IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

LORI RAVENSCROFT GEARE and 

ROBERT J. CASEY, II, Derivatively for the 

Benefit of HOSPIRA, INC., 

Plaintiffs, 

v. 

CHRISTOPHER B. BEGLEY, F. MICHAEL 

BALL, THOMAS E. WERNER, IRVING W. 

BAILEY, II, JACQUE J. SOKOLOV, 

BARBARA L. BOWLES, ROGER W. HALE, 

JOHN C. STALEY, CONNIE R. CURRAN, 

HEINO VON PRONDZYNSKI, MARK F. 

WHEELER, TERRENCE C. KEARNEY, 

RONALD A. MATRICARIA, and BRIAN J. 

SMITH, 

Defendants, 

–and– 

HOSPIRA, INC., a Delaware corporation, 

 Nominal Defendant. 

Case No. 11-cv-09074 (JJT) 

MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFFS' 

UNCONTESTED MOTION FOR FINAL APPROVAL OF SETTLEMENT, 

AWARD OF ATTORNEYS' FEES AND EXPENSES, AND INCENTIVE AWARDS 
- i - 

TABLE OF CONTENTS 

I. INTRODUCTION ...............................................................................................................1

II. RELEVANT BACKGROUND ...........................................................................................2

A. Overview of the Litigation .......................................................................................2

B. Preliminary Approval and Notice to Shareholders ..................................................4

III. THE SETTLEMENT SHOULD BE FINALLY APPROVED ...........................................4

A. Legal Standard .........................................................................................................4

1. Each of the Isby Factors Weighs in Favor of Final Approval......................5

a. The Risks of Establishing Liability..................................................5

b. The Complexity of Further Litigation Favors Final 

Approval ..........................................................................................7

c. Experienced Counsel Favor Approval .............................................8

d. The Stage of Proceedings Favors Final Approval of 

Settlement ........................................................................................8

B. The Proposed Settlement Is Presumed Fair and Reasonable Because It Is a 

Product of Arm's-Length Negotiations ..................................................................10

C. The Settlement Provides a Substantial Benefit to Hospira ....................................10

D. The Court-Approved Notice Was Adequate and Satisfies Due Process ................12

IV. THE REQUEST FOR ATTORNEYS' FEES AND EXPENSES SHOULD BE 

APPROVED ......................................................................................................................13

V. THE INCENTIVE AWARD AMOUNT SHOULD BE APPROVED .............................15

VI. CONCLUSION ..................................................................................................................15
- ii - 

TABLE OF AUTHORITIES 

CASES 

Am. Int'l Grp., Inc. v. ACE INA Holdings, Inc., 

No. 07 C 2898, 2011 WL 3290302 (N.D. Ill. July 26, 2011) ............................................10 

Am. Int'l Grp., Inc. v. ACE INA Holdings, Inc., 

No. 07 CV 2898, 2012 WL 651727 (N.D. Ill. Feb. 28, 2012) .............................................7 

Armstrong v. Bd. of Sch. Dirs. of Milwaukee, 

616 F.2d 305 (7th Cir. 1980), overruled on other grounds by Felzen v. Andreas, 

134 F.3d 873 (7th Cir. 1998) ...............................................................................................4 

Boeing Co. v. Van Gemert, 

444 U.S. 472 (1980) ...........................................................................................................13 

Boggess v. Hogan, 

410 F. Supp. 433 (N.D. Ill. 1975) ........................................................................................8 

Cohn v. Nelson, 

375 F. Supp. 2d 844 (E.D. Mo. 2005)..........................................................................13, 14 

Freeman v. Berge, 

68 F. App'x 738 (7th Cir. 2003) ...........................................................................................5 

Gen. Electric Capital Corp. v. Lease Resolution Corp., 

128 F.3d 1074 (7th Cir. 1997) .............................................................................................5 

Hensley v. Eckerhart, 

461 U.S. 424 (1983) ...........................................................................................................13 

In re AOL Time Warner S'holder Derivative Litig., 

No. 02 Civ. 6302 (SWK), 2006 WL 2572114 (S.D.N.Y. Sept. 6, 2006) ............................5 

In re AT&T Mobility Wireless Data Servs. Sales Litig., 

270 F.R.D. 330 (N.D. Ill. 2010) ...........................................................................................6 

In re AT&T Mobility Wireless Data Servs. Sales Tax Litig., 

789 F. Supp. 2d 935 (N.D. Ill. 2011) .................................................................................10 

In re Caremark Int'l Inc. Derivative Litig., 

698 A.2d 959 (Del. Ch. 1996)..............................................................................................6 

In re Educ. Testing Serv. Praxis Principles of Learning & Teaching: Grades 7-12 

Litig., 

477 F. Supp. 2d 612 (E.D. La. 2006) .................................................................................10 
- iii - 

In re Pac. Enters. Sec. Litig., 

47 F.3d 373 (9th Cir. 1995) .................................................................................................8 

In re Sw. Airlines Voucher Litig., 

No 11 C 8176, 2013 WL 4510197 (N.D. Ill. Aug. 26, 2013) ..............................................5 

