## F I L E D United States Court of Appeals Tenth Circuit 

### October 28, 2005

Clerk of Court PUBLISH UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

FRANKLIN LEE DEJULIUS and SUSAN M. DEJULIUS, Movants-Appellants,

v. NEW ENGLAND HEALTH CARE EMPLOYEES PENSION FUND, on behalf of itself and all others similarly situated, AMALGAMATED BANK, as Trustee for the Longview CollectiveInvestment Fund, EMPLOYERTEAMSTER LOCAL NOS. 175 & 505 PENSION TRUST FUND, PACE INDUSTRY UNION-MANAGEMENT PENSION FUND, PLUMBERS & PIPEFITTERS NATIONAL PENSION FUND, and UNITED BROTHERHOOD OF CARPENTERS PENSION FUND, Plaintiffs-Appellees, v. SPRINT CORPORATION, WILLIAM T. ESREY, RONALD T. LEMAY, KEVIN E. BRAUER, ARTHUR B. KRAUSE, ANDREW J. SUKAWATY, JOHN E. BERNDT, THEODORE H. SCHELL, THOMAS E. WEIGMAN, DON A. JENSEN, BRUCE BRANYAN, WILLIAM E. No. 04-3091- 2 -

McDONALD, MARTIN J. KAPLAN, GENE M. BETTS, JAMES RICHARD DEVLIN, MICHAEL B. FULLER, LEN J. LAUER, JOHN P. MEYER, ARTHUR ALLAN KURTZE, I. BENJAMIN WATSON, III, LINDA KOCH LORIMER, DUBOSE AUSLEY, WARREN L. BATTS, MICHAEL BON, IRVINE O. HOCKADAY, JR., HAROLD S. HOOK, CHARLES E. RICE, LOUIS W. SMITH, RON SOMMER, and STEWART TURLEY, Defendants-Appellees.

Appeal from the United States District Court

for the District of Kansas (D.C. No. 01-CV-04080-CM)

Kenneth E. Nelson, Nelson Law Firm, P.C., Kansas Ci ty, Missouri, for MovantsAppellants. Joseph D. Daley, (William S. Lerach, Keith F. Park, and Randall J. Baron; David R. Scott, Scott & Scott, LLC, Colchester, Connectic ut, with him on the brief) Lerach Coughlin Stoia Geller Rudman & Robbins LLP, San Diego, California, for Plaintiffs-Appellees. Eric J. Gorman, (Christina M. Tchen and Russell S. Jones, Jr., Shughart Thompson & Kilroy P.C., Kansas City, Missouri; J. E mmett Logan, Stinson Morrison & Hecker LLP, Kansas City, Missouri, with him on the brief) Skadden Arps Slate Meagher & Flom LLP, Chicago, Illinois, f or Defendants-Appellees.

Before EBEL, HOLLOWAY and LUCERO , Circuit Judges.- 3 -

EBEL , Circuit Judge.

This case deals with the legal and constitutional s ufficiency of the class action notice program under Fed. R. Civ. P. 23 and the Due Process Clause. Appellants are unnamed class plaintiffs in an actio n against Appellee Sprint Corporation. The class action concerns alleged ins tances of securities fraud surrounding Sprint’s failed merger attempt with Wor ldCom, Inc. Appellants received notice of a class settlement two weeks aft er the deadline for filing objections to the settlement and on the same day as the final fairness hearing on the settlement. After the district court approved the settlement between Sprint and its shareholders, Appellants moved to intervene , arguing that the attorneys’ fees to be paid to class counsel pursuant to the se ttlement were excessive and that the notice afforded to class members of the settlem ent was insufficient under the Due Process Clause and Fed. R. Civ. P. 23. Appella nts claim that since they held their shares in “street name” (meaning that they he ld only beneficial title to the shares while legal title was vested in their broker ’s name), the thirty-two-day period between the initial mailing of the settlemen t notice and the deadline for objections did not sufficiently account for the del ays involved in forwarding notice packets to beneficial stock owners.1 The class action complaint also names as defendants several high-level

officers at Sprint and members of its Board of Dire ctors. For the purposes of this opinion, when we use the term “Sprint,” we are refe rring to all three categories of Sprint defendants: directors, officers, and the corporate entity. In addition, the complaint named WorldCom, Inc., and its former Chie f Executive Officer, Bernard Ebbers, as defendants. The suit against Wor ldCom, Inc., was stayed pending the company’s bankruptcy, and the claims ag ainst Ebbers were voluntarily dismissed.

