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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Richard Di Donato, Individually and On 

Behalf of all Others Similarly Situated,

Plaintiff, 

v. 

Insys Therapeutics, Inc.; et al.,

Defendants.

No. CV-16-00302-PHX-NVW

ORDER

Before the Court is the Class Representative’s Motion for Order Preliminarily 

Approving Settlement with Defendant Michael L. Babich, etc. (Doc. 399). The Motion 

does not provide enough information for the Court to grant preliminary approval or for 

some or many class members to make informed decisions on whether to object to the 

proposed settlement. Therefore, a supplemental motion will be ordered to give the missing 

information.

Approval of a proposed settlement requires balancing of (1) the strength of the 

plaintiffs’ claim, (2) the provable damages, (3) the amount of recoverable assets or 

resources of the defendant, (4) the cost of continued prosecution of the case. The proposed 

settlement calls for a payment of $250,000.00 from Defendant Babich. Insurance 

indemnification has been denied. The provable damages are hotly disputed, but range 

between zero and $189.5 million. But the Motion fails to disclose the amount of assets or 

resources of Defendant Babich, though the information has been exchanged among 

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counsel. The Motion argues that cash contributions by settling individual securities class 

action defendants are not customary, but that avoids the inquiry; it does not end it.

The Motion says “Defendant Babich’s current financial obligations . . . far exceeds 

[sic] his net worth. Indeed, based on the financial information provided by Defendant 

Babich’s Counsel in connection with the Settling Parties settlement discussion, Mr. 

Babich’s financial obligations exceed his overall net worth by more than $49 million.” 

(Doc. 399 at 9-10.) Thus, the parties and counsel know Babich’s assets, but they keep them 

secret from the Court and the class members. On this showing alone, the Court could not 

grant preliminary approval of the Babich settlement. Nor could class members make 

informed decisions on whether to object to the settlement. The moving parties and counsel 

ask everyone to take it on faith that the lawyers have reached an acceptable settlement. The 

class members do not have to take it on faith, and the Court does not.

IT IS THEREFORE ORDERED that the parties submit by 5:00 p.m. on August 3, 

2020, a supplemental memorandum disclosing and explaining (1) Defendant Babich’s 

assets, not just his other obligations, (2) how and from what sources Defendant Babich can 

supply $250,000.00 in settlement in light of his negative net worth of $49 million, and (3) 

why he cannot pay more, bearing in mind that settlements must always leave defendants 

better off than a total liquidation of assets. An earlier supplement would speed action on 

approval of the settlement.

IT IS FURTHER ORDERED that the August 17, 2020, trial date and pretrial 

deadlines are reaffirmed and will not be delayed unless and until the Court grants 

preliminary approval of the Babich settlement.

Dated: July 24, 2020. 

Case 2:16-cv-00302-NVW Document 400 Filed 07/24/20 Page 2 of 2