In re Train Derailment Near Amite La., 

No. Civ. A. MDL No. 1531, 2006 WL 1561470 (E.D. La. May 24, 2006) ......................10 

Isby v. Bayh, 

75 F.3d 1191 (7th Cir. 1996) ...................................................................................4, 5, 7, 9 

Lambrecht v. Taurel, 

No. 1:08-cv-68-WTL-TAB, 2010 WL 2985946 (S.D. Ind. June 8, 2010) ..................10, 11 

Maher v. Zapata Corp., 

714 F.2d 436 (5th Cir. 1983) .............................................................................................11 

Mars Steel Corp. v. Cont'l Ill. Nat'l Bank & Trust Co., 

834 F.2d 677 (7th Cir. 1987) .............................................................................................10 

Mills v. Elec. Auto-Lite Co., 

396 U.S. 375 (1970) ...........................................................................................................13 

Sauby v. City of Fargo, 

No. 3:07-cv-10, 2009 WL 2168942 (D.N.D. July 16, 2009) .............................................15 

Smith v. Dominion Bridge Corp., 

No. 96-7580, 2007 WL 1101272 (E.D. Pa. Apr. 11, 2007) ...............................................14 

United Founders Life Ins. Co. v. Consumers Nat'l Life Ins. Co., 

447 F.2d 647 (7th Cir. 1971) ...............................................................................................8 

RULES 

Fed. R. Civ. P. 23.1(c). ................................................................................................................1, 4 
- 1 - 

I. INTRODUCTION 

Pursuant to Rule 23.1(c) of the Federal Rules of Civil Procedure ("Rule 23.1"), plaintiffs 

Lori Ravenscroft Geare and Robert J. Casey, II ("Illinois Plaintiffs"), by and through their 

undersigned counsel, respectfully submit this memorandum of law in support of final approval of 

the proposed settlement of the Illinois Action (the "Settlement") as set forth in the Stipulation,1

which was preliminarily approved by the Court by Order of November 14, 2014 (the 

"Preliminary Approval Order"). Dkt. #79. Illinois Plaintiffs also respectfully request final 

approval of the Fee and Expense Amount, including the Incentive Award Amount. 

As set forth in the Stipulation, and as explained in the accompanying declarations of 

George C. Aguilar ("Aguilar Decl.") and Scott R. Shepherd ("Shepherd Decl."), the Settlement 

achieves significant measures designed to strengthen Hospira's corporate governance and Board 

of Directors' (the "Board") oversight, and addresses allegations made in the Actions about 

alleged misconduct that resulted in compliance issues with U.S. Food and Drug Administration 

("FDA") regulations and hundreds of millions of dollars in remediation costs (the 

"Commitments"). The Commitments will, among other things: (i) significantly strengthen 

Hospira's internal controls over the Company's quality and compliance; (ii) provide numerous 

insider trading controls; (iii) improve Board training protocols; and (iv) require increased Board 

oversight over the Company's authorized stock repurchases. See Stipulation, Ex. A. Further, the 

Parties acknowledge the prosecution of the Actions was a meaningful factor in certain additional 

investments in quality and compliance, and changes in Board structure that the Company has 

recently implemented. Id. 

The proposed Settlement is the outcome of an extensive factual and legal investigation by 

 

1

 Unless otherwise indicated, all capitalized terms herein shall have the same meanings and/or definitions 

as set forth in the Stipulation of Settlement dated November 3, 2014 (the "Stipulation"). Dkt. #74. 
- 2 - 

Plaintiffs, (including the retention and consultation of an industry expert) and hard-fought 

litigation for more than two years. The Commitments, which will help Hospira significantly, 

resulted from arm's-length negotiations conducted by highly experienced counsel over a fivemonth period. The Settlement merits approval, as it provides excellent benefits, while 

eliminating the uncertainty and expense of continued litigation. 

II. RELEVANT BACKGROUND2

A. Overview of the Litigation 

Illinois Plaintiffs' individual shareholder derivative actions were filed in December 2011. 

Aguilar Decl., ¶4. The cases were consolidated ("Action" or "Illinois Action"), and Illinois 

Plaintiffs filed their amended complaint on May 1, 2013 (the "Illinois Complaint"), alleging that 

certain of the Individual Defendants breached their fiduciary duties by, among other things: 

(1) recklessly approving and pursuing an improper plan to boost corporate revenues at the 

expense of legal compliance; (2) dragging their feet on remediation as FDA violations piled up; 

(3) authorizing false statements to be issued that effective remedial actions were underway; 

(4) allowing insiders to improperly sell their shares; and (5) authorizing large stock repurchases 

while consciously in the dark as to the extent of Hospira's non-compliance (the stock soon 

thereafter declined significantly). Id., ¶¶4-6. In crafting their complaint, Illinois Plaintiffs drew 

on the advice of an FDA expert, as well as reviewed substantial materials obtained from the FDA 

via a FOIA request, and otherwise. Defendants' motion to dismiss the Illinois Complaint was 

fully briefed and submitted to the Court. Id., ¶24. 