2 Plaintiffs and Defendants are on the same side for purposes of this appeal; both argue that the district court correctly denied Appellants’ motion to intervene. - 4 - The district court held that the notice program was sufficient under Rule 23 and due process and denied the motion to intervene. For the reasons outlined below, we AFFIRM the judgment of the district court

.

BACKGROUND I. The parties Defendant-Appellee Sprint Corporation (“Sprint”) is in the telecommunications business, offering hardline and wireless long-distance service. 1 At the relevant time, Sprint was the third larges t long-distance carrier in the United States and had annual revenues in excess of $17 billion. Sprint’s common stock (“FON”) and its wireless tracking stoc k (“PCS”) are publicly held. Lead Plaintiff-Appellee 2 New England Health Care Employees Pension Fund (“New England”) is a large institutional inves tor that purchased publiclytraded Sprint securities. Pursuant to Section 101( b) of the Private Securities3 Pub. L. No. 104-67, 109 Stat. 737 (codified in rele vant part at 15 U.S.C.

§ 78u-4(a)(3)). - 5 - Litigation Reform Act of 1995, 3 the district court appointed New England to be the lead plaintiff in a consolidated class action a gainst Sprint seeking damages suffered by investors as a result of Sprint’s faile d merger attempt with WorldCom, Inc. See In re Sprint Corp. Sec. Litig. , 164 F. Supp. 2d 1240, 1242, 1244 (D. Kan. 2001) (“Sprint I ”). Sprint and New England eventually reached a $50 million settlement, which the district court ap proved. Movants-Appellants Franklin and Susan DeJulius are members of the class who filed a motion to intervene, claiming that the notice of settlement to class members was inadequate and that the fee requested b y class counsel was excessive. II. Factual background On October 4, 1999, after several months of intense negotiations, Sprint and WorldCom, Inc., agreed to the terms of a mergerwhereby WorldCom would acquire Sprint for $129 billion. See In re Sprint Corp. Sec. Litig. , 232 F. Supp. 2d 1193, 1201 (D. Kan. 2002) (“Sprint II ”). At the time, both companies had massive market shares in the domestic and internati onal telecommunications markets: Sprint was the nation’s third largest prov ider of long distance telephone services while WorldCom was the second largest prov ider of international long- 6 -

distance lines to American customers and the larges t provider of domesticallyconnected international private voice and data line s. Id. The combination of the two companies was to be the largest corporate merge r in history. Id. Sprint and WorldCom shareholders approved the merge r proposal on April 28, 2000. Id. However, on June 27, 2000, the Justice Departmentfiled an antitrust suit to block the merger; the European Co mmission followed suit the next day. Id. By July 13, 2000, Sprint and WorldCom officially terminated the merger agreement. Id. at 1201-02. Although the announcement of the merger initially h ad a positive impact on the value of PCS and FON shares, once the deal fell apart, stock values significantly decreased, causing investors to lose billions of dollars. Id. at 1210. Some investors felt that the proposed merger was si mply a ruse designed to allow certain Sprint executives prematurely to exercise s tock options. Id. at 1202. Under Sprint’s long-term compensation plan, certainhigh-level executives were given stock options to buy millions of shares of Sp rint FON/PCS common stock at prices well below market value. Id. In 1998, however, most of these options had not yet vested, which meant that Sprint executives could not yet exercise them. Id. According to Plaintiffs, Sprint executives were w orried that Sprint stock prices would continue to fall, further decreasing t he potential value of their unvested options. Id.- 7 -

The incentive plan did, however, provide that shoul d Sprint undergo a “change-in-control,” the options would immediately vest and become exercisable. Id. Thus, the plaintiff class alleges that Sprint exe cutives pushed for the WorldCom merger with full knowledge that it would n ever ultimately stand up to an antitrust challenge. Id. Once the shareholders approved the merger, stock prices would rise, the options would vest, and the executives could cash in their stock options at a substantial profit. Id. In fact, this is exactly what happened. William T. Esrey, the chairman and CEO of Sprint (a nd a named individual defendant in this suit), made over $300 million alo ne from his stock options. Id. The plaintiff class alleges that the total windfall for all stock option participants was in excess of $1.7 billion. Id. The downside was that once the merger failed, Sprint share prices tumbled. Id. at 1210. PCS shares dropped to $33.25, a fortynine percent decrease from its high point of $65.50 after the merger agreement was announced. Id. Similarly, FON shares fell to $26.81, a sixty-one percent decrease from its high point of $68.76 after the me rger agreement was announced. Id. III. Procedural history A. Consolidated complaint and dismissal of some clai ms These events gave rise to three separate shareholde r class actions, which were later consolidated into one complaint over whi ch New England was the lead- 8 -

