class might not otherwise recover from Defendants. The proposed Settlement will allow the Class to receive a concrete benefit now, not a hypothetical benefit from a far-from-guaranteed jury verdict. See In re AOL Time Warner, Inc. Sec. & ERISA Litig., 2006 WL 903236, at *13 (S.D.N.Y. Apr. 6, 2006) (recognizing that an immediate, substantial, and concrete benefit of settlement outweighs the possibility of higher recovery at trial).

V. NOTICE TO THE CLASS SHOULD BE APPROVED

As outlined in the agreed-upon form of proposed Preliminary Approval Order, and described above, Lead Plaintiffs will notify members of the Class by mailing the Notice and Claim Form to all members of the Class who can be identified with reasonable effort, including through the cooperation of Perrigo. The Notice will advise the members of the Class of (i) the terms of the Settlement; and (ii) information regarding Lead Counsel's application for an award of attorneys' fees and reimbursement of expenses. The Notice also will provide specifics on the date, time, and place of the Settlement Hearing and set forth the procedures for objecting to the Settlement, the proposed Plan of Allocation, or the application for attorneys' fees and expenses.

In addition to mailing the Notice and Claim Form, Lead Plaintiffs will cause publication of a Summary Notice in Investor's Business Daily and over the PR Newswire. Also, as set forth in the Class Action Fairness Act of 2005 (“CAFA”), Defendants will timely serve CAFA notices to appropriate federal and state officials within ten (10) days of the filing of the Stipulation.

The form and manner of providing notice to the Class satisfy the requirements of due process, Rule 23, and the PSLRA. In short, the Notice and Summary Notice “'fairly apprise the prospective members of the class of the terms of the proposed settlement and of the options that are open to them in connection with the proceedings.'” Wal-Mart, 396 F.3d at 114 (citation omitted). The manner of providing notice, which includes individual notice by mail to all members of the Class who can be reasonably identified, represents the best notice practicable under the circumstances and satisfies the requirements of due process and Rule 23. See In re Warner Chilcott Ltd. Sec. Litig., 2008 WL 5110904, at *3 (S.D.N.Y. Nov. 20, 2008).

V. PROPOSED SCHEDULE OF SETTLEMENT EVENTS

Lead Plaintiffs propose the following schedule:

Event	Proposed Due Date
Deadline for mailing the Notice and Claim Form to the Class (which date shall be the “Notice Date”) (Preliminary Approval Order ¶4(a))	21 calendar days after entry of Preliminary Approval Order
Deadline for publishing the Summary Notice (Preliminary Approval Order ¶4(c))	7 calendar days after the Notice Date
Deadline for filing of papers in support of final approval of Settlement, Plan of Allocation, and Lead Counsel’s application for attorneys’ fees and expenses (Preliminary Approval Order ¶22)	35 calendar days prior to Settlement Hearing
Deadline for receipt of objections (Preliminary Approval Order ¶12)	21 calendar days prior to Settlement Hearing
Settlement Hearing (Preliminary Approval Order ¶2)	Not earlier than 100 calendar days after the filing of this Motion
Deadline for filing reply papers (Preliminary Approval Order ¶22)	7 calendar days prior to Settlement Hearing
Deadline for submitting Claim Forms (Preliminary Approval Order ¶8)	120 calendar days after the Notice Date

VI. CONCLUSION

Lead Plaintiffs respectfully request that the Court (1) preliminarily approve the proposed Settlement; (ii) approve the proposed form and manner of notice given to the Class; and (iii) schedule a hearing on Lead Plaintiffs' motion for final approval of the Settlement and Lead Counsel's application for an award of attorneys' fees and expenses. The Parties' agreed-upon form of proposed Preliminary Approval Order, and exhibits thereto, is attached as Exhibit A to the Stipulation.

Dated: October 4, 2021

Respectfully submitted,

SAXENA WHITE P.A.
Steven B. Singer
Kyla Grant
Joshua H. Saltzman
10 Bank Street, Suite 882
White Plains, NY 10606
Tel: (914) 437-8551
Fax: (888) 216-2220
ssinger@saxenawhite.com
kgrant@saxenawhite.com
jsaltzman@saxenawhite.com

SAXENA WHITE P.A.
Maya Saxena
Joseph E. White, III
Lester R. Hooker
Brandon T. Grzandziel
7777 Glades Rd., Suite 300
Boca Raton, FL 33434
Tel: (561) 394-3399
Fax: (561) 394-3382
msaxena@saxenawhite.com
jwhite@saxenawhite.com
lhooker@saxenawhite.com
bgrzandziel@saxenawhite.com

Lead Counsel for Lead Plaintiffs and the Class

KLAUSNER KAUFMAN JENSEN & LEVINSON
Robert D. Klausner
7080 Northwest 4th Street
Plantation, Florida 33317
Tel: (954) 916-1202
Fax: (954) 916-1232
bob@robertdklausner.com

Additional Counsel for Lead Plaintiffs