EXHIBIT 4.4


 


IN THE COURT OF CHANCERY OF
THE STATE OF DELAWARE


 


	
  CME
  GROUP INC., a Delaware corporation,

  	
  :

  	
   

  	
   

  
	
  as
  successor by merger to CBOT HOLDINGS,

  	
  :

  	
   

  	
   

  
	
  INC.,
  a Delaware corporation; THE BOARD OF

  	
  :

  	
   

  	
   

  
	
  TRADE
  OF THE CITY OF CHICAGO, INC.,

  	
  :

  	
   

  	
   

  
	
  a
  Delaware corporation; and MICHAEL

  	
  :

  	
   

  	
   

  
	
  FLOODSTRAND
  and THOMAS J. WARD

  	
  :

  	
   

  	
   

  
	
  and
  All Others Similarly Situated,

  	
  :

  	
   

  	
   

  
	
   

  	
  :

  	
   

  	
   

  
	
  Plaintiffs,

  	
  :

  	
   

  	
   

  
	
   

  	
  :

  	
   

  	
   

  
	
  v.

  	
  :

  	
   

  	
  C.A.
  No. 2369-VCN

  
	
   

  	
  :

  	
   

  	
   

  
	
  CHICAGO
  BOARD OPTIONS EXCHANGE,

  	
  :

  	
   

  	
   

  
	
  INC.,
  a Delaware non-stock corporation,

  	
  :

  	
   

  	
   

  
	
  WILLIAM
  J. BRODSKY, JOHN E. SMOLLEN,

  	
  :

  	
   

  	
   

  
	
  ROBERT
  J. BIRNBAUM, JAMES R. BORIS,

  	
  :

  	
   

  	
   

  
	
  MARK
  F. DUFFY, DAVID FISHER,

  	
  :

  	
   

  	
   

  
	
  JONATHAN
  G. FLATOW, JANET P.

  	
  :

  	
   

  	
   

  
	
  FROETSCHER,
  BRADLEY G. GRIFFITH,

  	
  :

  	
   

  	
   

  
	
  PAUL
  J. JIGANTI, PAUL KEPES, STUART K.

  	
  :

  	
   

  	
   

  
	
  KIPNES,
  DUANE R. KULLBERG, JAMES P.

  	
  :

  	
   

  	
   

  
	
  MACGILVRAY,
  ANTHONY D. MCCORMICK,

  	
  :

  	
   

  	
   

  
	
  R.
  EDEN MARTIN, KEVIN MURPHY,

  	
  :

  	
   

  	
   

  
	
  RODERICK
  PALMORE, THOMAS H.

  	
  :

  	
   

  	
   

  
	
  PATRICK,
  JR., SUSAN M. PHILLIPS,

  	
  :

  	
   

  	
   

  
	
  WILLIAM
  R. POWER, SAMUEL K. SKINNER,

  	
  :

  	
   

  	
   

  
	
  CAROLE
  E. STONE, HOWARD L. STONE,

  	
  :

  	
   

  	
   

  
	
  and
  EUGENE S. SUNSHINE,

  	
  :

  	
   

  	
   

  
	
   

  	
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  Defendants.

  	
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MEMORANDUM OPINION


 


Date Submitted: December 16, 2008 

Date Decided: June 3, 2009


 

















 


 


Kenneth J. Nachbar, Esquire
of Morris, Nichols, Arsht & Tunnell LLP, Wilmington, Delaware; Hugh R.
McCombs, Esquire, Michele L. Odorizzi, Esquire, and Michael K. Forde, Esquire
of Mayer Brown LLP, Chicago, Illinois; Peter B. Carey, Esquire of Law Offices
of Peter B. Carey, Chicago, Illinois; Kevin M. Forde, Esquire of Kevin M.
Forde, Ltd., Chicago, Illinois, Attorneys for Plaintiffs CME Group, Inc.
and The Board of Trade of the City of Chicago, Inc.


 


Edward P. Welch, Esquire and
Edward B. Micheletti, Esquire of Skadden, Arps, Slate, Meagher & Flom
LLP, Wilmington, Delaware, and Jerrold E. Salzman, Esquire and Christal Lint,
Esquire of Skadden, Arps, Slate, Meagher & Flom LLP, Chicago,
Illinois, Attorneys for Plaintiffs CME Group, Inc. and The Board of Trade
of the City of Chicago, Inc.


 


Andre G. Bouchard, Esquire
and Joel Friedlander, Esquire of Bouchard, Margules & Friedlander,
P.A., Wilmington, Delaware, and Gordon B. Nash, Jr., Esquire and Scott C.
Lascari, Esquire of Drinker Biddle & Reath LLP, Chicago, Illinois,
Attorneys for Plaintiffs Michael Floodstrand, Thomas J. Ward, and All Others
Similarly Situated.


 


Samuel A. Nolen, Esquire,
Daniel A. Dreisbach, Esquire, and Rudolf Koch, Esquire of Richards, Layton &
Finger, P.A., Wilmington, Delaware, and Paul E. Dengel, Esquire and Paul E.
Greenwalt, III, Esquire of Schiff Hardin LLP, Chicago, Illinois, Attorneys for
Defendants.


 


Kevin G. Abrams, Esquire and
Nathan A. Cook, Esquire of Abrams & Laster LLP, Wilmington, Delaware,
Attorneys for Objectors Nicholas J. Neubauer, A. Alan Zatopa, Charles Westphal,
DRW Investments LLC, DRW Securities LLC, DRW Holdings LLC, and Alan Matthew;
James D. Wareharn, Esquire of Paul, Hastings, Janofsky & Walker LLP,
Washington, DC, and Kevin C. Logue, Esquire of Paul, Hastings, Janofsky &
Walker LLP, New York, New York, Attorneys for Objector Charles Westphal.


 


John H. Williams, Jr.,
Esquire of John Williams, P.A., Wilmington, Delaware, Attorney for Objector
Theodore Pecora.


 


Melanie K. Sharp, Esquire
and Michele Sherretta Budicak, Esquire of Young Conaway Stargatt &
Taylor, LLP, Wilmington, Delaware, and Nicholas C. Zagotta, Esquire and Joseph
P. Simon, Esquire of Connelly Roberts & McGivney LLC, Chicago,
Illinois, Attorneys for Objectors Quiet Light Trading, LLC, and Quiet Light
Securities, LLC.


 


Vernon R. Proctor, Esquire
and Jill K. Argo, Esquire of Proctor Heyman LLP, Wilmington, Delaware, Attorney
for Objectors SKTY Trading, LLC, The Ira S. Nathan Revocable Trust, J.P. Morgan
Futures Inc., and Rho Trading Securities, LLC, and Phillip S. Reed, Esquire of
Patzik, Frank & Samotny Ltd., Chicago, Illinois, Attorney for Objector
The Ira S. Nathan Revocable Trust.


 


Michael A. Weidinger,
Esquire and Joanne Pileggi Pinckney, Esquire of Pinckney, Harris &
Weidinger, LLC, Wilmington, Delaware, and David W. Porteous, Esquire and James
G. Martignon, Esquire of Levenfeld Pearlstein, LLC, Chicago, Illinois,
Attorneys for Objector Daniel M. Ambrosino.


 


Carolyn S. Hake, Esquire and
Lauren E. Maguire, Esquire of Ashby & Geddes, Wilmington, Delaware,
and Patrick L. Kenney, Esquire, Michael S. Cessna, Esquire, and Benjamin C. 


 

















 


Hassebrock, Esquire of
Lathrop & Gage L.C., Kansas City, Missouri, Attorneys for Objector
Agrex, Inc.


 


Denise Seastone Kraft,
Esquire and John L. Reed, Esquire of Edwards Angell Palmer & Dodge
LLP, Wilmington, Delaware, and Darrell J. Graham, Esquire of The Law Office of
Darrell J. Graham, LLC, Chicago, Illinois, Attorneys for Objectors Jeffrey
Holland and Louis Panos.


 


Joseph A. Rosenthal, Esquire
and P. Bradford deLeeuw, Esquire of Rosenthal, Monhait & Goddess,
P.A., Wilmington, Delaware, and J. Samuel Tenenbaum, Esquire and Meredith M.
Casper, Esquire of Chuhak & Tecson, P.C., Chicago, Illinois, Attorneys
for Objectors Milton Robinson and Bryan Shaughnessy.


 


Daniel B. Rath, Esquire and
Rebecca L. Butcher, Esquire of Landis Rath & Cobb LLP, Wilmington,
Delaware, and David A. Genelly, Esquire of Vanasco Genelly & Miller,
Chicago, Illinois, Attorneys for Objectors Kottke Associates LLC and Barbara
Whitlow, individually and as personal representative of the Estate of Richard
Whitlow.


 


David S. Eagle, Esquire and
Kelly A. Green, Esquire of Klehr Harrison Harvey Branzburg & Ellers,
Wilmington, Delaware, and Jeffrey H. Bergman, Esquire and Jennifer Zordani,
Esquire of Ungaretti & Harris LLP, Chicago, Illinois, Attorneys for
Objectors UBS Securities, LLC and UBS Financial Services, Inc.


 


Kevin J. Mangan, Esquire of
Womble Carlyle Sandridge & Rice, PLLC, Wilmington, Delaware, and
Edward S. Weil, Esquire and Heather L. Kramer, Esquire of Dykema Gossett PLLC,
Chicago, Illinois, Attorneys for Objector Infinium Capital Management, LLC.


 


Paul A. Fioravanti, Jr.,
Esquire and Laina M. Herbert, Esquire of Prickett, Jones & Elliott,
P.A., Wilmington, Delaware, and Brett Nolan, Esquire of Shefsky &
Froelich Ltd., Chicago, Illinois, Attorneys for Objector The Kolton Family
Limited Partnership.


 


Paul A. Fioravanti, Jr.,
Esquire and Laina M. Herbert, Esquire of Prickett, Jones & Elliott,
P.A., Wilmington, Delaware, and Daryl M. Schumacher, Esquire of The Law Offices
of Daryl M. Schumacher, P.C., Chicago, Illinois, Attorneys for Objectors
Anthony J. McKerr and Mary C. McKerr Trust est. 3/13/97.


 


Richard I. G. Jones, Jr.,
Esquire and Toni Ann Platia, Esquire of Ashby & Geddes, Wilmington,
Delaware, Attorneys for Objector Geneva Trading USA, LLC.


 


Patricia R. Uhlenbrock,
Esquire and Fotini A. Antoniadis, Esquire of Morris James LLP, Wilmington,
Delaware, and William T. Rodeghier, Esquire, of Chicago, Illinois, Attorneys
for Objector William P. Sullivan.


 


Lewis H. Lazarus, Esquire
and Michael J. Custer, Esquire of Morris James LLP, Wilmington, Delaware,
Attorneys for Objector Nicholas A. Rapanos.


 


Henry E. Gallagher, Jr.,
Esquire and Kevin F. Brady, Esquire of Connolly Bove Lodge & Hutz LLP,
Wilmington, Delaware, and George R. Dougherty, Esquire, Gary M. Miller,
Esquire, and 


 

















 


Justin M. Sandberg, Esquire
of Grippo & Elders LLC, Chicago, Illinois, Attorneys for Objector John
S. Stafford, Jr.


 


Martin S. Lessner, Esquire,
Danielle Gibbs, Esquire, and Kathaleen McCormick, Esquire of Young Conaway
Stargatt & Taylor LLP, Wilmington, Delaware, and Seth L. Levine,
Esquire and Manda M. Sertich, Esquire of Foley & Lardner LLP, New
York, New York, and Kathryn M. Trkla, Esquire of Foley & Lardner LLP,
Chicago, Illinois, Attorneys for Objector WH Trading LLC.


 


David A. Jenkins, Esquire of
Smith, Katzenstein & Furlow LLP, Wilmington, Delaware, Attorney for
Objector Canadian Imperial Bank of Commerce.


 


Objector Tom Mallers, pro se.


 


Objector Peter C. Kelly, pro se.


 


Objector Scott A. Hall, pro se.


 


Objector Donald T. McMurray,
pro se.


 


Objector [J. A] Dohl, pro se.


 


Objector William L. Allen,
Trustee of the William L. Allen Trust, pro se.


 


Objectors Thomas M. Marsh, pro se and Jamin Nixon, pro se.


 


Objector Brian R. Sherman, pro se.


 


Objector Dennis Quinn Cook, pro se.


 


Objector Thomas Hafner, pro se.


 


 


 


 


NOBLE,
Vice Chancellor


 

















 


Before the Court is a motion for approval of a
proposed settlement of a putative class action. 
When the settlement was negotiated, its value approached $1 billion.(1) 
There is no challenge to the adequacy of the total consideration achieved.  Instead, the primary debates concern the
means by which the economic benefits of the settlement are to be allocated
among the various stakeholders and the procedures imposed to qualify for
participation.


 


In this memorandum opinion, the Court will address
several questions, including whether this action should be certified as a class
action; whether the settlement is fair and reasonable as between the Plaintiff
class and the Defendants; whether the allocation of the settlement proceeds
among the putative class members is fair and reasonable; and whether the
requirements imposed in order to qualify for receiving distribution of
settlement proceeds are fair and reasonable.(2)  Of these contentions, the
methodology for allocating the settlement proceeds among members of the class
and the requirements for participating in the settlement distribution are the
most challenging.