plaintiff. The consolidated complaint alleged thatSprint made false and misleading statements in connection with the WorldC om merger, in violation of Section 10(b) of the Securities and Exchange Act of 1934 (“the Act”), 15 U.S.C. § 78j(b) (2000), and SEC Rule 10b-5, 17 C.F.R. § 24 0.10b-5 (2000), promulgated thereunder. The complaint also alleged Sprint and WorldCom violated Section 20(a) of the Act (codified at 15 U.S.C. § 78t(a)), a provision which provides for joint and several liability for any person who cont rols another that has violated the Act or any regulation promulgated thereunder. Prior to class certification, Sprint filed a motion to dismiss the suit. Sprint
II , 232 F. Supp. 2d at 1199. In a lengthy opinion, t he district court agreed to dismiss nearly all of the plaintiff class’ allegati ons, except for three paragraphs in the complaint dealing with misstatements and omissi ons made to the Department of Justice and the European Commission. Id. at 1230. B. Settlement agreement After the district court dismissed the bulk of the claims against Sprint, the parties entered into negotiations and, on April 7, 2003, agreed to settle the claims for $50 million. Under the terms of the agreement, the $50 million would be placed in a common settlement fund for class member s and would be distributed to class members after attorneys’ fees and other expenses were deducted. On October 29, 2003, the district court preliminarily approved the agreement,- 9 -

conditionally certifying a settlement class and sch eduling the final settlement hearing for December 16, 2003.
C. Notice & dismissal The district court’s preliminary approval mandated a number of procedures aimed at notifying absent class members of the sett lement agreement and their rights to opt-out, object, or intervene in the proc eedings before the settlement became final. Along with their settlement agreement, the parties submitted several draft documents that would notify class members of the se ttlement and enable them to obtain their share of compensation from the settlem ent fund: (1) a Notice of Pendency and Proposed Settlement of Class Action (the “Notice”); (2) a Proof of Claim and Release; and (3) a Summary Notice. The N otice and Proof of Claim and Release (“the notice packet”) were to be mailed directly to class members, while the Summary Notice would be published in news papers and on the internet. Those documents specifically stated that any class member wishing to opt-out or raise an objection to the settlement must do so bef ore December 2, 2003, two weeks before the final settlement hearing. The district court approved the proposed materials and ordered certain notice procedures that it found to be “the best not ice practicable” under the circumstances. Specifically, the court ordered that notice packets should be- 10 -

mailed to all Sprint shareholders in the class with in ten days, to the extent those persons were identifiable by Sprint records. In ad dition, the district court ordered that the summary notice be published on two separat e occasions within twenty days of its order in the national edition of Invest or’s Business Dailyand The Kansas City Star

. To facilitate class notice and claim processing, th e court appointed Gilardi & Co., LLC (“Gilardi”) as the settlement administrator and ordered it to place all of the notice materials on its Web site. With regard to the individual notice to class membe rs, the district court recognized a potential problem since it appeared th at many of the shareholders reflected in Sprint records were brokerage houses and it was thus likely that these entities held the shares only as “nominees” while t he entities’ clients held the beneficial title to the shares, also known as holdi ng shares in “street name.” The following background is useful: The practice of registering securities in the recor ds of issuers in other than the name of the beneficial owner is commonly r eferred to as “nominee” and “street” name registration. Nominee name registration refers to arrangements used by institutional investors (insurance companies and investment companies among others) and financial intermediaries (brokers, banks and trust companies) for the registration of securities held by them for their o wn account or for the account of their customers who are the benefici al owners of the securities. Street name registration, a specialize d type of nominee name registration, refers to the practice of a brok er registering in its name, or in the name of its nominee, securities lef t with it by customers or held by it for its own account.4 The full name of this study is: Final Report of the Securities and Exchange