Following informal settlement discussions, which included Defendants' production of 

approximately 1,000 pages of confidential documents, and review and comment on those 

 

2

 The facts supplied in Section II are discussed in greater detail in the Aguilar Decl., ¶¶4-13 and Shepherd 

Decl., ¶¶3-8 (Exhibit 5 to the Aguilar Decl.). 
- 3 - 

documents from Illinois Plaintiffs, Illinois Plaintiffs and Defendants (the "Illinois Parties") 

agreed to participate in and scheduled a mediation session with an experienced mediator, Jed D. 

Melnick (the "Mediator") on May 23, 2014. Id., ¶¶8-9. In advance of the mediation, the Illinois 

Parties submitted detailed mediation briefs. Id., ¶9. The mediation session on May 23 was 

fruitful, with counsel for the Illinois Parties negotiating substantial components of the 

Settlement, although significant issues remained open. Id., ¶¶9-10; Declaration of Mediator Jed 

D. Melnick in Support of Plaintiffs' Uncontested Motion for Final Approval of Settlement, 

Award of Attorneys' Fees and Expenses, and Incentive Awards ("Melnick Decl."), ¶9 (Exhibit 6 

to the Aguilar Decl.). Following the mediation session and for the next several months, the 

Illinois Parties continued arm's-length settlement negotiations, facilitated by the Mediator. 

Aguilar Decl., ¶9; Melnick Decl., ¶9. 

Around this time, the Delaware Plaintiff, following a review of documents produced in 

response to an inspection demand, filed the Delaware Action on July 22, 2014. Shepherd Decl., 

¶6. Shortly thereafter, counsel for the Delaware Plaintiff participated in the ongoing settlement 

discussions in the Illinois Action and negotiated certain revisions to the proposed terms in the 

Settlement. Id., ¶¶9-10.3

 

After reaching an agreement in principle on the substantive terms of a settlement, the 

Parties engaged in further arm's-length negotiations through the Mediator concerning the amount 

of an attorneys' fee and expense award. Aguilar Decl., ¶10. Despite extensive negotiation, the 

Parties were unable to reach an agreement but decided to submit the matter, after further 

briefing, to the Mediator for a binding determination. Id.; Melnick Decl., ¶14. The proposed Fee 

and Expense Amount, and the Incentive Award Amount, arrived upon reflect the Mediator's 

 

3 The Delaware Parties have informed the Delaware Court of the Settlement and submitted the Stipulation 

and filings in this Action to the Delaware Court. See Shepherd Decl., ¶11. 
- 4 - 

determination as to a fair amount for each Plaintiff group. Id.; Melnick Decl., ¶¶15-16. 

B. Preliminary Approval and Notice to Shareholders 

On November 14, 2014, the Court granted preliminary approval of the Settlement, 

authorized the Notice of Pendency and Proposed Settlement of Shareholder Derivative Actions 

(the "Notice"), and set January 23, 2015, as the hearing date for final approval of the Settlement. 

See Preliminary Approval Order, ¶¶2-5. Pursuant to the terms of the Preliminary Approval 

Order, the Notice was furnished to the U.S. Securities and Exchange Commission ("SEC") via 

Form 8-K and posted, along with the Stipulation, on the websites of Hospira, Robbins Arroyo 

LLP, and Schubert Jonckheer & Kolbe LLP. Aguilar Decl., ¶12. 

III. THE SETTLEMENT SHOULD BE FINALLY APPROVED 

A. Legal Standard 

Under Rule 23.1(c), a derivative action "may be settled, voluntarily dismissed, or 

compromised only with the court's approval." Fed. R. Civ. P. 23.1(c). In determining whether 

the proposed Settlement warrants final approval, the Court must limit its inquiry to "the 

consideration of whether the proposed [S]ettlement is lawful, fair, reasonable, and adequate." 

Isby v. Bayh, 75 F.3d 1191, 1196 (7th Cir. 1996).4

 This inquiry requires the Court not to "focus 

on individual components of settlements, but rather view them in their entirety in evaluating their 

fairness." Armstrong v. Bd. of Sch. Dirs. of Milwaukee, 616 F.2d 305, 315 (7th Cir. 1980), 

overruled on other grounds by Felzen v. Andreas, 134 F.3d 873 (7th Cir. 1998). Four factors 

guide the Court's analysis: (1) "the strength of plaintiffs' case compared to the amount of 

defendants' settlement offer"; (2) the "complexity, length and expense of the litigation"; (3) "the 

opinion of competent counsel"; and (4) "the stage of the proceedings and the amount of 

 

4

 Here, as throughout, all emphasis is added and citations and footnotes are omitted unless otherwise 

noted. 
- 5 - 

discovery completed." Isby, 75 F.3d at 1199.5

 As discussed below, the application of these 

factors supports final approval. 