 


I. 
BACKGROUND


 


In 2007, this Court reviewed the history of how this
dispute evolved.(3)  It is not the only tribunal to have been drawn into
this quagmire.(4)


 


This action was filed to establish the economic and
trading rights of members of the Plaintiff Board of Trade of the City of
Chicago (“CBOT”), now under the auspices of CME 


 






(1) Although the
magnitude of the proposed settlement may be unusual, the proposed settlement
becomes even more unusual when one learns that it is not accompanied by any
application for an award of attorneys’ fees.


 


(2) Also pending are
requests by class members for review of the decisions of class counsel that
excluded them from participating in the Settlement because of shortcomings in
the filing of their claims.  Those maters
will be addressed separately.


 


(3) CBOT Holdings, Inc. v. Chicago Bd. Options Exch., 2007
WL 2296355 (Del. Ch. Aug. 3, 2007).


 


(4) See, notes 6 & 9, infra.


 


1

















 


Group, Inc., as
successor by merger to CBOT Holdings, Inc., as Exercise Members or
Exercise Member Delegates of Defendant Chicago Board Options Exchange (“CBOE”).


 


CBOT established and financed the OBOE, which, as a
national securities exchange, is regulated by the Securities and Exchange
Commission (“SEC”).  Article Fifth (b) of
CBOE’s Certificate of Incorporation entitles a “member” of CBOT to become a “member”
of the CBOE without having to pay separately for that membership.  “Exercise Rights” were established by Article Fifth
(b) which provided:


 


[E]very present and future
member of [the] Board of Trade who applies for membership in the [CBOE] and to
otherwise qualify shall, so long as he remains a member of the [Board of
Trade], be entitled to be a member of the [CBOE] . . . without the necessity of
acquiring such membership for consideration or value from [CBOE].(5)


 


A Board of Trade member who took advantage of the
Exercise Right was known as an Exerciser Member of the OBOE.


 


Because Article Fifth (b) determines who
may trade on a national exchange, it is an exchange rule subject to the
jurisdiction of the SEC.  Interpretations
of exchange rules require the approval of the SEC in order to be
effective.  As CBOT evolved,
interpretations of (or revisions to) Article Fifth (b) became
necessary.  For example, a major
interpretation (or renegotiation of the relationship between CBOT member’s and
the CBOE) occurred in 1992 (the “1992 Agreement”) and was approved by the SEC
in 1993.


 


An already difficult relationship became more
complex in 2000 when CBOT considered demutualization.  CBOE asserted that demutualization would
eliminate the Exercise Right and, thus, Exerciser Members of the CBOE.  CBOT contested CBOE’s attempt to eliminate
the 


 






(5) Disputes over the
Exercise Rights of CBOT members in the CBOE have existed almost since they were
created by Article Fifth (b) in 1972.


 


2

















 


Exercise Right in a
proceeding in an Illinois state court.(6)  That litigation was resolved by
yet another agreement (the “2001 Agreement”) that has been amended from time to
time, most recently in February 2005. 
The parties agreed—shared interpretation may be the proper term of
art—that the Exercise Right, under certain circumstances, could survive CBOT’s
demutualization.  At the risk of
oversimplification, a CBOT full member (or full member delegate) would hold the
Exercise Right if that person held each of the following “Three Parts”:  (1) 27,338 shares of Class A common
stock of CBOT Holdings, Inc.; (2) one Series B-1 membership in
the Board of Trade; and (3) one Exercise Right Privilege or “ERP,” newly
issued by the Board of Trade.


 


The trend in the industry toward demutualization
continued when, in September 2005, CBOE announced that it would
demutualize and its members would receive shares in a stock corporation.  A special committee was appointed by the CBOE
board of directors in July 2006 to consider the relative interests of the
Exerciser Members (i.e., those who held rights by virtue of their relationship
with CBOT) and the CBOE Seat Owners (i.e., those who had paid for their
memberships).  This action was filed
shortly thereafter by CBOT Holdings, CBOT, and the individual Plaintiffs.  The class to be represented was composed of
certain “full” Board of Trade members. 
The goal of that action was to bar the demutualization of CBOE unless
the Exerciser Members and the CBOE Seat Owners were treated equally.


 


A few months later, in October 2006, CBOT
Holdings and Chicago Mercantile Exchange Holdings, Inc. (“CME Group”)
announced that CME Group would merge with CBOT Holdings.  CBOT would, following that merger, be a
wholly-owned subsidiary of CME Group.


 






(6) See Bd. of Trade of the City of Chicago v. Chicago Bd. Options Exch.,
Case No. 00 CH 15000 (Cir. Ct. Cook Cty, Ill).


 


3

















 


CBOE, in December 2006, reacted to the proposed
merger of CBOT Holdings and CME Group by determining that, pursuant to Article Fifth
(b), the merger would extinguish any rights of the class to become (or remain)
members of CBOE as a result of their Exercise Rights.  At the same time, CBOE sought SEC approval of
its interpretation of Article Fifth (b).


 


At the beginning of 2007, the Plaintiffs in this
action filed their Second Amended Complaint. 
They alleged that the CBOE’s proposed interpretation of Article Fifth
(b) was both a breach of contract and a breach of the CBOE’s board’s
fiduciary duties.  The Plaintiffs sought
an injunction barring the CBOE from terminating the Exercise Right (and
Exerciser Member status) in the event of a CBOT-CME Group merger.  Later that month, CBOE adopted a plan of
demutualization.  CBOE assumed that the
CBOT-CME Group merger would occur first and that the SEC would accept its
interpretation of Article Fifth (b) in these circumstances.  Thus, CBOE did not make provision for any
rights of the Exerciser Members within the context of its demutualization
plan.  With the announcement that the
vote on the CBOT-CME Group merger would be held in early July, CBOE, addressing
transitional issues, adopted an interpretation of a rule that allowed for
interim status of Exerciser Members (“Temporary Members”) until the SEC made
its determination.  The CBOT-CME Group
merger was approved and consummated in July 2007.  In August 2007, this Court denied the
Plaintiffs’ application for interim relief with respect to CBOE’s transition
rule.(7)  On the same day, this action was stayed pending decision by the
SEC on whether Article Fifth (b) should be interpreted to the effect
that the dernutualization of CBOT resulted in the loss of Exerciser Member
status.(8)


 






(7) CBOT Holdings, Inc. v Chicago Bd. Options Exch., 2007
WL 2296.356 (Del. Ch. Aug 3, 2007).


 


(8) CBOT Holdings, Inc., 2007 WL 2296355.


 


4

















 


The SEC approved CBOE’s interpretation of Article Fifth
(b) that no person could qualify as an Exerciser Member of CBOE after the
CBOT-CME Group merger.(9)  This order, issued January 15, 2008, in
substance resolved the question of who could trade on the CBOE as a result of a
previous interest in CBOT.  The SEC also
indicated that this Court had jurisdiction to decide state law issues.  The state law issues were generally understood
to involve breach of contract and fiduciary duty claims; more specifically,
they addressed the economic rights associated with the interests held by CBOT
members in the CBOE.(10)


 


In early February 2008, Plaintiffs, by now also
including the CME Group, filed a Third Amended Complaint against CBOE and
certain of its current or former directors. 
That action raised or reiterated numerous claims, including that CBOE
could not eliminate the rights, including trading rights, of Exerciser Members
as the result of the consummation of the CBOT-CME Group merger and that
Exerciser Members and CBOE Seat Owners should receive the same consideration as
the result of the CBOE’s demutualization. 
The parties, thereafter, filed various motions for summary judgment and,
shortly before the scheduled argument of those motions on June 2, 2008,
they reached an agreement in principle resolving this litigation.  The Stipulation of Settlement (the “Stipulation”)
was submitted to the Court for its consideration on August 20, 2008.(11)  Two days later, a scheduling order was
entered which, inter alia certified a temporary
class, directed the sending of notices, and established the procedures for a
hearing on the Settlement and for making any objections to the Settlement.  In order to qualify for certain 


 






(9) Securities Exchange
Act, Release No. 34-57159 (Jan. 22, 2008), 73 FR 3769-01
(SR-CBOE-2006-106).


 


(10) Various
CBOT-related parties appealed to the United States Court of Appeals for the
District of Columbia Circuit, Case No. 08-1116, seeking review of the
SEC’s approval of the CBOE’s interpretation. 
That appeal has been stayed.


 


(11) The terms of the
Settlement are discussed in greater detail below.  The Stipulation was revised in filings of September 30,
2008, and October 3, 2008. 
References to the Stipulation generally are to its final form.


 


 


5

















 


benefits under the terms of
the Settlement, the Three Parts—at least 27,338 shares of CBOT common stock or,
after the merger, at least 10,251.75 shares of CME Group common stock, one ERP,
and one CBOT B-1 membership—had to be held simultaneously. (12)


 


Eventually, the Stipulation was revised to make the
qualification process slightly easier. 
The cutoff date for meeting the qualifying requirements was extended
from June 2, 2008, to August 22, 2008.  Also, the Eligibility Date(13) was extended
from October 8, 2008, to October 14, 2008.  Finally, a requirement that the CME Group
stock be held lien-free, in book-entry form at Computershare was reduced from a
period of seven weeks to a period of seventeen days.  Instead of spanning the period between October 14
and December 2, 2008, the shares had to be deposited with Computershare in
accordance with the Stipulation only from October 14, 2008, through October 31,
2008.


 


The class, for purposes of distributing settlement
proceeds, has been divided into two groups: Group A and Group B.  The Participating Group A Settlement Class Members(14)
must have held all Three Parts simultaneously at some time before August 22,
2008, and held those parts from the Eligibility Date of October 14, 2008,
through the settlement period (until October 31, 2008).  The Participating Group A Settlement Class Members
will share in (i) an equity pool consisting of 18% of the equity interest
to be issued to both the CBOE Seat Owners and the Participating Group A
Settlement Class Members and (ii) a cash pool of $300 million.  In 


 






(12) Stipulation ¶
30FF.  The Three Parts were the product
of the 2001 Agreement and its requirements to be a Full Member of the CBOT and
entitled to an Exercise Right.


 


(13) Stipulation ¶ 30N.


 


(14) Stipulation ¶ 30T.


 


6

















 


addition, some Participating
Group A Settlement Class Members, also Temporary Members of the CBOE, may
receive payments based on certain access fees that they had paid to CBOE.(15)


 


The second group—not a separate class or
subclass—consists of the Participating Group B Settlement Class Members.(16)  They must have owned one ERP from the
Eligibility Date (October 14, 2008) through the end of the settlement
period (October 31, 2008) and will receive a payment of $250,000.


 


Other class members, who are not eligible to receive
any settlement proceeds, will be bound by the release to be provided as the
result of the Settlement.(17)  In order
to participate in the Settlement, CBOE insisted upon a dismissal of all the
litigation, with prejudice, and a release of all claims which could be tied to
prior interests in CBOT, including the holding of one or more of the Three
Parts.  Proceeds will be paid only to
those satisfying the requirements to be a member of either Group A or Group B.


 


Finally, in order to participate in the Settlement,
certain technical requirements were imposed, such as the timely filing of
necessary paperwork.  One of the
technical requirements, the depositing of a necessary minimum number of CME
Group shares with Computershare in book entry, lien-free, form has proved to be
problematic and is the basis of a challenge to the fairness of the Settlement.


 






(15) Other Participating
Group A Settlement Class Members will not be entitled to obtain a rebate
of certain access fees which they paid. 
This distinction is the basis of objections which the Court addresses in
Part V1, infra.


 


(16) Stipulation ¶ 30U.


 


(17) There are approximately
850 Participating Group A Settlement Class Members and 365 Participating
Group B Settlement Class Members out of roughly 1,330 who could have
qualified, and perhaps as many as 1,200 class members who will be bound by the
release but without any entitlement to settlement proceeds,.  See Tr. of
Settlement Hig. at 19; Notice of Hrg., Exs. 3 & 4.


 


7














 


II.  THE COURT’S TASK


 


The Court starts with consideration of whether class
certification is appropriate and whether the Settlement in gross should be
approved.  It then turns its attention to
the various specific objections to the terms of the Settlement.(18)


 


 


III.  CLASS CERTIFICATION


 


Court of Chancery Rule 23 establishes the
requirements for certification of a class.(19) 
By Court of Chancery Rule 23(a), there are four criteria that must
be satisfied: (1) numerosity; (2) commonality; (3) typicality; and
(4) adequacy of representation.


 


The proposed class has at least 2,500 members and, accordingly, joinder
of these potential plaintiffs in one proceeding is impracticable.(20)  The numerosity standard is
satisfied.(21)  The commonality prong
requires that the plaintiffs share questions of law or fact in common with
other class members.(22)  Although the
members of the class are not all similarly situated, they share numerous
questions of law and fact, including the continuing import of CBOE’s
certificate of incorporation, the 1992 Agreement, and the 2001 Agreement, as
revised.  The focus of the questions
common to the class would involve whether CBOE could unilaterally extinguish,
as a result of the CME Group merger, the Exercise Right and the corresponding
rights and privileges that settlement class members had, or may have had, with
respect to CBOE membership.  In addition,
there are questions of whether members of the CBOE board discharged their
fiduciary duties to class members.  These
common questions predominate over 


 






(18) As noted, supra note 2,
this memorandum opinion does not address the applications of those persons who
claim to have been improperly denied the opportunity to participate in the Settlement
because, according to class counsel, they failed to satisfy one or more of
the Stipulation’s procedural requirements, such as, for example, timely filing
of a claim.