Commission on the Practice of Recording the Ownersh ip of Securities in the Records of the Issuer in Other Than the Name of the Beneficial Owner of Such Securities . For convenience, most commentators simply refer to it as “The Street Name Study .” See Hamilton, infra , at 674 n.30. - 11 - Securities and Exchange Commission, The Street Name Study , 4 1 (1976), reprinted inRobert W. Hamilton & Jonathan R. Macey, Cases and Materials on Corporations Including Partnerships and Limited Liability Companies 674 (8th ed. 2003) (footnote omitted). The primary benefit of t his practice is to permit beneficial owners easily and quickly to transfer ow nership of their shares without meeting the issuer’s often cumbersome requirements, such as endorsing the back of the stock certificate. Id. at 675. The downside, of course, is that the issu er’s records would not always reflect the true owners of the shares. See id. In order to address this problem, the district court in the instant case issued special procedures for nominees who held shares on behalf of their clients during the class period. If a particular shareholder refl ected in Sprint’s records was a nominee, that entity had two options. The nominee could provide Gilardi with a list of names and addresses of its clients who were the beneficial owners of the Sprint shares. Gilardi would then forward individu al notice packets to each investor. Alternatively, the nominee could simply request the appropriate number of notice packets from Gilardi and then forward the notices itself to the actual

owners. Any costs associated with the mailing would be reim bursed from the5 The record also indicates that Gilardi took the ini tiative to send copies of

the notice package to several major brokerage house s whose clients commonly hold stock in street name.

6 The record contains no information as to precisely whenthese additional packets were sent directly to investors or to the n ominees for forwarding. All we know for certain is that as of December 3, 2003 (on e day after the deadline to file objections), Gilardi had sent out an additional 89, 426 notice packets.

7All of the required notice-by-publication apparentl y took place as required under the district court’s preliminary approval of the settlement. - 12 - settlement fund. In any event, the nominee was req uired to complete this process within ten days of receiving the initial notice pac kage from Gilardi. On October 31, 2003 (just two days after the distri ct court gave preliminary approval for the settlement), Gilardi obtained a li st of shareholders from Sprint and mailed 37,081 notice packets to various individ uals and entities. As predicted, many of these packets were sent to nomin ees. 5 Following the procedures set forth above, an additional 89,426 no tice packages were sent out sometime before December 3, 2003, one day after the deadline for optout/objection deadline and nearly two weeks prior t o the settlement hearing. 6 Of these packages, 56,078 packages were mailed by Gila rdi directly to potential class members (presumably from lists provided by nominees ), and 33,342 packages were sent in bulk to nominees (for the nominees to forward on to their clients). 7 No objections to the settlement were filed prior to the December 2, 2003, deadline, and as scheduled, the district court held a final settlement hearing two8 Class counsel requested, and the district approved (at the settlement

hearing) an award of attorneys’ fees not to exceed 17.5% of the settlement fund plus up to $375,000 in expenses. - 13 - weeks later on December 16, 2003. At the conclusion of the hearing, the district court approved the settlement and dismissed the sui t against Sprint.
D. The motion to intervene On December 18, 2003, Appellants filed a motion to intervene for the limited purpose of filing a motion for leave to fil e late objections to the settlement approved by the district court just two days earlier. Appellants sought their intervention both permissively and as of righ t. See Fed. R. Civ. P. 24(a)-(b). In a document attached to their motion, Appellants maintained that they did not receive notice of the class settlement until Decemb er 16, 2003, the very day of the fairness hearing and a full two weeks after the dea dline for filing objections had passed. Appellants sought to object to the settlem ent on two grounds: (1) that the attorneys’ fees requested by class counsel were unr easonable and excessive; 8 and (2) that the notice to the class was inadequate and constitutionally defective. The district court held that the notice scheme, on the whole, was constitutionally adequate even though Appellants th emselves did not receive timely notice of the settlement. It also noted that the issue regarding the fairness of the attorneys’ fees had already been taken up an d ruled upon at the final9 In its brief, Sprint raises an additional waiver ar gument. Sprint observes

that while Appellants’ opening brief discusses exte nsively the adequacy of notice, it does not argue that the district court erred by failing to allow them to intervene. According to Sprint, “Appellants’ failure to appeal the denial of intervention should deprive them of standing on appeal to assertthe merits of the objection they sought to raise.” Apparently, Sprint believes that Appellants should have included two issues in their brief: (1) whether the denial of intervention was inappropriate under Fed. R. Civ. P. 24; and (2) whe ther the notice to absent class members was inadequate. This argument ultimately fails. When the district court ruled on the motion to intervene, it did not specifically discuss the l egal standards under Rule 24 for permissive intervention or intervention as of right . Instead, the court focused on the issues of adequate notice and attorneys’ fees. In other words, the court looked to the merits of the objections that Appellants wou ld have filed if granted intervention. Finding those objections meritless, it then denied intervention. Putting aside the attorneys’ fees issue, the only i ssue before the court when it decided the motion to intervene was whether notice was adequate to absent class members. By challenging the district court’s holdi ng that notice was adequate, Appellants are therefore impliedly challenging the court’s decision to deny intervention. - 14 - settlement hearing. Accordingly, the district court denied the motion t o intervene. This appeal followed. As to the attorneys’ fees, Appellants have not rais ed this issue in their opening brief and it is therefore waived. See State Farm Fire & Cas. Co. v. Mhoon , 31 F.3d 979, 984 n.7 (10th Cir. 1994). Thus, the only remaining basis for intervention that Appellants assert on appeal is th e notice issue. 910 In Coalition for Stable Economic Growth , intervention was sought prior

