Case Name: In re WARNER COMMUNICATIONS SECURITIES LITIGATION. Steven BECKER; Russell Cammer; E.D. Dubowski; Robert and Hanna Fonfeder; Len Forman; Rick L. and Andrea K. Frimmer; Michael D. Gaddy; Richard Glovin; Charles Gribble; Louis O. Marino, custodian for Louis Marino II; Naomi Masri; Aileen S. Moleski; Irving and Charlotte Radol; Beatrice K. Rappoport, trustee for Julie Ann Rappoport; Robert Samit; Richard Schlesinger; Roberta Shine; Donald Singleton; Jessica Beth Sporn; Harry Stern; Richard S. Tabas; Robert W. and Bonnie Walker; Helena White; and S.J. Johnson, suing in the right and for the benefit of Warner Communications, Inc., Plaintiffs-Appellees, v. WARNER COMMUNICATIONS, INC.; Atari, Inc.; Ted Ashley; S. Gerard Benford; Eugene R. Black; Lawrence B. Buttenweiser; Allan B. Ecker; Emanuel Gerard; Dennis Groth; David R. Haas; Alan S. Henricks; David H. Horowitz; Deane F. Johnson; Raymond Kassar; Caesar P. Kimmel; Jacob Liebowitz; Martin D. Payson; Edward Rosenthal; Steven J. Ross; Robert J. Salomon; Norman K. Samnick; Beverly Sills; Fred L. Tepperman; Raymond S. Troubh; William J. Vandenheuvel; Bert W. Wasserman; Mark M. Weinstein; and Rod L. White, Defendants-Appellees, v. Stephen J. GROSS, custodian for Andrew Gross under the Uniform Gifts to Minors Act of the District of Columbia, Objector-Appellant
Court: United States Court of Appeals for the Second Circuit
Jurisdiction: United States
Decision Date: 1986-08-04
Citations: 798 F.2d 35
Docket Number: No. 764, Docket 85-7807
Parties: In re WARNER COMMUNICATIONS SECURITIES LITIGATION. Steven BECKER; Russell Cammer; E.D. Dubowski; Robert and Hanna Fonfeder; Len Forman; Rick L. and Andrea K. Frimmer; Michael D. Gaddy; Richard Glovin; Charles Gribble; Louis O. Marino, custodian for Louis Marino II; Naomi Masri; Aileen S. Moleski; Irving and Charlotte Radol; Beatrice K. Rappoport, trustee for Julie Ann Rappoport; Robert Samit; Richard Schlesinger; Roberta Shine; Donald Singleton; Jessica Beth Sporn; Harry Stern; Richard S. Tabas; Robert W. and Bonnie Walker; Helena White; and S.J. Johnson, suing in the right and for the benefit of Warner Communications, Inc., Plaintiffs-Appellees, v. WARNER COMMUNICATIONS, INC.; Atari, Inc.; Ted Ashley; S. Gerard Benford; Eugene R. Black; Lawrence B. Buttenweiser; Allan B. Ecker; Emanuel Gerard; Dennis Groth; David R. Haas; Alan S. Henricks; David H. Horowitz; Deane F. Johnson; Raymond Kassar; Caesar P. Kimmel; Jacob Liebowitz; Martin D. Payson; Edward Rosenthal; Steven J. Ross; Robert J. Salomon; Norman K. Samnick; Beverly Sills; Fred L. Tepperman; Raymond S. Troubh; William J. Vandenheuvel; Bert W. Wasserman; Mark M. Weinstein; and Rod L. White, Defendants-Appellees, v. Stephen J. GROSS, custodian for Andrew Gross under the Uniform Gifts to Minors Act of the District of Columbia, Objector-Appellant.