 


(19) See generally Prezant v. DeAngelis,
636 A.2d 915, 925 (Del. 1994).


 


(20) See, e.g.,
Leon N. Weiner and Assocs., Inc. v. Krapf, 584 A.2d 1220, 1225
(Del. 1991)


 


(21) Ct. Ch. R. 23(a)(1).


 


(22) Ct. Ch. R. 23(a)(2).


 


8

















 


any
questions that may confront class members individually.(23)  Accordingly, the commonality prong has been
satisfied.


 


 


With respect to typicality, the class
representatives’ legal and factual positions are substantially the same as
those of other members of the class.(24) 
Moreover, although it may vary in degree, the harm arising from the
elimination of rights with respect to the CBOE that trace back to the CBOT are
typical of all members.  Thus, the
typicality requirement is satisfied.


 


Finally, the class representatives are
knowledgeable, share economic incentives with the class, and have retained
sophisticated and experienced counsel to represent the class interest.  As further protection for the class members,
separate counsel have represented the interests of Group A and Group
B.(25)  The Court finds that class
representatives fairly and adequately represented the interests of the
class.(26)


 


In addition to satisfying the requirements of Court
of Chancery Rule 23(a), parties seeking certification of a class must also
satisfy at least one of the standards of Court of Chancery Rule 23(b).  In this instance, certification of a
mandatory (i.e., non-op-out) class is 


 






(23) Krapf,
584 A.2d at 1225 (class members need not be “identically situated”).


 


(24) See id.
Ct. Ch. R. 23(a)(3).


 


(25) The individual
plaintiffs are both Participating Group A Settlement Class Members.  That no plaintiff is a Participating Group B
Settlement Class Member is, of course, a source of concern.  The presence of independent counsel
representing Group B interests exclusively, coupled with the Court’s conclusion
that the allocation between the two groups is fair and reasonable, see, Part V.C., infra, provides
confidence that Group B’s interests have been adequately represented.


 


(26) Ct. Ch. R,
23(a)(4).  Some of the objections, such
as the one based on the difference between consideration for Group A and Group
B, the recoupment of certain fees paid to CBOE, and the timing requirements,
carry with them suggestions that there may have been conflicts between class
representatives and certain class members. 
The existence of material conflicts between the class representatives
and members of the class would limit the Court’s ability to conclude that the
class representatives’ efforts have been adequate within the meaning of Court
of Chancery Rule 23(a)(4).  A review
of those alleged conflicts is best done within the context of assessing the
merits of the objections.  Because the
Court will overrule those objections, infra, and
conclude that the class representatives and their counsel discharged their
responsibilities fairly and adequately and without any adverse consequences
from what the objectors have perceived as potential conflicts, the requirements
of Court of Chancery Rule 23(a)(4) have been satisfied.


 


9

















 


appropriate under both Court
of Chancery Rules 23(b)(1) and 23(b)(2).  Certification under Court of Chancery Rule 23(b)(1) is
appropriate because prosecution of separate actions by individual class members
would likely result in inconsistent and varying results that would impose
inconsistent obligations on opposing parties and because adjudication of
individual claims would likely be dispositive of the interests of other
potential class members who are not parties. 
For these reasons, actions challenging the exercise of corporate
fiduciary duties are frequently certified under this rule.  Court of Chancery Rule 23(b)(2) is
routinely relied upon in instances where class-wide injunctive or declaratory
relief is sought.  Although the remedy
achieved here is a monetary (or monetary equivalent) settlement, this action
was commenced with a firm focus on injunctive relief.  This equitable relief was designed to
preserve the trading and other rights of CBOT members with respect to the CBOE.  It is this aspect of equitable relief that
supports certification of a mandatory class.(27)


 


Accordingly, the class, as defined in the
Stipulation, is certified.(28)


 






(27) See
generally Nottingham Partners v. Dana, 564 A.2d 1089, 1095 (Del.
1989); Noerr v. Greenwood, 2002 WL, 31720734,
at *5 (Del. Ch. Nov. 22, 2002).


 


(28) Notice in accordance
with the Court’s scheduling order was duly given, and class members have
had ample opportunity to express their views.


 


10

















 


IV.  ADEQUACY OF THE SETTLEMENT


 


In determining whether to approve a settlement of
this nature, the Court is not in a position to resolve the merits of the
dispute.  Instead, the Court must assess
the nature of the claims asserted and the defenses that might be raised in
opposition and then apply its own business Judgment to determine whether the
proposed settlement is fair and reasonable.(29)


 


There is no general opposition to the consideration
achieved by the proposed class settlement with CBOE, nor should there
be.(30)  Based on assumptions made that
were reasonable when the Settlement was proposed, the Settlement carries a
value of roughly $1 billion.  This
consists of an equity pool in excess of $700 million and a cash pool of $300
million.  Using these numbers, each
Participating Group A Settlement Class Member will receive stock and cash
valued at approximately $1 million.  Each
Participating Group B Settlement Class Member, will receive $250,000 in
cash.  This litigation was difficult and
complicated.  Indeed, the Defendants had
many significant arguments running in their favor.  The dispute between the CBOT and the CBOE had
been ongoing for decades.  The various
agreements, tied to Article Fifth (b), as the product of several
compromised negotiations, were subject to multiple potential interpretations.  One assumes that, when the documents
establishing the CBOT-CBOE relationship were drafted, demutualization was not
high on the list of likely events, and, thus, demutualization did not fit
neatly into the structure established by Article Fifth (b).  In short, this was a case where litigation 


 






(29) See, e.g.,
In re Resorts Ini’l S’holder Litig., Appeals, 570 A.2d 259, 266
(Del. 1990); Rome v. Archer, 197 A.2d 49,
53-54 (Del. 1964). The Court is informed by the following factors: (1) the
probable validity of the claims, (2) the apparent difficulties in
enforcing the claims through the courts, (3) the collectibility of any
judgment recovered, (4) the delay, expense and trouble of litigation, (5) the
amount of the compromise as compared with the amount and collectibility of a
judgment, and (6) the views of the parties involved, pro and con. Polk v. Good, 507 A.2d 531, 536 (Del, 1986).  The critical factor here is the (excellent)
benefit achieved when measured against the (very real) risk of litigation.  The other factors identified in Polk are of little moment in this instance, but they
certainly do not counsel against approval of the Settlement.


 


(30) Indeed, no objection
has been submitted that challenges the sufficiency of the settlement
proceeds.  Numerous objections have been
filed as to how the settlement proceeds are to be allocated and what must be
done in order to qualify to receive those payments.


 


11

















 


risk to the class members
was substantial.  The risk of getting
nothing, especially in light of the SEC’s determination that there were no
longer any trading rights in the CBOE based on the CBOT interests, was
substantial.  Accordingly, after much
work by class counsel, much of it in this Court, this Settlement, on its
merits, is a compelling one and, save for the Court’s consideration of the more
specific objections, will be approved.


 


V. 
STRUCTURAL OBJECTIONS


 


For convenience, the structural objections will be
divided into three groups: (1) objections dealing with class membership
cutoff and eligibility dates; (2) objections to the verification
procedures established to assure that Participating Group A Settlement Class Members
satisfied the various requirements; (3) objections to the allocation of
value as between the Group A settlement class members and the Group B
settlement class members; and (4) an objection to the scope of the release
obtained by CBOE.


 


A.                                   Timing
Issues


 


In order to qualify as a Group A settlement class
member, the person must have simultaneously held all three parts—10,251.25
shares of CME Group common stock, a CBOT B-1 membership, and an ERP—at some
time before August 22, 2008.(31) 
Twelve objections were filed;(32) these objectors argue that a
prospective date should have been set so that they could have assembled the
Three Parts for the first time after announcement of the Settlement.(33)  Certain 


 






(31) If someone had owned
all of the parts simultaneously but had sold one or more of the parts, that
person had until October to reacquire (or reassemble) all of the parts.


 


(32) This objection has been
raised by DRW Investments, LLC, DRW Securities, LLC, DRW Holdings LLC, Scott A.
Hall, Jeffrey Holland, Peter C. Kelly, Tom Mallers, Nickolas J. Neubauer, Louis
Panos, Charles Westphal, Barbara J. Whitlow, and A. Alan Zatopa.  The record suggests that Mr. Westphal’s
objection may have been rendered moot by extension of the cutoff date from
June 2, 2008, to August 22, 2008.


 


(33) The August 22,
2008, record date was changed from the initial one of June 2, 2008, which
was the date that the settlement was initially announced.  The new date did not specifically afford an
opportunity to satisfy prospectively the simultaneous holding requirement.


 


12

















 


objectors argue that
portions of the 1992 Agreement should be interpreted as requiring a prospective
date.  That language, however, addresses “any
offer, distribution or redemption.”  It
does not speak to the Court’s task here, the review of a proposed settlement of
contested litigation.  The date chosen
precluded a stranger to the litigation or the CBOT membership from assembling
the Three Parts for the first time after the Settlement was announced and then
participating in the Settlement.  The
effect of this cutoff date is to protect those persons allegedly directly
injured by CBOE’s conduct from having to share settlement proceeds with
others.  This is fair and
reasonable.(34)  Similarly, the October 14,
2008, Eligibility Date, by which time the Three Parts had to be held together
and submitted for compliance purposes, is reasonable.  It allowed those who sought to reassemble the
parts seven weeks to do so.


 


B.                                     Deposit
of CME Group Shares with Computershare


 


Group A settlement class members were required to
hold at least 10,251.25 shares of CME Group common stock (one of the three
parts) (or an equivalent number of CBOT Holdings shares in the absence of the
merger).  In order to confirm accurately
those holdings, participants were required to register the shares, lien free,
in book entry form, at Computershare during the period from October 14,
2008 through October 31, 2008. 
Various objections have been lodged with respect to these
requirements.(35)


 






(34) Some record date was,
of course, necessary.  One could argue
that an even earlier date would have been sustainable.  It is worth noting that this action was
initially filed over trading rights, more so than accompanying economic rights.  The trading rights were effectively disposed
of (subject to appeal) by the SEC in January 2008.


 


WH Trading, LLC (joined by
others) has questioned the setting of the cutoff date.  It suggested that discovery into that topic
is necessary.  The Court fails to see how
any such discovery could lead to any relevant or admissible evidence.  The initial cutoff date of June 2, 2008,
was tied to the announcement of the Settlement. 
The August date was the product of what amounted to an effort to
accommodate some concerns that were troubling the Court and of the filing of
the Stipulation only a few days before. 
Any suggestion that the date was set with some sort of a nefarious
purpose of trying to target specific potential class members lacks any
foundation and is reminiscent of that proverbial fishing expedition.


 


(35)
The verification requirements of paragraph 30T of the Stipulation drew
objections from William L. Allen, DRW Investments, LLC, DRW Securities, LLC,
DRW Holdings LLC, Scott A. Hall, Jeffrey Holland, Peter C. Kelly, Tom Mallers,
Thomas M. Marsh, Donald T. McMurray, Ira S. Nathan Revocable Trust, Louis
Panos, 


 


13

















 


Most Group A participants were apparently able to
satisfy this requirement without material difficulty and, indeed, some
objectors eventually found ways to comply. 
Because of the multitude of ways possessory and ownership rights in
shares of stock can be divvied up, some procedure was necessary to assure that
the Group A proceeds would only be paid to those persons having genuine
attributes of ownership of the shares.(36) 
Otherwise, there would be significant risk that the Settlement would not
be managed on a fair and consistent basis.


 


Computershare was chosen because most class members
would have already had a relationship as a result of its role as transfer agent
for the CBOT demutualization and the CME Group merger.(37)  Many class members had accounts there;
indeed, full members were issued their CBOT stock following CBOT’s
demutualization through Computershare. 
In short, Computershare was a logical choice.


 


This arrangement was a fair and reasonable means of
verifying entitlement to participate in the class recovery.  It, of course, was not the only way, but many
of the others that might be suggested—relying upon broker’s affidavits and
other third-party information—would have imposed unnecessary administrative and
investigative burdens on class counsel. 
In addition, the requirement that the shares be lien-free provided
significantly greater confidence—again, without the need for extensive
investigation—that only genuine owners (those holding the real 


 






Brian R. Sherman, Nickolas
J. Neubauer, Jamin Nixon, Charles Westphal, UBS Financial Services, Inc.,
and A. Alan Zatopa.  The record suggests
that the Neubauer, Hall, Westphal, and Nixon objections may have been rendered
moot by their subsequent compliance with the verification requirements.


 


(36) The Court recognizes
that compliance with this requirement may have imposed economic costs.  Certain objectors complain that the deposit
with Computershare requirement is atypical of other, class action settlement
procedures.  That fact does not render
this requirement unreasonable.  The
consideration achieved as a result of this Settlement is atypical, and the
concomitant increased need for care in verifying that the claimants are, in
fact, entitled to participate justifies atypical treatment.


 


(37) The objectors note
that, on June 2, 2008, a class representative suggested that an
alternative method of ownership verification might be permissible, instead of
forcing all owners to register shares in book form with Computershare.  Whether true or not, as of the Stipulation,
all parties were on notice of the Computershare requirement and had sufficient
time to comply (or shortly thereafter).


 


14

















 


economic interest and not some sort of
prepaid forward contract holding or short sale holding) were permitted to
participate.  Again, the requirement is
reasonable; as such, it is sustained.