to the district court’s final judgment in the case. See 100 F.3d at 839. Here, in contrast, the motion to intervene was filed two day s after the district court entered a final judgment. The notice of appeal here was fi led in late February, so it could not have been timely filed in relation to the final judgment, which was entered in mid-December. We believe, however, that if a denia l of a motion to intervene is final for § 1291 purposes before judgment is entere d in the action, then it should also be final if brought as a post-judgment motion. See Guthrie v. Evans , 815 F.2d 626, 628 (11th Cir. 1987) (noting that denial of an unnamed class member’s motion to intervene is appealable). - 15 - DISCUSSION
I. Jurisdiction On December 16, 2003, the district court approved t he settlement order and dismissed the suit. Two days later, Appellants fil ed a motion to intervene permissively and as of right. The district court d enied that motion on February 24, 2004. Our appellate jurisdiction arises under 28 U.S.C. § 1291. See Coalition of Ariz./N.M. Counties for Stable Economic Growth v . Dep’t of the Interior , 100 F.3d 837, 839 (10th Cir. 1996) (holding that “[a]n order denying intervention is final and subject to immediate review if it prevent s the applicant from becoming a party to the action” and taking jurisdiction under § 1291). 10
II. Standard of Review Our review of rulings on motions to intervene as of right is de novo , and we review a denial of permissive intervention for a buse of discretion. City of Stilwell v. Ozarks Rural Elec. Coop. Corp , 79 F.3d 1038, 1042 (10th Cir. 1996).- 16 -

The underlying question of whether a particular cla ss action notice program satisfies the requirements of Fed. R. Civ. P. 23 an d the Due Process Clause is a legal determination we review de novo . See Rutter & Wilbanks Corp. v. Shell Oil
Co. , 314 F.3d 1180, 1186 (10th Cir. 2002) (stating that due process issues, which call for legal conclusions, are subject to de novo review); Torrisi v. Tuscon Elec.
Power Co. , 8 F.3d 1370, 1374 (9th Cir. 1993) (applying de novo review to due process and Rule 23 issues regarding class action n otice program). However, the district court’s findings of fact regarding notice are reviewed under the clearly erroneous standard. See Fed. R. Civ. P. 52(a).
III. Intervention Although this case arose in the context of Appellan ts’ post-judgment motion to intervene, the district court, in its ord er denying the motion, never specifically mentioned the legal standards for inte rvention, which are laid out in Fed. R. Civ. P. 24. Instead, the district court pr oceeded directly to the merits of the two objections Appellant sought to raise if gra nted intervenor status: sufficiency of the notice and appropriateness of th e attorneys’ fees. Finding both of these objections to be without merit, the distri ct court simply denied the motion to intervene. Although our analysis ultimately turns on the merit s of Appellants’ putative objection to the notice procedures, we must first d etermine if the threshold11 As noted above, the other ground asserted below forintervention—the

excessive nature of attorneys’ fees—has not been ra ised on appeal and is thus waived. - 17 - requirements of Rule 24 have been met. Fed. R. Civ . P. 24 provides, in relevant part: (a) Intervention of Right. Upon timely application anyone shall be permitted to intervene in an action. . . when the applicant claims an interest relating to the property or transaction wh ich is the subject of the action and the applicant is so situated that th e disposition of the action may as a practical matter impair or impede t he applicant's ability to protect that interest, unless the applic ant’s interest is adequately represented by existing parties. (b) Permissive Intervention. Upon timely application anyone may be permitted to intervene in an action . . . when a n applicant’s claim or defense and the main action have a question of l aw or fact in common. . . . In exercising its discretion the court shall consider whether the intervention will unduly delay or preju dice the adjudication of the rights of the original parties. Here, Appellants do not challenge the adequacy of t he named class representatives to protect their interests. The on ly asserted basis for intervention is the adequacy of class notice procedures, an enti rely separate issue from adequacy of representation. 11 Compare Fed. R. Civ. P. 23(a)(4) (adequacy of representation), withFed. R. Civ. P. 23(c)(2)(B) (requiring notice in a ctions certified under Rule 23(b)(3)). Thus, intervention as of right is not available to Appellants. See 7B Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure § 1799, at 246 (3d ed. 2005) (“If the court- 18 -