1. Each of the Isby Factors Weighs in Favor of Final Approval 

a. The Risks of Establishing Liability 

The first factor to consider is a comparative evaluation of the Actions to the results 

achieved by Settlement. Isby, 75 F.3d at 1199. "In considering the strength of plaintiffs' case, 

legal uncertainties at the time of settlement favor approval." In re Sw. Airlines Voucher Litig., 

No 11 C 8176, 2013 WL 4510197, at *7 (N.D. Ill. Aug. 26, 2013). 

The Action seeks redress for the alleged failure of the Individual Defendants to honor the 

fiduciary duties imposed upon them as directors and officers of Hospira. The Action centers 

upon the Individual Defendants' alleged pursuit of an improper plan to boost corporate revenues 

and profits, at the expense of legal compliance. Aguilar Decl., ¶5. The Individual Defendants 

first ignored the Company's compliance problems and then, as FDA violations piled up, 

deliberately slowed the required response. Id. Additionally, during this period, the Individual 

Defendants authorized or permitted false statements, including that effective remedial actions 

were underway, to be issued. Id. Further, the Individual Defendants allowed insiders to dump 

their shares on the unsuspecting public and improperly authorized large stock repurchases. Id. 

Although Illinois Plaintiffs believe they have strong claims against the Individual 

Defendants, they are mindful that derivative actions are notoriously complex and expensive to 

prosecute. See, e.g., In re AOL Time Warner S'holder Derivative Litig., No. 02 Civ. 6302 (SWK), 

2006 WL 2572114, at *3 (S.D.N.Y. Sept. 6, 2006) (approving derivative settlement and noting that 

 

5 See also Freeman v. Berge, 68 F. App'x 738, 742-743 (7th Cir. 2003); Gen. Electric Capital Corp. v. 

Lease Resolution Corp., 128 F.3d 1074, 1082 (7th Cir. 1997). 
- 6 - 

"shareholder derivative actions are 'notoriously difficult and unpredictable'").6

 Indeed, as in 

every complex case of this kind, Illinois Plaintiffs face some significant obstacles to recovery. 

As an initial matter, at the time the proposed Settlement was agreed upon, Defendants' motion to 

dismiss—asserting that Illinois Plaintiffs had not satisfied Delaware's stringent "demand 

requirement"—was still pending. While Illinois Plaintiffs believe that they adequately pled 

demand futility, there is a substantial risk that the Court could rule otherwise (particularly given 

Rule 23.1's heightened pleading requirements). 

Moreover, even if the Court denied the pending motion to dismiss, the defenses likely to 

be raised by the Individual Defendants would have added to the litigation's unpredictability. For 

example, Defendants would likely have compartmentalized Illinois Plaintiffs' claims as being 

"Caremark" claims seeking recovery for the Individual Defendants' failure to supervise third 

parties. This theory—"possibly the most difficult theory in corporation law upon which a 

plaintiff might hope to win a judgment"—requires a plaintiff to prove "a sustained or systematic 

failure of the board to exercise oversight." In re Caremark Int'l Inc. Derivative Litig., 698 A.2d 

959, 967, 971 (Del. Ch. 1996). Indeed, Defendants made this argument in their motion to 

dismiss. See Dkt. #53 at 23-24 n.7. In addition, damages claims under Delaware law require 

proof of the defendants' "bad faith," a state of mind never easily established. Thus, there exists a 

significant possibility that Defendants could have prevailed on summary judgment or at trial by 

rebutting the contention that the Board's awareness of the Company's failure to comply with 

applicable law had risen to the level of a "systematic failure," or that their conduct reflected their 

bad faith. 

 

6

 In evaluating the strengths and weaknesses of the Illinois Action on the merits and the defenses raised, 

the Court should take special care not to conduct something akin to a trial on the merits. See In re AT&T 

Mobility Wireless Data Servs. Sales Litig., 270 F.R.D. 330, 346 (N.D. Ill. 2010) ("When analyzing 

whether a proposed settlement is fair, reasonable, and adequate, courts 'should refrain from resolving the 

merits of the controversy or making a precise determination of the parties' respective legal rights.'"). 
- 7 - 

Balanced against this uncertainty, this proposed Settlement achieves the major objectives 

of the Action. Aguilar Decl., ¶18. There will be substantial and material benefits to the 

Company and its shareholders from prospective changes resulting from the Commitments. Id. 

Plaintiffs were ultimately responsible for obtaining commitments to improve or maintain, among 

other areas, Hospira's quality and compliance controls, the independence and competence of its 

Board and management, and insider trading and repurchase oversight. As noted below and in the 

motion for preliminary approval, these Commitments were specifically designed by Plaintiffs to 

remedy alleged internal governance failures that gave rise to the Action, as they strengthen 

Hospira's corporate governance practices in a real and practical way. The Parties further 

acknowledge the prosecution of the Actions as a meaningful factor in Hospira's additional 

investments in quality and compliance, and in changes in Board structure that the Company has 

recently implemented. These include the hiring of new management, employees, and the 

installation of new quality, testing, and inspection laboratory improvements. The Settlement thus 

obtains most of the Action's objectives without the risk of continued litigation. 