 


Finally, some holding period to complete the
verification process was necessary.  The
initial period was shortened by almost two months; it ended up being only a
little longer than two weeks.  Any
significantly shorter period likely would have been unworkable and likely would
have called into question the accuracy and the fairness of the verification
process.  Thus, the holding period of
seventeen days is also sustained as reasonable.


 


C.                                     Allocation
of Settlement Proceeds


 


Three Group B participants have challenged the
disparity of roughly $750,000 between the value of a Group A settlement unit
and the value of a Group B settlement unit. (38)  The Group B participants, of course, hold one
ERP while the Group A participants hold all Three Parts.


 


“An allocation plan must be fair, reasonable, and adequate.”(39)  Approval of the allocation is part of the
process of approving the Settlement.  The
standards guiding the Court’s exercise of its discretion are the same.  As with evaluation of the wisdom of a
compromise of litigation claims, there is no mathematical model that will yield
the proper division of proceeds among the class members when the class members
are not situated in exactly the same fashion.


 


CBOE, through the Settlement, seeks to extinguish
the ERPs because in that way it can be sure that no one who had acquired a B-1
membership and sufficient equity in CME Group, or whatever entity may stand in
its stead, will appear later and demand trading rights on its exchange.  This has been a critical impediment to CBOE’s
demutualization effort.  Of the various
parts, the ERP is the most critical to CBOE’s efforts to reduce future
risk.  Thus, it is 


 






(38) Participating Group B
Settlement Class Members Thomas Hafner, Jeffrey Holland, and Louis Panos
have brought this objection.


 


(39) Schultz v.
Ginsburg, 965 A.2d 661, 668 (Del. 2009).


 


15

















 


argued that the key role of the ERP should
entitle the holder of an ERP to a greater portion of the settlement, even
without the other parts.  The history of
the CBOT-CBOE relationship and the purpose of the ERP defeat this
contention.  In order to be able to trade
as an Exerciser Member of the CBOE, one needed all Three Parts.  The ERP, alone, delivered little, if any,
value.  Indeed, the ERP was created to
allow CBOE a separate mechanism for reducing (by buying up ERPs) the potential
number of Exerciser Members.


 


The Settlement here is driven, as was the
commencement of this action, by the loss of trading rights.  Those who had, but lost, trading rights on
the CBOE held all Three Parts.  It
follows that those who held all Three Parts should be paid a substantially
greater proportion of the settlement than those who held only an ERP.


 


That it is reasonable to pay substantially more to
the holders of Group A settlement units than to the holders of Group B
settlement units, of course, does not compel any particular conclusion with
respect to a specific number.  There is
no magic formula that allows a valuation of an ERP at, say, $225,000 or
$325,000.


 


Nonetheless, the Court is satisfied that the
allocation between Group A and Group B proposed in the Settlement is fair,
reasonable, and adequate.  Group A
interests and Group B interests were represented by separate, independent, and
competent counsel.  The amount paid to Group
B for the ERP was higher than any price paid for an ERP in the preceding eight
months and, in the preceding three years, only twenty-five transactions were
recorded with a higher price than $250,000 per ERP.(40)  Thus, the amount to be paid to Group B participants
is consistent with prevailing market values, although it may be that the
uncertainty surrounding the future of the CBOT-CBOE relationship may have
depressed the value.  More importantly,
the amount to be 


 






(40)
Krewer Aff. at ¶ 5, Ex. B.


 


 


16

















 


paid to the Group A
participants fairly reflects the loss—and in a more global sense, to include
trading rights—as the result of CBOE’s actions. 
Although the Court may have differentiated between economic rights and
trading rights, it would be unfair to consider trading rights as carrying no
economic benefit.  The Settlement was
also designed to accommodate the economic loss associated with the loss of
trading rights that also formed the focus for the breach of contract and
fiduciary duty claims and presented a significant litigation risk that CBOE had
to confront.  Therefore, the allocation
of the settlement proceeds was fair and reasonable.


 


D.                                    The
Release


 


As perhaps should be expected of a settlement with
so many components, the release sought by CBOE reaches persons who qualify
neither as Group A settlement class members nor as Group B settlement class
members.  Thus, they will be bound by the
release but will receive no consideration. 
That is not necessarily a sound basis for objecting to a settlement,(41)
because a party funding a settlement reasonably can expect to put all claims
relating to the subject matter of the litigation—real claims and theoretical
claims—behind it.(42)  One objection,
that of Dennis Quinn Cook, highlights this possibility.  Mr. Cook held full membership in CBOT
from 1966 until March 21, 2006, when he sold his full interest.  He claims that he was damaged when CBOE, in September 2005,
announced its plans for demutualization and that it would not expect to pay
Exerciser Members anything as a result of the restructuring.  This claim appears to be related directly to
the substance of these proceedings—the consequences of CBOE’s predictions of
the fate of Exerciser Members after demutualization.  Yet, it is a claim detached from any notion
of cause and effect.  There is no showing
that the announcement had any impact on the


 






(41)
See In re Triare Cos., Inc. Class and Deriv. Litig.,
791 A.2d 872, 876 (Del. Ch. 2001).


 


(42)
The reach of the proposed release is determined by reference to the Stipulation
at ¶ 30Y (Released Parties), ¶ 30Z (Settled Claims), and ¶ 31 (Release of
Unknown Claims).


 


17














 


value of his CBOT
interests.  All CBOE did was announce its
intentions.  It took no direct
action.  Why a mere announcement under
these circumstances would give rise to liability on the part of CBOE is not
apparent.  The relationship between CBOT
and CBOE had been relatively strained for many years before Mr. Cook
decided to sell his interests.  Instead
of pursuing his claims, he sold his various CBOT interests and, now, with a
substantial settlement fund having been established, he seeks to draw from it.  His claim is so general that it is difficult
to assess, but, for purposes of approving the scope of the release, it is
sufficient to note that the Court, in the exercise of its business judgment, is
readily able to conclude that the “probable validity” of his claim is minimal
and the “likelihood” of monetary recovery is negligible.  In these circumstances, Mr. Cook’s
objection, and any other like it, must be rejected.


 


VI.  ADDDITIONAL PAYMENTS


 


As the CBOE reacted to CBOT’s demutualization and
the CBOT-CME Group merger, various transitional arrangements were
implemented.  One of these resulted in “Temporary
Members” who could trade on the CBOE but with the payment of substantial
fees.  As part of the Settlement, certain
payments are to be made to some of the CBOE Temporary Members.(43)  CBOE takes the position that only “individuals”—not
legal entities—can collect Additional Payments. 
Three entities (the “Entities”) that would otherwise qualify for
Additional Payments if they are not limited to individuals have
objected.(44)  They argue that the
Stipulation allows them, even as legal entities, to receive Additional
Payments.  If they are not entitled under
the Stipulation to receive those payments, then, they argue, the Settlement
should be rejected 


 






(43) They are designated
“Fee Based Payments” and “Supplemental Fee Based Payments” in paragraphs 36F
and 36G of the Stipulation.  For
convenience, they will be referred to, collectively, as “Additional Payments.”  The Court’s focus will be on the Fee Based Payment
because, in order to qualify for a Supplemental Fee Based Payment, one must
first be entitled to a Fee Based Payment.


 


(44) The Entities are Quiet
Light Securities, LLC, Infinium Capital Management, LLC, and UBS Securities,
LLC.


 


18

















 


because there is no rational
basis for distinguishing between legal entities and individuals with respect to
their entitlement to Additional Payments.(45)


 


Under paragraph 36F of the Stipulation, CBOE will
make a “Fee Based Payment” to “each Participating Group A Settlement Class Member
who became a CBOE Temporary Member [pursuant to CBOE Rules 3.19.01 or
3.19.02] . . .”.  Thus, to receive a
fee-based payment, the person must (1) be a Participating Group A
Settlement Class Member (i.e., hold the three parts under the necessary
conditions which the Entitles did) and (2) have been a CBOE Temporary
Member.


 


To understand who could have been a CBOE Temporary
Member, it is necessary to review briefly a few CBOE Rules.  For present purposes, a “Temporary Member,”
by CBOE Rule 3.19.01, would include a “person who is a member of CBOE (an ‘exerciser
member’) pursuant to [Article Fifth (b)] as of July 1, 2007.”(46)  Thus, to be a Temporary Member in order to
qualify for Additional Payments, one must first have been an Exerciser
Member.  CBOE Rule 3.16(b) provides,
with respect to Article Fifth (b) that “[f]or the purpose of
entitlement to membership on the [CBOE] in accordance with [Article Fifth
(b)] the term ‘member of [the CBOT] as used in Article Fifth (b) is
interpreted to mean an individual, who is either an ‘Eligible CBOT Full Member’
or an ‘Eligible CBOT Full Member Delegate,’ as those terms are defined in the
[1992 Agreement and the 2001 Agreement] . . . and shall not mean any other
person.”  By the 1992 Agreement, both “Eligible
CBOT Full Member” and “Eligible CBOT Full Member 


 






(45) In general, the Court
has limited this memorandum opinion to approval of the settlement and not to
questions of individual eligibility to participate in the settlement.  The question of whether legal entities may
receive Additional Payments, is addressed here because, if the Entities qualify
under the terms of the Settlement, then they have no quarrel with the
Stipulation’s handling of Additional Payments.


 


(46) See also
CBOE Rule 3.19.02 for, in substance, an extension of this rule.


 


19

















 


Delegate” are defined as “individual[s].”(47)  Support for CBOE’s position can also be found
in other provisions of the 1992 Agreement. 
For example, at paragraph 2(a), it provides that: “[t]he CBOT agrees, in
its own capacity and on behalf of its members, that only an individual who is
an Eligible CBOT Full Member or an Eligible CBOT Full Member Delegate is a
member of the CBOT within the meaning of Article Fifth (b) eligible
to have an Exercise Right and to be an Exercise Member.”  The 2001 Agreement, as revised, may have
modified the definitions of Eligible CBOT Full Member and Eligible CBOT Full
Member Delegate as a result of CBOT’s planned demutualization, yet the notion
that only individuals could be Exerciser Members persists.  For example, in Section 1 (d) of
the Agreement, “an individual shall be deemed to be an Eligible CBOT Full
Member if the individual [satisfies the three-part test].”


 


The Entities, because they held the Three Parts,
were able to designate their employees to be Exerciser Members.  Those employees were able to be Temporary
Members.  The Entities, of course, paid
all fees related to the employees’ status as Temporary Members.(48)  Because the Entities were not Temporary
Members, they did not satisfy the second requirement necessary to qualify for
an Additional Payment under the Settlement.(49)


 


With the conclusion that the Entities do not quality
for Additional Payments under the Stipulation, it becomes necessary to consider
whether exclusion of the Entities from those payments impairs the fairness and
reasonableness of the settlement.  The
Entities make the 


 






(47) 1992 Agreement § 1(a) &
(b).


 


(48) Although the employees
were qualified temporary members, they did not hold the Three Parts, and, thus,
they did not qualify for additional payments.


 


(49) The Entities point to
various other factors, such as billing practices, regular conduct, and some
arguably less than clear provisions of the CBOE Rules (see, e.g., Rule 3.8(c) which is in accord with the
Court’s analysis because of its use of his and her for the antecedent CBOT
Exerciser.)  None of these arguments,
however, overcomes the clear tenor set forth through the CBOE rules directly
defining who could be an Exerciser Member, and, thus, a temporary member.


 


20

















 


simple and somewhat
appealing argument that:  if fees are to
be rebated, what difference does it make if they are to be paid to individuals
or to firms?  The answer is that the
conditions required to qualify for Additional Payments were intensely
negotiated terms.(50)  Only individuals
were Temporary Members.  If rights to
Additional Payments were opened up to legal entities generally, the exposure of
CBOE would be increased materially.  This
is but one part of a much larger settlement negotiation process.  In the context of the overall settlement and
in recognition that many contested lines had to be drawn, the Court concludes
that the conditions for qualifying for Additional Payments were established
reasonably.(51)


 


In short, the objections of the Entities to the
fairness of the Settlement as to Additional Payments are overruled.


 


VII.  A BRIEF POSTSCRIPT


 


This was a difficult matter.  Class counsel, in the Court’s judgment,
came to a fair and reasonable balancing of the various interests of all class
members.  The tension between Group A and
Group B was addressed with separate counsel representing each group.  The Court is satisfied that those class
members who qualify for neither Group A nor Group B had no material chance of
independent recovery.  Certain requirements
to participate in the Settlement were imposed—such as Computershare registration—as
pragmatic solutions to troubling concerns. 
They were not imposed to create any undue burden on any particular class
member.  Although 


 






(50) Discovery has been
requested with respect to the adequacy of class counsel and their effort in negotiating
Additional Payments, as well as whether the Additional Payments aspect
satisfies the typicality requirement of Court of Chancery Rule 23(a)(3).  As with the other requests for discovery, see note 34, supra, a
generalized and unfocused effort to discovery into the negotiation process is
not likely to result in useful or relevant evidence in these circumstances.


 


(51) In light of the SEC’s
approval of the CBOE’s interpretation of its rules that would have
excluded Exerciser Members from free trading rights on the CBOE, CBOE certainly
had a good argument that would have supported its requirement that additional
fees be paid.  In this sense, that any of
the fees that had been paid are being rebated is perhaps a fortuitous product
of negotiations.