determines that the absent class members are adequately represented, intervention as of right under Rule 24(a) should be unavailable. Intervention in this situation should be a matter that is left to the court’s disc retion under the standards for permissive intervention in Rule 24(b)(2).”). As for the standards for permissive intervention, i t is clear that Appellants meet the requirement that their claim “have a quest ion of law or fact in common” with the main action. Fed. R. Civ. P. 24(b). Wher e, as here, a class action is certified under Fed. R. Civ. P. 23(b)(3), it is req uired that “questions of law or fact common to the members of the class predominate over any questions affecting only individual members . . . .” However , in deciding whether to permit intervention, the court is also required to conside r whether the intervention will “unduly delay or prejudice” the adjudication of the rights of existing litigants. Fed. R. Civ. P. 24(b). The district court’s conclu sion that the notice procedures in this case were adequate (and therefore that Appe llants’ putative objection was meritless) can be read as a conclusion that the int ervention Appellants sought would cause undue delay to the final disposition of the class settlement. While our overall review of a motion to intervene p ermissively is for an abuse of discretion, here the district court rested its ruling on a legal conclusion: that the notice procedures were adequate under the Due Process Clause and Rule 23. An abuse of discretion occurs when a district court bases its ruling on an- 19 -

erroneous conclusion of law. Kiowa Indian Tribe v. Hoover , 150 F.3d 1163, 1165 (10th Cir. 1998). Thus, if we conclude—under a de novo standard of review—that the district court incorrectly held the notice procedures to be adequate, we must reverse the district court’s ruli ng on Appellants’ motion to intervene. IV. Adequacy of the class notice procedures A. Applicable law Under Fed. R. Civ. P. 23(e)(1)(B), a district courtapproving a class action settlement “must direct notice in a reasonable mann er to all class members who would be bound by a proposed settlement, voluntary dismissal, or compromise.” According to the advisory committee’s note, “[r]eas onable settlement notice may require individual notice in the manner required by Rule 23(c)(2)(B)[, the rule governing class-certification notice,]” particularl y when, as here, individual class members are required to file claims to collect from the settlement fund. Advisory Committee’s Note, 2003 Amendments, Fed. R. Civ. P. 23, reprinted inFederal Civil Judicial Procedure and Rules 132-33 (West 2005 ed.). Rule 23(c)(2)(B) provides, in relevant part: For any class certified under Rule 23(b)(3), the co urt must direct to class members the best notice practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort.- 20 -

In addition to the requirements of Rule 23, the con stitution’s Due Process Clause also guarantees unnamed class members the ri ght to notice of certification or settlement. See U.S. Const. amend. V; Mullane v. Cent. Hanover Ban k &
Trust Co. , 339 U.S. 306, 313 (1950); Eisen v. Carslisle & Ja quelin , 417 U.S. 156, 173 (1974). Many controversies have raged about the cryptic and abstract words of the Due Process Clause but there can be no doubtthat at a minimum they require that deprivation of life, libe rty or property by adjudication be preceded by notice and opportunity for hearing appropriate to the case. Mullane , 339 U.S. at 313. In Mullane , the Court addressed whether publication notice (r ather than mailed individual notice) to known beneficiaries of a common trust fund as part of a judicial settlement of accounts was constituti onally sufficient. Id. at 307. Observing that notice and an opportunity to be hear d were fundamental requisites of procedural due process, the Court held that noti ce must be “reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportuni ty to present their objections.” Id. at 314; see also Eisen , 417 U.S. at 173 (concluding that some form of individualized notice is mandatory under Ru le 23 and the Due Process Clause). The Court continued: But when notice is a person’s due, process which is a mere gesture is not due process. The means employed must be such a s one desirous- 21 -