b. The Complexity of Further Litigation Favors Final Approval 

The second factor to consider in evaluating the reasonableness of a proposed settlement 

looks to the future of a case absent the settlement of claims. Isby, 75 F.3d at 1199. There is 

much that remains to be done in order to successfully recover for Hospira absent the proposed 

Settlement. A ruling on the pending motion to dismiss in the Illinois Action must be reached and 

Illinois Plaintiffs and Defendants must prosecute the Illinois Action through merits discovery, 

expert discovery, summary judgment, trial, and appeal. These efforts would no doubt entail 

intensive, lengthy, and costly proceedings for both sides. Am. Int'l Grp., Inc. v. ACE INA 

Holdings, Inc., No. 07 CV 2898, 2012 WL 651727, at *6 (N.D. Ill. Feb. 28, 2012) (where court 

had "ample evidence with which to evaluate the litigation's expense" and the "path to trial will be 
- 8 - 

quite costly," this factor weighed in favor of approval of the settlement). 

 Likewise, the investment of additional time and expense does not assure that Illinois 

Plaintiffs would have achieved a better result for the Company and its shareholders. If the case 

were fully litigated, the Company may have received substantially less, or nothing at all. "[T]he 

odds of winning [a] derivative lawsuit [are] extremely small." In re Pac. Enters. Sec. Litig., 47 

F.3d 373, 378 (9th Cir. 1995). With a great amount of work to be done and no assurance of 

ultimate success, the significant results flowing from the proposed Settlement provide a strong 

justification for its approval. 

c. Experienced Counsel Favor Approval 

The third factor routinely considered when evaluating the reasonableness of a proposed 

settlement is the view of counsel, as well as shareholder reaction to the proposed settlement. See 

United Founders Life Ins. Co. v. Consumers Nat'l Life Ins. Co., 447 F.2d 647, 655 (7th Cir. 

1971); Boggess v. Hogan, 410 F. Supp. 433, 438 (N.D. Ill. 1975) (noting support from "counsel 

experienced in similar litigation"). Plaintiffs' Counsel, who believes this Settlement offers an 

excellent result for Hospira and its shareholders, are eminently qualified to offer such an opinion 

through their extensive experience in prosecuting class and derivative litigation. Aguilar Decl., 

¶31 & Exs. 1-4. It is not just Plaintiffs' Counsel who support this Settlement. Defendants are 

represented by an experienced and prestigious corporate defense law firm which is also wellversed in breach of fiduciary duty litigation. Id., ¶22. Whereas this is an uncontested motion for 

final approval, all counsel involved are of the view that, in their best judgment, the proposed 

Settlement is fair, reasonable, and adequate. 

d. The Stage of Proceedings Favors Final Approval of Settlement 

The evaluation of a proposed settlement must also consider at what stage of the litigation 

settlement is reached and whether the parties were sufficiently informed about the facts to permit 
- 9 - 

a meaningful resolution of the litigation. Isby, 75 F.3d at 1199. Although this case settled prior 

to resolution of Defendants' motion to dismiss, all Parties to the proposed Settlement had 

extensive knowledge of the facts and a more than sufficient basis on which to evaluate both the 

merits of the claims and defenses in this Action, as well as any proposed settlement terms. 

Here, the Settlement was negotiated only after Illinois Plaintiffs conducted a diligent 

investigation into Plaintiffs' factual allegations and legal claims, and after posturing the case in 

the best possible stage for efficient resolution of the claims, including: (1) reviewing Hospira's 

press releases, public statements, SEC filings, and securities analysts' reports and advisories 

about the Company; (2) reviewing media reports about the Company; (3) researching the 

applicable law with respect to the claims alleged in the Actions and the potential defenses 

thereto; (4) preparing and filing the complaints in the Actions; (5) obtaining and reviewing 

highly technical documents via a FOIA request to the FDA; (6) hiring and conferring with an 

industry expert to advise on the FOIA documents and in the preparation and drafting of the 

Illinois Complaint; (7) conducting extensive damages analyses; (8) drafting an opposition to 

Defendants' motion to dismiss; (9) participating in informal conferences with Defendants' 

counsel regarding the specific facts of the cases, the perceived strengths and weaknesses of the 

cases, and other issues in an effort to facilitate negotiations and fact gathering; (10) reviewing 

approximately 1,000 pages of confidential documents in connection with settlement discussions; 

(11) proposing extensive corporate commitments for Defendants; and (12) negotiating this 

Settlement with Defendants, including drafting and submitting extensive mediation briefs. 

Aguilar Decl., ¶24. 

Ultimately, "[t]he question is not whether the parties have completed a particular amount 

of discovery, but whether the parties have obtained sufficient information about the strengths and 

weaknesses of their respective cases to make a reasoned judgment about the desirability of 
- 10 - 

settling the case on the terms proposed or continuing to litigate it." In re Educ. Testing Serv. 

Praxis Principles of Learning & Teaching: Grades 7-12 Litig., 477 F. Supp. 2d 612, 620-21 

(E.D. La. 2006) (citing In re Train Derailment Near Amite La., No. Civ. A. MDL No. 1531, 

2006 WL 1561470, at *22 (E.D. La. May 24, 2006)).7

 Accordingly, Illinois Plaintiffs had ample 

information to evaluate the strengths and weaknesses of their claims. 