 


 


21

















 


there may have been other
means available, the path chosen by class counsel was reasonable, and it is far
from certain that some other path would not have suffered from yet a different
set of potential shortcomings.  Class counsel
negotiated the best deal—one perhaps better than what should have been
expected—that they could.  There are,
admittedly, some rough edges, but, frankly, it is difficult to see how that
could have been avoided.  Competent and
fair-minded counsel resolved the tough issues in a reasonable and responsible
manner.(52)  Ultimately, the Court is in
no position to reach any conclusion other than that the Settlement, including
its allocation plan, was, in the words of Schultz, “fair,
reasonable, and adequate.”


 


VIII.  CONCLUSION


 


For the foregoing reasons, the class as proposed
will be certified, this action may be maintained as a class action, and the
Settlement will be approved.  An
implementing order will be filed.


 






(52) This,
together with the Court’s review of the substantive objections, resolves any
lingering disquiet about the adequacy (and absence of material conflict) of the
class representatives and their counsel.


 


22

















 


IN THE COURT OF CHANCERY OF
THE STATE OF DELAWARE


 


	
  CME GROUP INC., a Delaware
  corporation,

  	
  :

  	
   

  	
   

  
	
  as successor by merger to
  CBOT HOLDINGS,

  	
  :

  	
   

  	
   

  
	
  INC., a Delaware
  corporation; THE BOARD OF

  	
  :

  	
   

  	
   

  
	
  TRADE OF THE CITY OF
  CHICAGO, INC.,

  	
  :

  	
   

  	
   

  
	
  a Delaware corporation;
  and MICHAEL

  	
  :

  	
   

  	
   

  
	
  FLOODSTRAND and THOMAS J.
  WARD

  	
  :

  	
   

  	
   

  
	
  and All Others Similarly
  Situated,

  	
  :

  	
   

  	
   

  
	
   

  	
  :

  	
   

  	
   

  
	
  Plaintiffs,

  	
  :

  	
   

  	
   

  
	
   

  	
  :

  	
   

  	
   

  
	
  v.

  	
  :

  	
   

  	
  C.A. No. 2369-VCN

  
	
   

  	
  :

  	
   

  	
   

  
	
  CHICAGO BOARD OPTIONS
  EXCHANGE,

  	
  :

  	
   

  	
   

  
	
  INC., a Delaware non-stock
  corporation,

  	
  :

  	
   

  	
   

  
	
  WILLIAM J. BRODSKY, JOHN
  E. SMOLLEN,

  	
  :

  	
   

  	
   

  
	
  ROBERT J. BIRNBAUM, JAMES
  R. BORIS,

  	
  :

  	
   

  	
   

  
	
  MARK F. DUFFY, DAVID
  FISHER,

  	
  :

  	
   

  	
   

  
	
  JONATHAN G. FLATOW, JANET
  P.

  	
  :

  	
   

  	
   

  
	
  FROETSCHER, BRADLEY G.
  GRIFFITH,

  	
  :

  	
   

  	
   

  
	
  PAUL J. JIGANTI, PAUL
  KEPES, STUART K.

  	
  :

  	
   

  	
   

  
	
  KIPNES, DUANE R. KULLBERG,
  JAMES P.

  	
  :

  	
   

  	
   

  
	
  MACGILVRAY, ANTHONY D.
  MCCORMICK,

  	
  :

  	
   

  	
   

  
	
  R. EDEN MARTIN, KEVIN
  MURPHY,

  	
  :

  	
   

  	
   

  
	
  RODERICK PALMORE, THOMAS
  H.

  	
  :

  	
   

  	
   

  
	
  PATRICK, JR., SUSAN M.
  PHILLIPS,

  	
  :

  	
   

  	
   

  
	
  WILLIAM R. POWER, SAMUEL
  K. SKINNER,

  	
  :

  	
   

  	
   

  
	
  CAROLE E. STONE, HOWARD L.
  STONE,

  	
  :

  	
   

  	
   

  
	
  and EUGENE S. SUNSHINE,

  	
  :

  	
   

  	
   

  
	
   

  	
  :

  	
   

  	
   

  
	
  Defendants.

  	
  :

  	
   

  	
   

  



 


MEMORANDUM OPINION


 


Date Submitted: December 16, 2008

Date Decided:  June 25, 2009


 

















 


 


Kenneth J. Nachbar, Esquire
of Morris, Nichols, Arsht & Tunnell LLP, Wilmington, Delaware; Hugh R.
McCombs, Esquire, Michele L. Odorizzi, Esquire, and Michael K. Forde, Esquire
of Mayer Brown LLP, Chicago, Illinois; Peter B. Carey, Esquire of Law Offices
of Peter B. Carey, Chicago, Illinois; Kevin M. Forde, Esquire of Kevin M.
Forde, Ltd., Chicago, Illinois, Attorneys for Plaintiffs CME Group, Inc.
and The Board of Trade of the City of Chicago, Inc.


 


Edward P. Welch, Esquire and
Edward B. Micheletti, Esquire of Skadden, Arps, Slate, Meagher & Flom
LLP, Wilmington, Delaware, and Jerrold E. Salzman, Esquire and Christal Lint,
Esquire of Skadden, Arps, Slate, Meagher & Flom LLP, Chicago,
Illinois, Attorneys for Plaintiffs CME Group, Inc. and The Board of Trade
of the City of Chicago, Inc.


 


Andre G. Bouchard, Esquire
and Joel Friedlander, Esquire of Bouchard, Margules & Friedlander,
P.A., Wilmington, Delaware, and Gordon B. Nash, Jr., Esquire and Scott C.
Lascari, Esquire of Drinker Biddle & Reath LLP, Chicago, Illinois,
Attorneys for Plaintiffs Michael Floodstrand, Thomas J. Ward, and All Others
Similarly Situated.


 


Samuel A. Nolen, Esquire,
Daniel A. Dreisbach, Esquire, and Rudolf Koch, Esquire of Richards, Layton &
Finger, P.A., Wilmington, Delaware, and Paul E. Dengel, Esquire and Paul E.
Greenwalt, III, Esquire of Schiff Hardin LLP, Chicago, Illinois, Attorneys
for Defendants.


 


Kevin G. Abrams, Esquire and
Nathan A. Cook, Esquire of Abrams & Laster LLP, Wilmington, Delaware,
Attorneys for Objectors Nickolas J. Neubauer, A. Alan Zatopa, Charles Westphal,
DRW Investments LLC, DRW Securities LLC, DRW Holdings LLC, and Alan Matthew;
James D. Wareham, Esquire of Paul, Hastings, Janofsky & Walker LLP,
Washington, DC, and Kevin C. Logue, Esquire of Paul, Hastings, Janofsky &
Walker LLP, New York, New York, Attorneys for Objector Charles Westphal.


 


John H. Williams, Jr.,
Esquire of John Williams, P.A., Wilmington, Delaware, Attorney for Objector
Theodore Pecora.


 


Melanie K. Sharp, Esquire
and Michele Sherretta Budicak, Esquire of Young Conaway Stargatt &
Taylor, LLP, Wilmington, Delaware, and Nicholas C. Zagotta, Esquire and Joseph
P. Simon, Esquire of Connelly Roberts & McGivney LLC, Chicago,
Illinois, Attorneys for Objectors Quiet Light Trading, LLC, and Quiet Light
Securities, LLC.


 


Vernon R. Proctor, Esquire
and Jill K. Argo, Esquire of Proctor Heyman LLP, Wilmington, Delaware, Attorney
for Objectors SKTY Trading, LLC, The Ira S. Nathan Revocable Trust, J.P. Morgan
Futures Inc., and Rho Trading Securities, LLC, and Phillip S. Reed, Esquire of
Patzik, Frank & Samotny Ltd., Chicago, Illinois, Attorney for Objector
The Ira S. Nathan Revocable Trust.


 


Michael A. Weidinger,
Esquire and Joanne Pileggi Pinckney, Esquire of Pinckney, Harris &
Weidinger, LLC, Wilmington, Delaware, and David W. Porteous, Esquire and James
G. Martignon, Esquire of Levenfeld Pearlstein, LLC, Chicago, Illinois,
Attorneys for Objector Daniel M. Ambrosino.


 


Carolyn S. Hake, Esquire and
Lauren E. Maguire, Esquire of Ashby & Geddes, Wilmington, Delaware,
and Patrick L. Kenney, Esquire, Michael S. Cessna, Esquire, and Benjamin C. 


 

















 


Hassebrock, Esquire of
Lathrop & Gage L.C., Kansas City, Missouri, Attorneys for Objector
Agrex, Inc.


 


Denise Seastone Kraft,
Esquire and John L. Reed, Esquire of Edwards Angell Palmer & Dodge
LLP, Wilmington, Delaware, and Darrell J. Graham, Esquire of The Law Office of
Darrell J. Graham, LLC, Chicago, Illinois, Attorneys for Objectors Jeffrey
Holland and Louis Panos.


 


Joseph A. Rosenthal, Esquire
and P. Bradford deLeeuw, Esquire of Rosenthal, Monhait & Goddess,
P.A., Wilmington, Delaware, and J. Samuel Tenenbaum, Esquire and Meredith M.
Casper, Esquire of Chuhak & Tecson, P.C., Chicago, Illinois, Attorneys
for Objectors Milton Robinson and Bryan Shaughnessy.


 


Daniel B. Rath, Esquire and
Rebecca L. Butcher, Esquire of Landis Rath & Cobb LLP, Wilmington,
Delaware, and David A. Genelly, Esquire of Vanasco Genelly & Miller,
Chicago, Illinois, Attorneys for Objectors Kottke Associates LLC and Barbara
Whitlow, individually and as personal representative of the Estate of Richard
Whitlow.


 


David S. Eagle, Esquire and
Kelly A. Green, Esquire of Klehr Harrison Harvey Branzburg & Ellers,
Wilmington, Delaware, and Jeffrey H. Bergman, Esquire and Jennifer Zordani,
Esquire of Ungaretti & Harris LLP, Chicago, Illinois, Attorneys for
Objectors UBS Securities, LLC and UBS Financial Services, Inc.


 


Kevin J. Mangan, Esquire of
Womble Carlyle Sandridge & Rice, PLLC, Wilmington, Delaware, and
Edward S. Weil, Esquire and Heather L. Kramer, Esquire of Dykema Gossett PLLC,
Chicago, Illinois, Attorneys for Objector Infinium Capital Management, LLC.


 


Paul A. Fioravanti, Jr.,
Esquire and Laina M. Herbert, Esquire of Prickett, Jones & Elliott,
P.A., Wilmington, Delaware, and Brett Nolan, Esquire of Shefsky &
Froelich Ltd., Chicago, Illinois, Attorneys for Objector The Kolton Family
Limited Partnership.


 


Paul A. Fioravanti, Jr.,
Esquire and Laina M. Herbert, Esquire of Prickett, Jones & Elliott,
P.A., Wilmington, Delaware, and Daryl M. Schumacher, Esquire of The Law Offices
of Daryl M. Schumacher, P.C., Chicago, Illinois, Attorneys for Objectors
Anthony J. McKerr and Mary C. McKerr Trust est. 3/13/97.


 


Richard I. G. Jones, Jr.,
Esquire and Toni Ann Platia, Esquire of Ashby & Geddes, Wilmington,
Delaware, Attorneys for Objector Geneva Trading USA, LLC.


 


Patricia R. Uhlenbrock,
Esquire and Fotini A. Antoniadis, Esquire of Morris James LLP, Wilmington,
Delaware, and William T. Rodeghier, Esquire, of Chicago, Illinois, Attorneys
for Objector William P. Sullivan.


 


Lewis H. Lazarus, Esquire
and Michael J. Custer, Esquire of Morris James LLP, Wilmington, Delaware,
Attorneys for Objector Nicholas A. Rapanos.


 


Henry E. Gallagher, Jr.,
Esquire and Kevin F. Brady, Esquire of Connolly Bove Lodge & Hutz LLP,
Wilmington, Delaware, and George R. Dougherty, Esquire, Gary M. Miller,
Esquire, and 


 

















 


Justin M. Sandberg, Esquire
of Grippo & Elders LLC, Chicago, Illinois, Attorneys for Objector John
S. Stafford, Jr.


 


Martin S. Lessner, Esquire,
Danielle Gibbs, Esquire, and Kathaleen McCormick, Esquire of Young Conaway
Stargatt & Taylor LLP, Wilmington, Delaware, and Seth L. Levine,
Esquire and Manda M. Sertich, Esquire of Foley & Lardner LLP, New
York, New York, and Kathryn M. Trkla, Esquire of Foley & Lardner LLP,
Chicago, Illinois, Attorneys for Objector WH Trading LLC.


 


David A. Jenkins, Esquire of
Smith, Katzenstein & Furlow LLP, Wilmington, Delaware, Attorney for
Objector Canadian Imperial Bank of Commerce.


 


Objector Tom Mallers, pro se.


 


Objector Peter C. Kelly, pro se.


 


Objector Scott A. Hall, pro se.


 


Objector Donald T. McMurray,
pro se.


 


Objector [J. A.] Dohl, pro se.


 


Objector William L. Allen,
Trustee of the William L. Allen Trust, pro se.


 


Objectors Thomas M. Marsh, pro se and Jamin Nixon, pro se.


 


Objector Brian R. Sherman, pro se.


 


Objector Dennis Quinn Cook, pro se.