of actually informing the absentee might reasonably adopt to accomplish it. The reasonableness and hence the co nstitutional validity of any chosen method may be defended on th e ground that it is in itself reasonably certain to inform those aff ected . . . . Mullane , 339 U.S. at 315. The Court held that publication notice could not satisfy due process where the names and addresses o f the beneficiaries were known. Id. at 320. Nevertheless, this due process right does not requi re actualnotice to each party intended to be bound by the adjudication of arepresentative action. See id. at 313-14 (“A construction of the Due Process Claus e which would place impossible or impracticable obstacles in the way co uld not be justified.”); accord In re Integra Realty Res., Inc. , 262 F.3d 1089, 1110-11 (10th Cir. 2001) (“Integra
I ”) (holding Rule 23 and Due Process requisites sati sfied where the record indicated that only seventy-seven percent of class members actually received notice of the settlement). For due process purposes, rather than looking at ac tual notice rates, our precedent focuses upon whether the district court g ave “the best notice practicable under the circumstances including individual notice to all members who can be identified through reasonable effort.” Integra I , 262 F.3d at 1110 (citing Eisen , 417 U.S. at 174) (quotation omitted). The legal st andards for satisfying Rule 23(c)(2)(B) and the constitutional guarantee of pro cedural due process are coextensive and substantially similar. Compare Integra I , 262 F.3d at 1110 with12 We expressly left open the possibility of individua l class members (continued...) - 22 - Fed. R. Civ. P. 23(c)(2)(B); see also Advisory Committee’s Note, 1966 Amendments, Fed. R. Civ. P. 23, reprinted inFederal Civil Judicial Procedure and Rules 130 (West 2005 ed.) (“This mandatory notice pursuant to subdivision (c)(2) . . . is designed to fulfill requirements of due pr ocess to which the class action procedure is of course subject.”). Although the Tenth Circuit has not yet dealt with t he appropriate method of sending settlement notices in a shareholder class a ction to class members who hold their shares in street name only, two decision s from the Ninth Circuit offer helpful guidance. In Torrisi , the Ninth Circuit held that notice provided to shareholders thirty-one days before the deadline fo r written objections and fortyfive days before the fairness hearing was adequate under the Due Process Clause and Rule 23, despite the fact that nearly one-third of the 113,000 class members held their shares in street name. 8 F.3d at 1373, 1375. In so doing, the court noted that the question before us today is not whether some in dividual shareholders got adequate notice, but whether the c lass as a whole had notice adequate to flush out whatever objection s might reasonably be raised to the settlement. If an indi vidual shareholder later claims he did not receive adequate notice and therefore should not be bound by the settlement, he can litigate that issue on an individual basis when the settlement is raised as abar to a lawsuit he has brought. 1212 (...continued)

bringing a due process claim based on lack of indiv idual notice in a collateral effort to challenge the binding effect of the settl ement as to them. Integra I , 262 F.3d at 1111 & n.18. - 23 - Torrisi , 8 F.3d at 1375. As further support, the Torrisi court pointed out that a number of “street name” shareholders actively parti cipated in the litigation, filing objections and participating in the settlement hear ing, tending to indicate that street name shareholders received fair notice despi te the fact that only thirty-one days elapsed between the initial mailing and the objection deadline. Id. at 1375
n.2. Similarly, the Ninth Circuit has also concluded that due process and Rule 23 were satisfied even when it was undisputed that a nominee forwarded nearly one-sixth of the settlement notices to beneficial o wners after the opt-out deadline.
See Silber v. Mabon , 18 F.3d 1449, 1452, 1454 (9th Cir. 1994). In Sil ber , the initial round of settlement notices were sent out t o approximately 1,000 individual shareholders (identifiable in the company’s records ) forty days prior to the opt-out deadline. Id. Based on information from nominees, the settlemen t administrator then sent out over 5,000 additional notice packets to beneficial owners, either directly or by providing the packets to nominees fo r forwarding. Id. One of the nominees, PaineWebber, did not even request notice packets until just eight days before the opt-out deadline. Id. The settlement administrator sent these packets13 See fn. 14, infra. - 24 -

to PaineWebber on the day of the opt-out deadline, which then sent them to the beneficial owners. Id. While the objector in Silberreceived his notice after the opt-out deadline, he did receive notice approximate ly eleven days prior to the fairness hearing at which he appeared and unsuccess fully requested to opt-out. 13
Id. Holding the notice procedures sufficient under du e process and Rule 23, the court noted that [w]hile [the objector] was fortuitously unable to e xercise his right to opt out in a timely fashion, that fact alone does n ot mean that the best practicable notice under the circumstances was not given to absent class members. As the procedures in this ca se for notice to beneficial owners through brokerage houses conforme d to [prior precedent], we affirm the judgment. Id. at 1454. B. Analysis Appellants’ central claim on appeal is that the rec ord indicates that 70.7% of the class members received fewer than thirty-two days’ notice. This fact, while supported in the record, however, does not render the instant notice program deficient under the Due Process Clause or Rule 23. Appellants derive the “70.7%” figure from the follo wing facts: (1) An initial mailing of 37,081 notice packets was sent o n October 31, 2003 (thirty-two days before the deadline) to various individuals an d entities; (2) then, at some- 25 -