B. The Proposed Settlement Is Presumed Fair and Reasonable Because It Is a 

Product of Arm's-Length Negotiations 

The proposed Settlement further merits approval because it has been the subject of a 

lengthy mediation and negotiation process that was conducted at arm's-length. See Mars Steel 

Corp. v. Cont'l Ill. Nat'l Bank & Trust Co., 834 F.2d 677, 684 (7th Cir. 1987) (emphasizing the 

importance of a negotiation process free of collusion). The parties to the Illinois Action engaged 

in an extensive in-person mediation session before the Mediator on May 23, 2014, to determine 

if there was any common ground upon which a settlement could be reached. Melnick Decl., ¶¶3, 

9. Following the mediation session and for the next several months, Illinois Plaintiffs and 

Defendants continued arm's-length settlement negotiations, facilitated by the Mediator. Id., ¶9. 

Without question, therefore, the Settlement cannot be viewed as collusive or the product of 

anything but the fully negotiated and hard fought Settlement that it is. 

C. The Settlement Provides a Substantial Benefit to Hospira 

Because this is a derivative action, the Court must consider the extent of the benefit 

conferred on Hospira by the proposed Settlement. See Lambrecht v. Taurel, No. 1:08-cv-68-

WTL-TAB, 2010 WL 2985946, at *3 (S.D. Ind. June 8, 2010) (holding that the terms of the 

 

7 See also In re AT&T Mobility Wireless Data Servs. Sales Tax Litig., 789 F. Supp. 2d 935, 941 (N.D. Ill. 

2011) ("Although formal discovery had not taken place, that fact alone did not preclude approval of the 

Settlement in light of the significant amount of informal discovery that the parties had conducted."); Am. 

Int'l Grp., Inc. v. ACE INA Holdings, Inc., No. 07 C 2898, 2011 WL 3290302, at *8 (N.D. Ill. July 26, 

2011) (discovery sufficient to "provide the parties with information about their respective litigation 

positions" is enough for settlement approval). 
- 11 - 

shareholder derivative settlement were fair, reasonable, and adequate after having "considered 

the substantial benefits the Settlement provides [the company]"). Importantly, the benefits 

afforded by a settlement in a derivative action need not be monetary: "a settlement may fairly, 

reasonably, and adequately serve the best interest of a corporation ... even though no direct 

monetary benefits are paid by the defendants to the corporation." Maher v. Zapata Corp., 714 

F.2d 436, 466 (5th Cir. 1983). In cases involving alleged misconduct – including a failure of 

board oversight – by companies in the pharmaceutical industry (like here), courts have routinely 

held that enhanced corporate governance measures confer a "substantial benefit" on a 

corporation. Lambrecht, 2010 WL 2985946, at *3 (approving settlement with corporate 

governance component only, and stating that "the Court has considered the substantial benefits 

the Settlement provides [the company], taking into account among other factors the risks of 

establishing liability and proving damages, the complexity, expense, and likely duration of the 

litigation, and the stage of the proceedings"). 

Here, the Commitments include changes in corporate oversight directly addressing the 

Company's quality and safety procedures, related FDA compliance, and policies regarding 

insider trading and stock repurchases. Stipulation, Ex. A. The Commitments address the alleged 

oversight lapses by increasing direct, formal executive oversight of the Company's quality and 

FDA compliance efforts, providing for more rigorous management and oversight of the internal 

quality audit function, and enhancing the insider trading and stock repurchase policies. Id. 

Additionally, the Commitments also go further and require broad structural changes that will 

materially improve the competence and effectiveness of the Board's oversight of Hospira's 

operations. Id. As stated above, the prosecution of the Actions was a meaningful factor in 

certain additional investments in quality and compliance and changes in Board structure that the 

Company has recently implemented. Accordingly, the Commitments and other improvements, 
- 12 - 

which will be maintained for no less than three years, confer real and substantial value on 

Hospira and its shareholders. See Stipulation, ¶2.1; Aguilar Decl., ¶27. 

D. The Court-Approved Notice Was Adequate and Satisfies Due Process 

The Preliminary Approval Order requires notice of the proposed Settlement to be made 

available to Hospira shareholders through: (i) furnishing the Notice and Stipulation to the SEC 

on Form 8-K; (ii) posting the Notice and Stipulation on Hospira's website; and (iii) posting the 

Notice and Stipulation on Plaintiffs' Counsel's websites at Robbins Arroyo LLP and Schubert 

Jonckheer & Kolbe LLP. See Preliminary Approval Order, ¶5. Hospira and Plaintiffs' Counsel 

have taken all these steps, and will file an affidavit to that effect fourteen days prior to the 

Settlement Hearing. See id., ¶6. 