 


Objector Thomas Hafner, pro se.


 


 


 


 


NOBLE, Vice Chancellor


 

















 


I. 
BACKGROUND


 


The Court recently approved the proposed Stipulation
of Settlement in this class action (the “Settlement”).(1)  Claims of
potential class members had been submitted before the Settlement was
considered.  The claims process was
supervised and administered by Class Counsel who excluded a number of
Settlement Class Members from participating in the benefits conferred
under the Settlement because of their failure to comply strictly with the
Settlement’s conditions for eligibility.(2)  Some have objected (the “Objectors”)
to their exclusion.  The objections can
be placed into five categories:  (1) Objectors
who, for various reasons, submitted untimely Settlement Claim Forms; (2) Objectors
who failed to transfer their CME shares in book entry to Computershare during
the period of October 14, 2008, through 5:00 p.m. on October 31,
2008, due to an oversight or error; (3) one Objector that falls under both
categories 1 and 2 above—it filed a late Claim Form and did not comply
with the Settlement’s Computershare requirement; (4) Objectors who were
excluded based upon Class Counsel’s determination that they did not “beneficially
own” the requisite Three Parts needed to qualify as a Participating Group A
Settlement Class Member; and (5) one miscellaneous Objector.  The Court addresses these objections in this
memorandum opinion.


 






(1) CME Group, Inc. v. Chicago Bd. Options Exchange, Inc., 2009
WL 1547510 (Del. Ch. June 3, 2009). 
Familiarity with that memorandum opinion is presumed.


 


(2) The
Court overturns several of Class Counsel’s decisions regarding participation
in the proceeds conferred by the Settlement. 
Class Counsel, in the Court’s judgment, fairly and accurately
performed their duties.  It was their
responsibility to apply the terms of the Settlement strictly and
consistently.  They did not, however,
have the Court’s equitable discretion that is inherent in its supervision of
the class action claims process.


 


1














 


II.    DISCUSSION


 


A.                                   Objections
to Exclusion Based Upon Late Filing


 


Pursuant to the terms of the Settlement, in order to
qualify as a Participating Group A or Group B Settlement Class Member, a
Settlement Class Member must have submitted a Claim Form by October 14,
2008 (the “Eligibility Date”).  Class Counsel
excluded certain Settlement Class Members from participating in the
Settlement (as either Group A or Group B Settlement Class Members) based
upon their failure to submit a Claim Form by the Eligibility Date.  Several of these excluded Settlement Class Members
have objected, arguing that excluding them from participating would be
inequitable.


 


There are two types of later filers:  (1) Class Members who, because of
an inadvertent error—either their own, Class Counsel’s, or the United
States Postal Service’s—submitted their Claim Forms late, but otherwise met the
requirements in order to participate in the settlement; and (2) Class Members
who in good faith submitted a Group A Settlement Class Member Claim Form that
was rejected by Class Counsel and, upon receiving such rejection,
promptly—but after October 14, 2008—sought to become Participating Group B
Settlement Class Members.  Both
types of objector/late filer will be discussed in turn.


 


1.                                       The First Category of Late Filer


 


The first group of Objectors(3) all claim, in
essence, that their failure to file timely Claims Forms should not prohibit
them from participating in the Settlement under either the “excusable neglect”
or “substantial compliance” standard.  It
is undisputed that each of the later filers in this first category would
otherwise have satisfied all ownership and registration requirements to 


 






(3) The late filers to
whom the Court refers are:  Theodore
Pecora, Argex, Inc., John S. Stafford, William P. Sullivan, Anthony J.
McKerr and Marry C. McKerr Trust Est. 3/13/1997, Canadian Imperial Bank of
Commerce, Milton Robinson and Bryan Shaughnessy, Alan Matthew, and J.P. Morgan
Futures, Inc.


 


 


2

















 


become a Participating Group
A or Group B (depending on the particular Objector) Settlement Class Member.(4)


 


There is substantial overlap in the facts of all
Objectors’ cases in this group—i.e., all of the members of this group filed
late Claims Forms because of an excusable, inadvertent error.  Any difference amongst them does not alter
the analysis.  Accordingly, the Court
will assess these Objectors’ claims as a group.(5)


 


In determining whether to approve the Settlement,
the Court was bound to exercise its own business judgment as to the fairness of
the settlement.(6)  “A corollary to that duty must be the duty of this
Court to insure that the stockholders who are entitled to participate in the
settlement are given a reasonable opportunity to file for and receive what is
due to them.”(7)  Of course, the Court already approved as reasonable the
Settlement’s Eligibility Date.  However, “[w]hile
it is true that the function of the filing deadline is to put a time limit on
the claims procedure, and . . . fair warning was given to the potential
claimants concerning the deadline, nevertheless the filing deadline is not
inflexible and must yield, if necessary, to the demands of equity.”(8) 
The parties seem to dispute the legal standard—“excusable neglect” or “substantial



 






(4) See Pls.’ Mem.
in Supp. of Mot. for Final Approval of the Proposed Settlement at 49 (“Class Counsel
acknowledges that all of the[] objectors [at issue] were in compliance except
for timely filing the appropriate Participating Settlement Class Member
Claim Form . . . .”).


 


(5) Within this group
of late filers, there are two subgroups. 
First, there are those persons who apparently timely sent off their
claim forms, but the forms were never received and recorded by Class Counsel.  Whether there was a problem with the delivery
service or whether their forms were misplaced by Class Counsel cannot be
determined.  Second, there are those who
did not submit their claim forms in a timely fashion because, for example, they
had not received notice of the Settlement or of the claims process.  It seems apparent that the position of those
who sent off their forms which were not received and recorded by Class Counsel
is deserving of greater sympathy. 
Nonetheless, because the Court’s analysis as to all the members of this
group is unchanged by the subtle differences in facts among them, assigning
blame for whatever error caused the late filing for a particular Objector is of
no use.


 


(6) Neponsit Inv. Co. v. Abramson, 405 A.2d 97, 100 (Del. 1979).


 


(7) Mendich v. Hunt Int’l Res., Inc., 1981 WL 7629, at *2
(Del. Ch. Oct. 21, 1981).


 


(8) Id. at *3.


 


3

















 


compliance” —the Court is to
employ in determining whether the filing deadline must yield to the demands of
equity.  The Court need not decide this
issue because it holds that under either standard, equitable principles demand
that the filing deadline be waived for the Objectors in this group.


 


In Mendich v. Hunt
International Resources, Inc., the Court of Chancery held that “although
a claims procedure approved by the Court should be followed, . . . substantial
compliance should be adequate.”(9)  The Court determined that “[t]he
missing of the postmark deadline, even without excuse, is substantial
compliance with the procedures for the filing of claims, when all the equities
are considered, if the postmark shows mailing within a few days of the
deadline.”(10)  Here, the facts of the Objectors’ cases indicate
substantial compliance under Mendich.  The Objectors either (1) mailed the
Claim Form prior to the Eligibility Date but Class Counsel, for
reasons that are unclear, did not receive it; or (2) received the Claim Form from
Class Counsel late, also for reasons that are unclear, but promptly mailed
the Claim Form upon actual receipt of it. 
Therefore, these Objectors have substantially complied with the terms of
the Settlement under Mendich.


 


In Brown v. Penn Central
Corp.,(11) this Court applied the seemingly more rigorous excusable
neglect standard in order to determine whether a settlement’s filing deadline
should be waived for late filers. 
Excusable neglect is a four factor test in which the Court
considers:  (1) the danger of
prejudice to the adverse party; (2) the length of the delay and its
potential effect on judicial proceedings; (3) the reason for the delay,
including whether it was within the reasonable 


 






(9) Id. at *2.


 


(10) Id. at *3.


 


(11) 1986 WL 5477 (Del. Ch., May 12, 1986).


 


4

















 


control of the late filer;
and (4) whether the late filer acted in good faith.(12)  All of the factors weigh in favor of the
Objectors and they are, therefore, entitled to participate as Group A or Group
B Settlement Class Members.


 


The first factor weighs in favor of the Objectors
because there is no prejudice to the other Participating Group A and Group B
Settlement Class Members.  Even
though other Group A Members’ distributions will be diminished somewhat
(because Group A Members share in the proceeds of the balance of the Settlement
pool, while Group B Members received the same lump sum payment), the additional
proceeds from the settlement pool they would receive if the late filers were
excluded is simply a windfall. 
Accordingly, they suffer no prejudice.(13)  Factor two weighs in favor of the Objectors
because the length of the delay was relatively minimal and it did not affect
the proceedings in this Court.  Factor
three also weighs in favor of the Objectors because in all cases the delay was
not reasonably in the control of the late filer.  Finally, factor four weighs in favor of the
Objectors because all the Objectors acted in good faith.


 


In sum, the Eligibility Date for the Objectors in
this group must yield to the demands of equity; it is therefore waived for
these Objectors.


 






(12) Pioneer Inv.
Servs. v. Brunswick Assoc. Ltd. P’ship, 507 U.S. 380, 395 (1993).


 


(13) See In re
Orthopedic Bone Screw Prods. Liab. Litig., 246 F.3d 315, 323-24 (3rd
Cir. 2001).


 


5

















 


2.                                       The Second Category of Late Filer


 


The second group of Objectors(14) all meet the
requirements to become Participating Group B Settlement Class Members.  However, none submitted Participating Group B
Settlement Class Member Claim Forms. 
This is because all filed, in good faith, Participating Group A
Settlement Class Member Claim Forms (believing, in good faith, that they
met the requirements to become Participating Group A Settlement Class Members),
and because the Settlement provided that a claimant was only permitted to use
an individual ERP (the only “part” required for Group B Membership) as either
one of the Three Parts(15) to support Group A Membership or to support Group B
Membership, but not both.  Class Counsel
subsequently rejected these Objectors’ Participating Group A Settlement Class Member
Claim Forms.  Such rejection came after
the time to submit Participating Group B Settlement Class Member Claim
Forms had passed.  


 






(14) Those Objectors
are:  WH Trading, Kottke, Daniel M.
Ambrosinno, and the Bunge Companies (Bunge Chicago, Inc., Bunge Global
Markets, Inc., Bunge Limited, Bunge North America (East), LLC, and Bunge
North America, Inc.).


 


Below the Court rejects WH Trading’s and Kottke’s
arguments that Class Counsel wrongfully excluded them from becoming
Participating Group A Settlement Class Members.  Both parties have argued, in the alternative,
that their failed Group A Claim From be considered a claim for Group B
Membership.  Bunge could be seen as
belonging in a somewhat different category because, although its claim to be a
Group A Settlement Class Member was timely filed, its claim to be a Group
B Settlement Class Member and its objection here were not submitted until
several months after the Settlement hearing. 
That delay is attributable to the fact that it did not receive
notice—the reason is not clear—of Class Counsel’s rejection of Group A
Claim.  Bunge, nonetheless, came forward
as soon as practicable and no prejudice will result from its participating, as
it would otherwise have been entitled, as a Group B Settlement Class Member.


 


Barbara Whitlow also argues that she should be
eligible for Group B Membership based upon her good faith filing of a Group A
Membership Claim Form.  However, because
the Court determines below that Ms. Whitlow beneficially owned the
requisite three parts for Group A Membership, the Court need not address her
alternative argument that she is eligible for Class B Membership based on
her filing of a Group A Claim Form.


 


(15) The Three Parts
are:  one B-1 Membership of the CBOT; one
Exercise Right Privilege (“ERP”); and at least 10,251.75 shares of CME Group
Common Stock. Stip. ¶ 30FF.


 


 


6

















 


Accordingly, Class Counsel
now objects to granting these Objectors Participating Group B Settlement Class Membership.


 


Class Counsel concede, as they must, that
Paragraph 30R of the Settlement permitted Class Members to use an
individual ERP either to constitute Group A Membership or Group B Membership,
but not both.  Class Counsel argue,
however, that this provision “does not restrict or limit filing Claim Forms in
the alternative or filing Claim Forms for both a Group A Settlement Unit and a
Group B Settlement Unit.”(16)  In other
words, because it was possible for Class Members to file for both types of
membership, failing to do so precludes their participation in the
Settlement.  But this fact demonstrates
only that the Settlement’s procedures for submitting claims were imperfect
because it was entirely reasonable for a Class Member to do precisely what
these Objectors did.  They believed in
good faith that they had assembled the Three Parts necessary to become
Participating Group A Settlement Class Members; thus, they submitted Group
A Claim Forms.  There was no reason for
them to assume that Class Counsel would deny those Claims.  Instead, it may have been unreasonable to
have expected them to file Group B Claim Forms separately.  Accordingly, the Eligibility Date requirement
is waived for these Objectors.


 


B.                                     Objections
to Exclusion Based Upon Failure to Meet the Computershare Requirement


 


Pursuant to the Settlement, in order to be eligible
for Group A Membership, a Settlement Class Member must have transferred to
Computershare to be held, lien-free, in book entry form, a sufficient number of
CME Group shares necessary to qualify for a Group A Settlement Unit for a
specified time period (from October 14, 2008 to October 31,
2008).  The Objectors in this 


 






(16) Pls.’ Mem. in Supp. of
Mot. for Final Approval of the Proposed Settlement at 67.


 


7

















 


Section were excluded
by Class Counsel for failure to comply with the Computershare requirement.