point before December 2, 2003 (the opt-out deadline ), an additional 89,426 notice packages were sent out to beneficial owners. There fore, a total of 126,507 notice packages were mailed to shareholders with 89,426 (o r 70.7%) of them sent sometime after the initial wave of mailings on Octo ber 31, 2003 but before December 3, 2003, one day after the deadline for op t-outs and written objections and nearly two weeks before the settlement hearing. Of these 89,426 packages, we also know that 56,078 packages were mailed by Gi lardi directly to potential class members (presumably from lists provided by no minees), and 33,342 packages were sent in bulk to nominees (for the nom inees to forward on to their clients). Notably absent from the record, however, is any evi dence indicating whether anyone other than Appellants received theirnotice after the deadline for objections and opt-outs or the settlement hearing. Indeed, Appellants conceded below (and thus would be bound to concede here) that it was possible for beneficial owners of nominee accounts to have recei ved the notice as many as fourteen days prior to the objection deadline. Appellees rely heavily on Torrisi , arguing that since a thirty-one-day notice period was deemed appropriate even though there wer e a substantial number of beneficial shareholders there who had to have notic e passed on to them, the thirty-two-day period in the instant case must also be permissible. However, it is- 26 -

worth pointing out that the percentage of beneficia l owners in Torrisi is substantially less than it is here. In Torrisi , only one-third of the class members were contacted after the initial mailing based on n ames provided by nominees. 8 F.3d at 1374-75. Here, in contrast, the vast major ity of shareholders (indeed 70.7% of them) held their shares beneficially. Butlike Torrisi , “the question before us today is not whether some individual shar eholders got adequate notice, but whether the class as a whole had notice adequat e to flush out whatever objections might reasonably be raised to the settle ment.” 8 F.3d at 1375. In Silber , the proportion of beneficial owners not included in the initial mailing was closer to eighty-three percent. See 18 F.3d at 1452 (initial mailing sent to approximately 1,000 shareholders, and an ad ditional 5,000 mailings were sent to beneficial owners sometime thereafter). Th us, even when a substantial number of class members hold their shares in streetname only, courts have found a notice scheme similar to the one in the instant c ase sufficient and have not required a sixty- or ninety-day notice period, as Appellants suggest. Accordingly, we believe that in the instant case, p articularly given the absence of any evidence that anyone other than Appe llants received their notice after the deadline for objections or the settlementhearing, the initial and secondary rounds of mailings were sufficient to flu sh out any objections that might arise to the fairness of the settlement. Ind eed, the only substantive- 27 -

argument Appellants sought to raise if permitted to intervene—that the attorneys’ fees were excessive—was specifically considered andrejected at the settlement hearing. Furthermore, even if we accept as true Appellants’ unsubstantiated assertion that “thousands of class members receivedtheir notice packet too late to respond,” this does not necessarily mean that the n otice program violated Rule 23 or the Due Process Clause. In Silber , the court found the notice scheme to be sufficient even when it was undisputed that 1,000 o f the notices, or approximately seventeen percent, were sent out after the opt-out deadline. 18 F.3d at 1453-54. Here, it is undisputed that all of the notices were sent out nearly two weeks prior to the settlement hearing, and it is likely that a large number of the notices were sent out much earlier than that.

CONCLUSION We hold that the instant class action notice progra m satisfies the requirements of the Due Process Clause and Rule 23. Because the district court correctly reached this conclusion, it was not an ab use of discretion for the court to14 We note that the instant case deals only with class-wide determinations of

fairness and due process. Appellants here do not s eek individually to opt-out of the settlement or in any other way attempt to avoid its binding effect. If this were Appellants’ objective, the lack of actual notice as to them may have some due process implications. We express no view, however, as to whether individual members of the class might be able to establish a l apse in due process because they lacked actual notice of the action, such that they might successfully challenge the binding effect of the settlement agai nst them in a collateral action. See Integra I , 262 F.3d at 1111 n.18. Relevant to any such analy sis might be the fact that the stockholders who chose to hold their share in street name do so at their own volition in reliance upon the nominee to protect their interests. This is not to suggest that the class representative can ig nore that fact, but it may be a factor to consider in the mix. - 28 - deny Appellants’ motion to intervene. 14 We AFFIRM.