This Court has already ruled that "the form and substance of the Notice" as well as the 

manner disseminated "shall constitute sufficient notice under Federal Rule of Civil Procedure 

23.1(c)." Id., ¶4. Further, the process employed was reasonably calculated to apprise 

shareholders of the Settlement, as the Notice informed shareholders of: (1) the essential terms of 

the Settlement; (2) the date and location of the final Settlement Hearing; (3) the primary 

contentions of the Parties and an explanation of the Actions; (4) the amount of the request for 

attorneys' fees and expenses and Plaintiffs' Incentive Award Amount; (5) the procedure by which 

shareholders can object to the proposed Settlement and/or the request for attorneys' fees and 

expenses; and (6) the requirements for appearing at the Settlement Hearing. The Notice is more 

than sufficient to inform interested parties of the proposed Settlement and of their opportunity to 

present any objections. 
- 13 - 

IV. THE REQUEST FOR ATTORNEYS' FEES AND EXPENSES SHOULD BE 

APPROVED 

In recognition of the material benefits conferred upon Hospira and its shareholders, and 

subject to the Court's approval, Defendants will cause Hospira or its insurance carriers to pay 

Plaintiffs' counsel attorneys' fees and expenses in the amount of $2.3 million to Illinois Plaintiffs' 

counsel and $330,000 to Delaware Plaintiff's counsel (the "Fee and Expense Amount"). See 

Stipulation, ¶¶4.1-4.2. Counsel who prosecute and settle shareholder derivative actions that 

confer benefits on corporations are entitled to an award of attorneys' fees and costs. See Boeing 

Co. v. Van Gemert, 444 U.S. 472, 478 (1980); Mills v. Elec. Auto-Lite Co., 396 U.S. 375, 395 

(1970) (an award of fees may be justified "regardless of whether the benefit is pecuniary in 

nature"). Here, there is no question that the Commitments obtained confer material and longlasting benefits upon Hospira. See supra section III.C.8

 

Moreover, courts encourage litigants to resolve fee issues by agreement. See, e.g.,

Hensley v. Eckerhart, 461 U.S. 424, 437 (1983) ("Ideally, ... litigants will settle the amount of a 

fee."). A negotiated fee is entitled to substantial deference. Cohn v. Nelson, 375 F. Supp. 2d 

844, 861 (E.D. Mo. 2005). Here, the agreed-upon Fee and Expense Amount is the product of 

extensive arm's-length negotiations between highly skilled and experienced counsel. See supra

sections II.A, III.B; see also Aguilar Decl., ¶¶25, 31, & Exs. 1-4. Importantly, the negotiation of 

the Fee and Expense Amount was conducted separately and following agreement of the 

substantive terms of the Settlement. See Melnick Decl., ¶11. These negotiations occurred 

directly between the Company's counsel and insurer and Plaintiffs' Counsel, with the substantial 

 

8

 Courts recognize the value of such measures and have awarded attorneys' fees in shareholder derivative 

cases that far exceed those being sought here and where the settlements were for corporate governance 

measures only. See, e.g., In re Abbott-Depakote S'holder Derivative Litig., No. 1:11-cv-08114, slip op. at 

7 (N.D. Ill. May 22, 2014) (awarding $9.9 million in attorneys' fees and expenses); Warner v. Lesar,

Cause No. 2011-09567, slip op. at 10 (Tex. Dist. Ct.-Harris Cnty. Oct. 1, 2012) (awarding $7.75 million 

in attorneys' fees) (Exhibits 11 & 12 to the Aguilar Decl.). 
- 14 - 

aid of the Mediator. Id., ¶¶12-13. The Parties negotiated the Fee and Expense Amount at arm'slength based upon their respective valuation of the benefits conferred upon Hospira and 

assessment of the amount that would fairly compensate Plaintiffs' Counsel for the risks and 

efforts undertaken in commencing and prosecuting the Actions on a contingency basis and the 

results achieved for Hospira. See Melnick Decl., ¶13; Aguilar Decl., ¶31. 

The Parties agreed to submit the matter, after additional briefing, for the Mediator's 

binding determination. Melnick Decl., ¶¶13-14. The Mediator subsequently determined the Fee 

and Expense Amount, including Incentive Award Amount, subject to Court approval, and the 

Parties accepted the Mediator's determination. Id., ¶15. Ultimately, the fee negotiation and final 

determination was based on a knowledgeable analysis of the appropriate fee for the work done 

and the benefits achieved. Id., ¶16. The end result of the negotiation reflects both sides' 

experience, including the Mediator's experience, as to what is appropriate and should therefore 

be approved by the Court. See Id., ¶¶15-16; Aguilar Decl., ¶32. 