 


1.                                       Nicholas Rapanos


 


Nicholas Rapanos owned the requisite Three Parts;
this is undisputed.  However, he did not
timely transfer the sufficient number of shares of CME Group Common Stock to
Computershare.  Therefore, Class Counsel
excluded him from Group A Membership.  Mr. Rapanos
has objected, arguing that he was unaware of the Computershare requirement
because he never received the necessary information in the mail, and that, as
soon as he became aware of it, he promptly transferred his shares to
Computershare; accordingly, the balance of the equities tips in his favor, and
he is therefore eligible for Group A Membership.


 


Class Counsel state that they initially mailed
a copy of the Class Action Notice to Mr. Rapanos on August 29,
2008, at his last known address, and that such mailing was never returned to Class Counsel’s
offices as undeliverable.  Subsequently,
on September 24, 2008, Class Counsel by overnight courier sent
another copy of the Class Action Notice to Mr. Rapanos at that
address, and such mailing also was never returned as undeliverable.


 


The Court has no reason to question the truth of either
version.  It is entirely possible that Mr. Rapanos,
through no fault of his own, did not in fact receive the Class Action
Notice in time to transfer his shares. 
His Affidavit, which he filed under penalty of perjury, states that he
was unaware of the Computershare requirement, and that as soon as he became
aware, he promptly transferred his shares to Computershare.(17)  The balance of the equities therefore tip in Mr. Rapanos’s
favor, and, accordingly, the Computershare cutoff dates must yield to the demands
of 


 






(17) See
Aff. of Nicholas A. Rapanos at 2-3.


 


8

















 


equity.(18)  The Court therefore finds that Mr. Rapanos
must be included as a Participating Group A Settlement Class Member.(19)


 


2.                                       Ira S. Nathan Revocable Trust dated March 23,
1979(20)


 


The Ira S. Nathan Revocable Trust dated March 23,
1979 (the “Nathan Trust”) was also excluded by Class Counsel for failure
to comply with the Computershare requirement. 
It is undisputed that the Nathan Trust owned the requisite Three
Parts.  The Nathan Trust did in fact
transfer its CME Group shares to Computershare and held them there from October 14,
2008 through October 31, 2008. 
However, the Settlement required that the shares be held by
Computershare until 5:00 p.m. on October 31.  Due to an error by the Nathan Trust’s
investment advisors, the shares were transferred out of Computershare a few
hours before 5:00 p.m. on October 31. 
For this reason Class Counsel excluded the Nathan Trust from
participating in the Settlement.


 


The Nathan Trust substantially complied with the
terms of the Settlement.  The removal of
the shares a few hours early was an error that was not within the Nathan Trust’s
control.  Therefore, equity would not be
served by excluding the Nathan Trust from participating in the Settlement.  Accordingly, the Computershare requirement
must yield to the demands of equity, and the Nathan Trust is eligible to become
a Participating Group A Settlement Class Member.


 


C.                                     Objection
to Exclusion Based Upon Late Filing and Failure to Meet the Computershare
Requirement


 






(18) See cases cited supra notes 7,
11.


 


(19) Class Counsel,
if they so choose, will be entitled to take discovery on the question of
whether Mr. Rapanos was on notice (actual or constructive) of the
obligation to transfer his shares to Computershare.  They also may take discovery on the question
of whether Mr. Rapanos could have satisfied the Computershare requirement
during the appropriate period.  The
Court’s conclusions with respect to Mr. Rapanos are subject to this
option.


 


(20) The Court’s
determination here renders the Nathan Trust’s Motion for Clarification or
Reargument, filed June 10, 2009, moot.


 


9

















 


Rho Trading Securities, LLC (“Rho”) was excluded by Class Counsel
for filing its Participating Group A Settlement Claim Form on January 28,
2009, more than three months late. 
Therefore, not only was Rho a late filer, but it also did not comply
with the Settlement’s Computershare requirement.  Class Counsel argue that in the interest
of fairness to all Class Members who complied with all the deadlines Rho
must be excluded.  Rho claims that it
received neither the Class Action Notice, nor the follow-up letters
regarding amendments to the Settlement. 
Rho’s contact information maintained by the CBOT was up to date.  However, Rho maintains that it never received
any correspondence regarding the class action until approximately January 27,
2009.  Upon learning about the action,
Rho promptly filed its Participating Group A Settlement Class Member Claim
Form.  Rho conducted a thorough internal
investigation in order to determine whether any notice of the action had been
received by any Rho employee; there was no indication that there was.(21)  The Court has no reason to doubt that this is
true.  Accordingly, Rho has substantially
complied with the terms of the Settlement, and, therefore, the filing deadlines
and the Computershare requirement must yield to the demands of equity.(22)


 


D.                                    Beneficial
Ownership


 


Paragraph 30AA of the Settlement provides that in
order for a Settlement Class Member to become a Participating Group A
Settlement Class Member, such member must have “beneficially owned” the
requisite Three Parts.  The Settlement,
however, does not define the term “beneficial ownership,” which is commonly
understood to encompass the notion of having the “true” ownership interest but
with title held by another.  Shares of
stock registered in “street 


 






(21) Verified Objection of
Rho Trading Securities, LLC to Proposed Settlement at ¶¶ 2, 5, 6 & 7.


 


(22) This conclusion,
however, is subject to the right of Class Counsel, if they so choose, to
take discovery on the question of whether Rho was on notice (actual or
constructive) of the Class Action and whether Rho could have complied with
the Settlement’s terms, including the Computershare requirements during the
appropriate period.


 


10

















 


name” or assets held in a
trust for a beneficiary are typical examples of how beneficial interests are
established.(23)


 


Class Counsel rejected a number of Settlement Class Members’
claims based on their determination that the Class Member did not
beneficially own the Three Parts. 
Several of those Class Members have objected, arguing that they
beneficially owned the requisite Three Parts. 
The Court, thus, turns to their objections.


 


1.                                       Kottke Associates and WH Trading


 


Objectors Kottke Associates, LLC (“Kottke”) and WH
Trading, LLC (“WH Trading”) each owned two of the Three Parts required for a
Group A Settlement Unit.  Both parties
claim that they beneficially owned the missing third part (a B-1 Membership for
Kottke and shares of CME Group Common Stock for WH Trading) because such part
was assigned to them to support their status as a clearing member firm (of the
CBOT or the CME).  Class Counsel
rejected both claims because they concluded that neither Kottke nor WH Trading
beneficially owned the missing third part. 
Indeed, both Kottke and WH Trading concede that they do not own the
missing part.  Instead, Kottke and WH
Trading argue the missing part was assigned to them and the interest in the
assigned part to which they claim a beneficial ownership interest is sufficient
to meet the Settlement’s beneficial ownership requirements.


 


Class Counsel correctly rejected Kottke’s and
WH Trading’s claims.  Neither Kottke nor
WH Trading beneficially own the missing part they claim an ownership interest
in.  Under CBOT Rule 902 and CME Rule 902,
the assignment of stock or a membership by an individual member to support a
clearing member firm’s status as a clearing member runs to the CME


 






(23) Some of the Objectors
have sought discovery from Class Counsel to determine their understanding
of what constitutes a beneficial interest within the scope of the
Settlement.  Although the Settlement was
not drafted by the Court, it is the Court’s document and its interpretation is
a matter for the Court’s resolution.  No
plausible allegation of bias or even of a specific instance of inconsistent
application has been lodged by the Objectors.


 


11














 


clearing house, not to the
clearing member firm.(24)  Accordingly,
the clearing member firm—i.e., Kottke and WH Trading—acquired no interest in
the asset assigned and, therefore, do not beneficially own it.(25)


 


2.                                       Geneva Trading USA and DRW Securities


 


Geneva Trading USA, LLC (“Geneva Trading USA”) and
DRW Securities LLC (“DRW Securities”) both submitted Participating Group A
Settlement Class Claim Forms, which were rejected by Class Counsel.  Geneva Trading USA owned a B-1 Membership, an
ERP, and 6,977 shares of CME Group common stock.  Its Claim Form stated that it
beneficially owned an additional 3,275 shares of CME Group common stock through
its wholly owned subsidiary, Geneva Ireland Financial Trading Limited (“Geneva
Ireland”).  When combined with the 6,977
shares directly owned, the Settlement’s stock ownership threshold would be
met.  Similarly, DRW Securities owned a
B-1 Membership and an ERP, but it did not own the requisite CME Group
shares.  The CME Group shares of common
stock DRW Securities claimed it owned were actually owned by its affiliate, DRW
Investments LLC.  Both DRW Securities and
DRW Investments are wholly owned subsidiaries of DRW Holdings LLC (“DRW
Holdings”).


 


Class Counsel rejected both Geneva Trading USA’s
and DRW Securities’ claims based upon their interpretation of beneficial
ownership, an interpretation that does not include a parent corporation’s
interest in its wholly owned subsidiary’s assets or a corporation’s interest in
its affiliate corporation’s assets.  Class Counsel
rest their interpretation of “beneficial ownership” on two passages in Fletcher’s
Cyclopedia; they are:  “a person who has
voluntarily adopted the 


 






(24) See Pls.’ Mem. in Supp, of Mot. for Final Approval of the
Proposed Settlement Ex. G, H.


 


(25) The Settlement’s
concept of ownership reaches not only parts “beneficially owned” but also those
“possessed by delegation.”  Neither
Kottke nor WH Trading has relied upon delegation.  Delegation of rights related to the exchange
has a history that carries a specific contextual understanding, one that cannot
readily be extended by analogy.  For that
reason, Kottke’s argument that its situation is “analogous” to the specifically
recognized delegator/delegatee status fails.


 


12

















 


corporate form to engage in
business may be deemed to be precluded from asking courts to disregard that
form merely because the person is disadvantaged by its use”;(26) and “a
business enterprise’s corporate structure is determined by choice, and if the
owners are to accept the advantages of dividing the business into separate
corporate entities, they must also be subject to the disadvantages.”(27)  Both Geneva Trading USA and DRW Securities
voluntarily adopted a corporate form, presumably because it made business sense
to do so.  The Court agrees with Class Counsel
that these entities, in electing a certain corporate form, cannot simply
abandon that form when it is convenient. 
The Court must respect the corporate form chosen.  Therefore, Class Counsel correctly
excluded Geneva Trading USA and DRW Securities from participating in the
Settlement.


 


3.                                       Barbara Whitlow


 


Barbara Whitlow is the widow of Richard Whitlow, a
long time member of the CBOT.  Mr. Whitlow
died on April 3, 2008.  For many years
Mr. Whitlow owned what is now the requisite Three Parts for a
Participating Group A Settlement Unit. 
In late 2007 or early 2008, Mr. Whitlow transferred his shares of
CME stock into joint ownership with Ms. Whitlow.  Shortly before his death, Mr. Whitlow
and Ms. Whitlow sold 3,000 of their CME shares, which brought their
ownership below the level required for Participating Group A Membership.  Pursuant to the Settlement, however, a Class Member
seeking to participate in the Settlement who had transferred a portion of the
components of CBOT membership was entitled to recombine those components on or
before October 14, 2008.


 






(26) 1 Fletcher’s
Cyclopedia Corporations § 41.70 n.9 (West 2006).


 


(27) Id. at § 43.50.


 


13

















 


In July 2008, Mr. Whitlow’s estate was
opened, and Ms. Whitlow was appointed the personal representative of the
estate.  Under the terms of Mr. Whitlow’s
will, Ms. Whitlow was to succeed to all of her late husband’s assets.  On July 17, 2008, an Indiana probate
court directed the transfer of the B-1 Membership and the ERP to Ms. Whitlow.  The CME Group shares automatically passed to Ms. Whitlow
as the surviving joint tenant.  Ms. Whitlow
then began repurchasing the 2,951 shares she needed to be eligible for a
Participating Group A Settlement Unit. 
She did so by September 6, 2008, and deposited her shares in
Computershare under her name.  Upon
receiving her Participating Group A Settlement Class Claim Form, Class Counsel
excluded Barbara Whitlow from participating in the Settlement because she had
not at any time prior to August 22, 2008 simultaneously beneficially owned
or possessed by delegation the Three Parts required by Paragraph 30AA of the
Settlement.(28)


 


A court of equity is a court of conscience, and the
Court cannot, in good conscience, let this result stand.  Were Ms. Whitlow not allowed to
participate in the Settlement, it would be because of her husband’s death,
which would also result in a minor windfall to the other Group A Members.  Moreover, Class Counsel cannot be
concerned about overlapping claims based upon the same Three Parts owned by Mr. Whitlow.  It is clear that Ms. Whitlow is the sole
owner of the Three Parts and will be the only person submitting a claim based
upon those parts.  And the purpose of the
Settlement’s stringent ownership requirements is to protect against parties
submitting claims based upon overlapping ownership interests in the CBOT.  Accordingly, no harm will result by allowing
her to participate.  Therefore, the
Court, in the exercise of its 


 






(28) As a joint tenant, she
had once held the necessary number of CME Group shares.  She did not acquire the B-1 Membership or the
ERP until after she could no longer claim ownership of the minimum number of
shares.