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 798
Pages: 35–38

Head Matter:
In re WARNER COMMUNICATIONS SECURITIES LITIGATION. Steven BECKER; Russell Cammer; E.D. Dubowski; Robert and Hanna Fonfeder; Len Forman; Rick L. and Andrea K. Frimmer; Michael D. Gaddy; Richard Glovin; Charles Gribble; Louis O. Marino, custodian for Louis Marino II; Naomi Masri; Aileen S. Moleski; Irving and Charlotte Radol; Beatrice K. Rappoport, trustee for Julie Ann Rappoport; Robert Samit; Richard Schlesinger; Roberta Shine; Donald Singleton; Jessica Beth Sporn; Harry Stern; Richard S. Tabas; Robert W. and Bonnie Walker; Helena White; and S.J. Johnson, suing in the right and for the benefit of Warner Communications, Inc., Plaintiffs-Appellees, v. WARNER COMMUNICATIONS, INC.; Atari, Inc.; Ted Ashley; S. Gerard Benford; Eugene R. Black; Lawrence B. Buttenweiser; Allan B. Ecker; Emanuel Gerard; Dennis Groth; David R. Haas; Alan S. Henricks; David H. Horowitz; Deane F. Johnson; Raymond Kassar; Caesar P. Kimmel; Jacob Liebowitz; Martin D. Payson; Edward Rosenthal; Steven J. Ross; Robert J. Salomon; Norman K. Samnick; Beverly Sills; Fred L. Tepperman; Raymond S. Troubh; William J. Vandenheuvel; Bert W. Wasserman; Mark M. Weinstein; and Rod L. White, Defendants-Appellees, v. Stephen J. GROSS, custodian for Andrew Gross under the Uniform Gifts to Minors Act of the District of Columbia, Objector-Appellant.
No. 764, Docket 85-7807.
United States Court of Appeals, Second Circuit.
Argued Jan. 31, 1986.
Decided Aug. 4, 1986.
Alan B. Morrison, Washington, D.C. (Public Citizen Litigation Group, Washington, D.C. and Elliot J. Weiss, New Yolk City, of counsel), for objector-appellant.
Arthur L. Liman, New York City (Leslie Gordon Fagen, C. William Phillips, Paul, Weiss, Rifkind, Wharton & Garrison, New York City, of counsel), for defendants-appellees Warner Communications, Inc. and Atari, Inc.
Barry H. Garfinkel, New York City (Timothy A. Nelsen, Jeremy A. Berman, Skadden, Arps, Slate, Meagher '& Flom, New York City, of counsel), for individual defendants-appellees.
Melvyn I. Weiss, New York City (Jerome M. Congress, George A. Bauer III, Milberg Weiss Bershad Specthrie & Lerach, New York City, Sherrie R. Savett, Stephen A. Whinston, Berger & Montague, P.C., Philadelphia, Pa., Daniel W. Krasner, Fred T. Isquith, Wolf Haldenstein Adler Freeman & Herz, New York City, of counsel), for plaintiffs-appellees.
Before VAN GRAAFEILAND, NEWMAN and KEARSE, Circuit Judges.

Opinion:
VAN GRAAFEILAND, Circuit Judge:
Stephen Gross, the holder of twenty shares of Warner Communications, Inc. common stock, seeks to overturn an order of the United States District Court for the Southern District of New York (Keenan, J.) approving the settlement for $17.54 million of a shareholders class action against Warner, its subsidiary, Atari, Inc., and certain of their officers and directors, and dismissing a consolidated shareholders derivative action. The class action plaintiffs alleged that the defendants issued false and misleading statements and failed to disclose material adverse information relating to the corporations' financial status and that the individual defendants engaged in insider trading on the basis of material nonpublic information, all in violation of section 10(b) of the Securities and Exchange Act of 1934, 15 U.S.C. § 78j(b), and SEC Rule 10b-5, 17 C.F.R. § 240.10b-5. The settlement agreement also covered a shareholders derivative action filed in the Delaware Court of Chancery, which alleged mismanagement and self-dealing on the part of the officers and directors. An action similar to the dismissed federal derivative claim was consolidated into the State action, and approval of each of the federal and State settlements was made contingent upon approval of the other. The Opinion and Order of the district court is reported in 618 F.Supp. at 735. For the reasons stated below, we affirm.
The class action suits sought recovery for persons who traded in Warner stock or options between May 3,1982 and December 8, 1982. Plaintiffs alleged that, during that period, the defendants knowingly issued misleading statements and projections and the officers and directors disposed of substantial amounts of their own stock. After Warner announced in December 1982 that anticipated fourth quarter earnings would be less than had been projected, the price of its stock declined substantially.
An SEC investigation revealed that Warner and Atari officials had sold more than $30 million in Warner stock during the period in question. The SEC directed two Atari officers, defendants Kassar and Groth, to disgorge their tainted gains from the sales but took no action against any other officer or director.