The reasonableness of the Fee and Expense Amount is further supported under a lodestar 

analysis. In representative actions, courts will sometimes look to the requesting counsel's 

lodestar and the multiplier that will result if a requested fee is awarded as a "cross-check." Smith 

v. Dominion Bridge Corp., No. 96-7580, 2007 WL 1101272, at *7 (E.D. Pa. Apr. 11, 2007). "In 

shareholder litigation, courts typically apply a multiplier of 3 to 5 to compensate counsel for the 

risk of contingent representation." Cohn, 375 F. Supp. 2d at 862 (collecting cases). Here, 

counsel who represented Illinois Plaintiffs expended 3,071.52 hours prosecuting this litigation, 

for a total lodestar of $1,464,023.75. Aguilar Decl., ¶34. The Delaware Plaintiff's counsel 

expended 625.70 hours prosecuting this litigation, for a total lodestar of $381,156. Shepherd 

Decl., ¶13. Combined expenses total a reasonable $67,652.42. The resultant multipliers of 1.53 

and 0.84, respectively, are well within the range regularly approved by courts in this type of 
- 15 - 

litigation and further demonstrate that the requested Fee and Expense Amount is reasonable and 

should be approved in full. 

V. THE INCENTIVE AWARD AMOUNT SHOULD BE APPROVED 

In recognition of Plaintiffs' efforts on behalf of Hospira, the Stipulation provides for an 

award to each Plaintiff in the amount of $3,000, as determined by the Mediator, to be paid from 

the Fee and Expense Amount. See Stipulation, ¶4.3; Melnick Decl., ¶15; Aguilar Decl., ¶¶10, 

32, 40. The modest Incentive Award Amount should therefore be approved. Sauby v. City of 

Fargo, No. 3:07-cv-10, 2009 WL 2168942, at *1 (D.N.D. July 16, 2009) (upholding awards of 

$5,000 and $10,000 because, among other things, "[i]ncentive awards are not intended to 

'compensate' plaintiffs, but instead serve to encourage people with legitimate claims to pursue 

the action"). 

VI. CONCLUSION 

For all of the foregoing reasons, the Court should grant final approval of the Settlement, 

approve the requested Fee and Expense Amount, including the Incentive Award Amount, and 

enter the Judgment submitted herewith. 

Dated: December 31, 2014 Respectfully submitted, 

ROBBINS ARROYO LLP 

By: /s/ George C. Aguilar 

 

George C. Aguilar 

Brian J. Robbins 

Ashley R. Palmer 

Joan M. Rabutaso 

600 B Street, Suite 1900 

San Diego, CA 92101 

Telephone: (619) 525-3990 

Facsimile: (619) 525-3991 

gaguilar@robbinsarroyo.com 

brobbins@robbinsarroyo.com 
- 16 - 

apalmer@robbinsaarroyo.com 

jrabutaso@robbinsarroyo.com 

 

THE PASKOWITZ LAW FIRM, P.C. 

Laurence D. Paskowitz 

208 East 51st Street, Suite 380 

New York, New York 10022 

Telephone: (212) 685-0969 

Facsimile: (212) 685-2306 

lpaskowitz@pasklaw.com 

Co-Lead Counsel for Plaintiffs

 

–and– 

LASKY & RIFKIND, LTD. 

Norman Rifkind 

Leigh Lasky 

Amelia S. Newton 

351 West Hubbard Street, Suite 401 

Chicago, IL 60654 

Telephone: (312) 634-0057 

Facsimile: (312) 634-0059 

rifkind@laskyrifkind.com 

newton@laskyrifkind.com 

THE LAW OFFICES OF EDWARD T. 

 JOYCE & ASSOCIATES, P.C. 

Edward T. Joyce 

Rowena T. Parma 

135 South LaSalle Street 

Suite 2200 

Chicago, IL 60603 

Telephone: (312) 641-2600 

Facsimile: (312) 641-0360 

rparma@joycelaw.com 

Co-Liaison Counsel for Plaintiffs 

Additional Counsel: 

 

THE GRANT LAW FIRM, PLLC 

Lynda Grant 

521 Fifth Avenue, 17th Floor 

New York, NY 10175 

Telephone: (212) 292-4441 

Facsimile: (212) 292-4442 
- 17 - 

lgrant@grantfirm.com 

ROY JACOBS & ASSOCIATES 

Roy L. Jacobs 

60 East 42nd Street 

46th Floor 

New York, New York 10165 

Telephone: (212) 867-1156 

Facsimile: (212) 504-8343 

jacobs@jacobsclasslaw.com 

Additional Counsel for Plaintiff Lori 

Ravenscroft Geare 

LAW OFFICE OF ALFRED 

 G. YATES, JR., P.C. 

Alfred G. Yates, Jr. 

519 Allegheny Building 

429 Forbes Avenue 

Pittsburgh, PA 15219 

Telephone: (412) 391-5164 

Facsimile: (412) 471-1033 

yateslaw@aol.com 

Additional Counsel for Plaintiff Robert J. 

Casey 

998635 
CERTIFICATE OF SERVICE 

I hereby certify that on December 31, 2014, I electronically filed the foregoing with the 

Clerk of the Court using the CM/ECF system, which will send notification of such filing to the email addresses denoted on the Electronic Mail Notice List. 

/s/ George C. Aguilar 

GEORGE C. AGUILAR 

ROBBINS ARROYO LLP 

600 B Street, Suite 1900 

San Diego, CA 92101 

Telephone: (619) 525-3990 

Facsimile: (619) 525-3991 

gaguilar@robbinsarroyo.com