 


14

















 


discretion, determines that Ms. Whitlow
must be deemed to have held a Participating Group A Settlement Unit, and, thus,
she is entitled to participate as a Group A Settlement Class Member.(29)


 


5.             The Kolton Family Limited Partnership


 


The Kolton Family Limited Partnership’s (the “Kolton
Partnership”) Participating Group A Settlement Class Member Claim Form was
rejected by Class Counsel because the records indicated that the Kolton
Partnership owned only the CME Group shares, but neither a B-1 Membership nor
an ERP.  The B-1 Membership and the ERP
relied upon by the Kolton Partnership claims are owned individually by its
general partner and 46% owner, Bradley Kolton. 
Mr. Kolton was a long time member of the CBOT.  Mr. Kolton established the Kolton
Partnership in 1987, and shares of CME Group Common Stock are its only
assets.  The Partnership was created for
the benefit of Mr. Kolton’s three sons, the limited partners of the Kolton
Partnership.


 


The Settlement provides that natural persons
submitting Group A Claims satisfy the requirement that they own CME Group
Common Stock if such shares are owned of record by “one or more trusts for the
benefit of such Group A Settlement Class Member or such Group A Settlement
Class Member’s spouse, children,
stepchildren, or grandchildren . . . not formed for 


 






(29)
Brown v. Penn Central Corp., 1986 WL
5477, at *2 (“Until the fund created by the settlement is actually distributed,
the court retains its traditional equity powers.  It is not novel law to announce that a court
supervising the distribution of a trust fund has the inherent power and duty to
protect unnamed but interested persons.  In
the words of Professor Chafee, the dean of equity law, these individuals are
akin to ‘wards of court.’”).


 


Because of the complexity of
the Settlement’s structure, a relatively large number of claimants who “came
close” to meeting the various requirements must be considered.  It is obvious that those who are deemed to
have satisfied the requirements and those who are not allowed to share (or to
share fully) in the Settlement are on something of a continuum.  It is also obvious that, in light of the
various factual circumstances of those seeking relief from strict application
of the Settlement’s conditions, some “line drawing” by the Court is
inevitable.  It is even more obvious that
those persons close to, but on the “wrong side” of, the line are likely to
chafe at the Court’s conclusions.  But,
perhaps unfortunately, just because some who did not strictly qualify under the
Settlement are, as a matter of equity, allowed to participate in the benefits
of the Settlement, does not mean that all who can find some nexus to the
Settlement’s conditions should be entitled to participate.  At some point, a further relaxing of the
Settlement’s requirements in the name of equity would run the risk of
undermining the carefully designed settlement standards that have previously
been approved by this Court.


 


15

















 


the purpose of participating
in the Settlement . . . .”(30)  Although
not within the scope of the trust exception because the Kolton Partnership is
not a “natural person,” family wealth transfer is the obvious purpose behind
the creation of the Kolton Partnership. 
In this instance, the partnership, owned by family members, serves
purposes parallel to those of the trusts expressly allowed to participate in
the Settlement.  As such, for purposes of
the Settlement, there is no material basis for distinguishing between the
Kolton Partnership and the trusts that are otherwise allowed to share in the
proceeds of the Settlement.  Further, as
is the case with Ms. Whitlow, there is no potential for abuse here.  Accordingly, the Court finds that equity would
not be served if the Kolton Partnership were excluded from participating in the
Settlement.


 


E.             Miscellaneous Objector


 


SKYT Trading, LLC (“SKYT”) was excluded by Class Counsel
because Class Counsel had no evidence of ownership of a sufficient number of
CME Group shares by SKYT and that such shares were duly deposited with
Computershare.  This was due to a
clerical error by either ABN/AMRO (the clearing entity through which SKYT
purchased its CBOT membership in 2005) or Computershare which resulted in the
record ownership of the CME Group shares being listed as held by “SKYT LLC.”  In November 2008, SKYT brought this
error to Class Counsel’s attention, but Class Counsel declined SKYT’s
request to include it as a Participating Group A Settlement Class Member.  Class Counsel claims that it “lacks
sufficient information to verify the accuracy of SKYT’s assertion.”(31)  The Court is satisfied with SKYT’s
representations to the Court, both in its brief and at the hearing on their
objection, and the supplemental documents it 


 






(30) Stipulation of
Settlement ¶ 30T(3) (emphasis added).


 


(31)
Pls.’ Mem. in Supp. of Mot. for Final Approval of the Proposed Settlement at
61.


 


16

















 


submitted,(32) that SKYT
Trading, LLC is the record owner of the shares transferred to
Computershare.  Accordingly, having met
all of the Settlement’s requirements, SKYT is entitled to become a
Participating Group A Settlement Class Member.


 


III.  CONCLUSION


 


Accordingly, the various objections are resolved as
set forth above.  An implementing order
will be required.


 






(32)
These documents include Form 1099-DIV and an employer identification form,
Form SS-4.


 


17

















 


 


COURT OF CHANCERY

OF THE 

STATE OF DELAWARE


 


 


	
  JOHN W. NOBLE 

  VICE CHANCELLOR

  	
   

  	
  417 SOUTH STATE STREET 

  DOVER, DELAWARE 19901 

  TELEPHONE: (302) 739-4397 

  FACSIMILE: (302) 739-6179,
  2009

  



 


July 28, 2009


 


	
  Kenneth J. Nachbar,
  Esquire 

  Morris, Nichols,
  Arsht & Tunnell LLP 

  1201 N. Market Street 

  Wilmington, DE 19801

  	
   

  	
  Edward P. Welch, Esquire 

  Skadden,
  Arps, Slate, 

  Meagher & Flom LLP 

  One
  Rodney Square 

  Wilmington,
  DE 19801

  
	
   

  	
   

  	
   

  
	
  Andre G. Bouchard, Esquire
  

  Bouchard,
  Margules & Friedlander, P.A. 

  222 Delaware Avenue,
  Suite 1400 

  Wilmington, DE 19801

  	
   

  	
  Samuel A. Nolen, Esquire 

  Richards,
  Layton & Finger, P.A. 

  One Rodney Square 

  Wilmington, DE 19801

  
	
   

  	
   

  	
   

  
	
  Nathan A. Cook, Esquire 

  Abrams & Laster
  LLP 

  20 Montchanin Road,
  Suite 200 

  Wilmington, DE 19807

  	
   

  	
  Denise S. Kraft, Esquire 

  Edwards Angell Palmer &
  Dodge LLP 

  919 Market Street,
  Suite 1500 

  Wilmington, DE 19801

  



 


John G. Harris, Esquire


Riley Riper Hollin & Colagreco


One Commerce Center, 3rd Floor


1201 North Orange Street


Wilmington, DE 19801


 


	
  Re:

  	
  CME Group, Inc. v.
  Chicago Board Options Exchange, Inc.

  
	
   

  	
  C.A. No. 2369-VCN

  
	
   

  	
  Date Submitted:
  July 15, 2009

  



 


Dear Counsel:


 


I write to address three
applications.


 

















 


1.                                       William L. Allen Trust, dated September 5,
1995.


 


The William L. Allen Trust, dated September 5,
1995 (the “Trust”), submitted a Group A Settlement Claim form that was rejected
because of the Trust’s failure to comply with the requirement that its shares
be deposited in book entry form at Computershare.  The Trust held an ERP and, thus, was entitled
to participate in the Group B Class Settlement.  It did not, however, submit any Class B
Settlement claim form.  It now seeks to
participate in the Group B Settlement. 
The Trust analogizes its predicament to that of Geneva Trading LLC which
was recently allowed to participate in the Group B Settlement despite having
only filed a Group A Settlement claim form (for the interest at issue).  Geneva, however, had a substantial argument
that it had met the requirements to participate in the Group A Settlement.  The Trust, unfortunately, did not (and, apparently
because of what the Trust has labeled as bad advice from a broker, could not)
attempt or approach compliance with the Computershare requirement.


 


Nevertheless, I am persuaded that the Trust should
be allowed to participate in the Group B Settlement.  The documents it submitted in support of its
timely Group A Settlement claim form—evidencing the necessary ERP—demonstrated
an entitlement to Group B participation. 
Denying the Trust the opportunity to participate in the Group B
Settlement process would result in a windfall to the Group A participants.


 


2.                                       Jeffrey Holland.


 


Mr. Holland, a qualifying Group B Settlement Class Member,
seeks the Court’s approval to participate in the Group A Settlement.  He now does so by way of a motion for
clarification.  Because of some
uncertainty on the part of Mr. Holland, he did not reassemble the “Three
Parts.”  He was aware of the need to
acquire (or reacquire) certain interests, but he chose not to do so.  He attempts to blame all of this on the
decision of Class Counsel not to provide specific and 


 


3

















 


individual legal advice to
him in advance of his submission of a claim as to whether or not he had
previously held certain interest by “delegation” as that concept is addressed
in the Settlement.  The “delegation”
standard may have be complicated, but it was sufficient to inform Mr. Holland
(who is represented by counsel) and to enable him to determine whether, within
the terms of the Settlement, he could properly participate as a Group A
Settlement Class Member through “delegation.” Apparently, he was unwilling
to run the risk or expense of reassembling the Three Parts without first
obtaining certainty as to whether he would qualify.  That may (or may not) have been prudent, but
it was his own choice not to reassemble the various components.  As such, he failed to meet the requirements
of the Settlement, including, specifically, the requirement for book entry of
shares of CME Group Common Stock with Computershare.  That failure is fatal to his efforts to
obtain Group A status.  Thus, Mr. Holland’s
motion for clarification is denied.


 


3.                                       A. Alan Zatopa.


 


Mr. Zatopa persists in his resistance to the
Computershare requirement.  He timely
raised his objection to this prerequisite for participation as a Group A
Settlement Class Member.  But for
the Computershare requirement, he would have qualified for a second Group A
Settlement Class unit.(1)  The Court has sustained the Computershare
requirement.(2) Mr. Zatopa has moved for reargument.(3)  Mr. Zatopa challenged—and this may be
something of an over-simplification—the 


 






(1) It appears that
some of those who initially objected to the Computershare requirement
eventually complied with it.


 


(2) See CME Group, Inc. v. Chicago Bd. Options Exch., Inc.,
2009 WL 1547510, at *6-7 (Del. Ch. June 3, 2009).


 


(3) The Court has
addressed objections primarily in two opinions. 
The first dealt with the structural objections.  Id.  The second dealt with the individual
objections.  CME Group, Inc.
v. Chicago Bd. Options Exch., Inc., 2009 WL 1856693 (Del. Ch.
June 25, 2009).  Mr. Zatopa’s
arguments largely reprise the structural arguments addressed by the Court in
the first opinion.  The Court, in
consideration of the individual arguments, did not directly address
Mr. Zatopa’s circumstances. 
Mr. Zatopa premises his motion for reargument on his individual 


 


4

















 


Computershare requirement as
unnecessary.  He contended that there
were other ways by which Class Counsel could have accurately confirmed
compliance with the various requirements for participating in the
Settlement.  Those arguments, as noted,
were rejected, but he now refines his argument. 
He contends that when his personal circumstances are considered, equity
should relieve him of the Computershare burden. 
Mr. Zatopa asserts that he owned the necessary CME Group common
stock in certificate form throughout the applicable timeframe.  He argues that he made the necessary records
available to Class Counsel and made himself available for
questioning.  Instead of offering a
reason why equity should come to his aid, Mr. Zatopa, instead, simply
seeks special treatment.  The
Computershare requirement was reasonable. 
That other approaches might have been available does not refute that
conclusion.  To allow Mr. Zatopa to
participate in the Group A Settlement without compliance with the Computershare
requirement would unfairly interfere with a reasonable and approved
condition.  By extension, acceptance of Mr. Zatopa’s
argument would suggest that no one who held CME Group Common Stock in
certificate form should have bothered to comply with the Computershare
requirement either.  Accordingly, the
Court concludes that because Mr. Zatopa failed to comply with the
Computershare requirement, he may not participate as the holder of a second
Group A Class Settlement Unit.


 


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  /s/ John W. Noble

  



 






circumstances.  To the extent that Mr. Zatopa seeks
reargument of the Court’s consideration of the Computershare requirement
generally, his motion is denied because it does nothing more than reprise
earlier arguments and he has not demonstrated that the Court either misapplied
the law or misunderstood the facts.  See, e.g., Serv Corp. of Westover Hills v. Guzzetta, 2008 WL
5459249 (Del. Ch. Dec. 22, 2008). 
To the extent that the Court did not consider his individual
circumstances, reargument is appropriate for matters fairly presented to the
Court but which it did not address.  See, e.g., Stone v. Stant, 2008 WL 2938543, at *1 (Del. Ch.
July 18, 2008).  Whether
Mr. Zatopa raises genuinely individual arguments or simply takes his
general arguments and recasts them as applying to himself is an interesting, but
ultimately unnecessary, topic for debate. 
The Court will treat his motion under the rubric of having failed to
consider his individual claims previously.


 


5

















 


JWN/cap


 


cc:                                 Richard I. G. Jones, Jr.,
Esquire

John H. Williams, Jr., Esquire

Melanie K. Sharp, Esquire

Vernon R. Proctor, Esquire

Michael A. Weidinger, Esquire

Paul A. Fioravanti, Jr., Esquire

Henry E. Gallagher, Jr., Esquire

Joseph A. Rosenthal, Esquire

Patricia R. Uhlenbrock, Esquire

Carolyn S. Hake, Esquire

David S. Eagle, Esquire

Daniel B. Rath, Esquire

Kevin J. Mangan, Esquire

Lewis H. Lazarus, Esquire

Martin S. Lessner, Esquire

David A. Jenkins, Esquire

Arthur L. Dent, Esquire

Register in Chancery-K


 


6