Following certification of a plaintiff class and an extensive period of discovery, the parties initiated settlement negotiations. The compromise finally agreed upon called for $2 million to be paid to Warner in the Delaware action and $17.54 million ($11.25 million from Warner, $6 million from insur anee carriers, and $290,000 from Kassar and Groth) to be paid into a settlement fund in the federal action. The settlement agreement also required the defendants to pay the costs of the settlement and the providing of notice to class members. The total value of the settlement to the class, including accrued interest, is well in excess of $18 million. The settlement agreement releases Warner and the individual defendants from liability for all acts complained of or referred to in both the State and federal actions.
Appellant's challenge is directed to the source of the settlement proceeds, not their amount. In fact, appellant acknowledged in district court that the settlement award was "spectacular". His complaint is that most of the settlement funds come from the corporation or insurance carriers rather than from the individual defendants. In short, appellant seeks to renew the argument he made unsuccessfully in the Delaware court, i.e., that the $2 million paid in settlement of the corporation's claims was not enough. This he cannot do. In the face of Vice Chancellor Hartnett's holding that settlement of the derivative corporate claims for $2 million was "fair and reasonable", appellant cannot now contend that the district court, in the exercise of its power to approve or disapprove settlement of the federal'securities claim, should have compelled a greater contribution from the officers.
In approving the proposed settlement of a class action, a district court has the fiduciary responsibility of ensuring that the settlement is fair and not a product of collusion, and that the class members' interests were represented adequately. Plummer v. Chemical Bank, 668 F.2d 654, 658 (2d Cir.1982); Grunin v. International House of Pancakes, 513 F.2d 114, 123 (8th Cir.), cert. denied, 423 U.S. 864, 96 S.Ct. 124, 46 L.Ed.2d 93 (1975). If the total compensation to class members is fair, reasonable, and adequate, the court is not required to supervise how the defendants apportion liability for that compensation among themselves. See Masterson v. Pergament, 203 F.2d 315, 330 (6th Cir.), cert. denied, 346 U.S. 832, 74 S.Ct. 33, 98 L.Ed. 355 (1953); Bonime v. Doyle, 416 F.Supp. 1372, 1387 (S.D.N.Y.1976), aff'd, 556 F.2d 554 (2d Cir.), cert denied, 434 U.S. 924, 98 S.Ct. 401, 54 L.Ed.2d 281 (1977); Fox v. Glickman Corp., 253 F.Supp. 1005, 1013 (S.D.N.Y.1966); Duban v. Diversified Mortgage Investors, 87 F.R.D. 33, 40 (S.D. N.Y.1980). Indeed, it is not a district judge's job to dictate the terms of a class settlement; he should approve or disapprove a proposed agreement as it is placed before him and should not take it upon himself to modify its terms. Plummer v. Chemical Bank, supra, 668 F.2d at 655 n. 1.
Moreover, because the issue of apportionment as between the corporations and their officers already has been resolved in another appropriate forum, appellant has had his day in court on this issue. See TBK Partners, Ltd. v. Western Union Corp., 675 F.2d 456, 460 (2d Cir.1982); Abramson v. Pennwood Instrument Corp., 392 F.2d 759, 762 (2d Cir.1968); Saylor v. Lindsley, 391 F.2d 965, 969 n. 6 (2d Cir.1968).
Our review of a settlement order is limited to determining whether the district court abused its discretion. Handschu v. Special Services Division, 787 F.2d 828, 833 (2d Gir.1986). If the court approves a settlement based upon well-reasoned conclusions, arrived at after a comprehensive consideration of the relevant factors, see City of Detroit v. Grinnell Corp., 495 F.2d 448, 463 (2d Cir.1974), the settlement is entitled to deference upon review. Handschu v. Special Services Division, supra; Plummer v. Chemical Bank, supra, 668 F.2d at 659.
The district court reviewed each of the criteria suggested by this Court in Grinnell, supra, as guidelines for evaluating the fairness of a proposed settlement. See 618 F.Supp. at 741-46. We see no need to enlarge upon the district court's thorough analysis, except to note that no abuse of discretion is evident in. either the evaluation process or the conclusions. We find no merit in appellant's suggestion that the matter be remanded to the district court for a more complete statement of its reasons for approving the settlement agreement. The order appealed from is affirmed.