In re Stericycle Securities Litigation

Stericycle, Inc. (defendant) was sued for securities fraud in a class action brought by the Public Employees’ Retirement System of Mississippi (pension fund) (plaintiff). Before the class action commenced, Stericycle settled similar claims brought by state investigators and private customers. Applying the procedures set forth in the Private Securities Litigation Reform Act of 1995, the district court appointed the pension fund as one of the lead plaintiffs in the class action and appointed the law firm of Bernstein Litowitz Berger & Grossmann LLP (BLBG) as lead counsel. BLBG had contributed to the campaigns of elected officials who oversaw the pension fund. The class action settled for $45 million during the early stages of the litigation, before discovery. BLBG moved for attorney’s fees, seeking an award of 25 percent of the settlement amount. Mark Petri (plaintiff), a class member, opposed BLBG’s motion for attorney’s fees, arguing that the requested amount was unreasonably high. Petri also moved to conduct discovery regarding BLBG’s allegedly improper relationship with the pension fund. The district court approved the settlement and granted BLBG’s motion for attorney’s fees. The district court did not use the lodestar method to calculate the attorney’s-fee award and ignored the settlements reached in the prior lawsuits filed against Stericycle. The district court also denied Petri’s motion for discovery, finding that Petri’s allegations of an improper relationship between BLBG and the pension fund were unsubstantiated. Petri appealed.