Opinion ID: 423534
Heading Depth: 3
Heading Rank: 3

Heading: Lack of Monetary Consideration.

Text: 128 Maldonado's next argument is that the settlement is unfair because its terms do not provide for any direct monetary consideration to be paid Zapata in exchange for the relinquishment of its claims against the defendants. Parties to the settlement of a shareholders' derivative action are, however, permitted great freedom in shaping the form of the settlement consideration. Levin v. Mississippi River Corporation, 59 F.R.D. 353, 367 n. 38 (S.D.N.Y.), aff'd sub nom., Wesson v. Mississippi River Corporation, 486 F.2d 1398 (2d Cir.), cert. denied, 414 U.S. 1112, 94 S.Ct. 843, 38 L.Ed.2d 739 (1973). The fact that the form of the settlement decided upon is somewhat unusual in that it includes some benefits which cannot be evaluated in financial terms does not militate against its acceptance .... Levin, 59 F.R.D. at 367 n. 38. Thus, a settlement may fairly, reasonably, and adequately serve the best interest of a corporation, on whose behalf the derivative action is brought, even though no direct monetary benefits are paid by the defendants to the corporation. See Goldman v. Northrop Corporation, 603 F.2d at 108-09; Lewis v. Anderson, 81 F.R.D. 436, 438-39 (S.D.N.Y.1978); Milstein v. Werner, 57 F.R.D. at 521-23. See also Hill v. Art Rice Realty Co., 66 F.R.D. 449, 453 (N.D.Ala.1974), aff'd, 511 F.2d 1400 (5th Cir.1975) ([i]t does not follow as a matter of course, that money must be paid to make every settlement a reasonable one). Moreover, as noted, much of the relief sought was nonmonetary in nature. 129 Here, before the settlement hearing was held, a stipulation of benefits signed by Zapata, the independent Investigation Committee, and the plaintiffs was submitted to the district court. This stipulation, which listed numerous benefits that the institution and maintenance of plaintiffs' action had facilitated, was relied upon by the district court in approving the settlement. (See district court's finding No. (5), supra). Moreover, it is plain that one of the principal purposes of the settlement was to terminate the litigation to avoid any further legal expense to Zapata, and, of at least as great importance, to take its management out of the courtroom and restore them fulltime to the corporate board room and business. Milstein, 57 F.R.D. at 521. The avoidance of this expense, both monetarily in the form of litigation fees and expenses, and nonmonetarily in the form of disruption and distraction of management, and threatened impairment of the Corporation's credit and goodwill, are important and valid reasons for seeking a settlement, Lewis, 81 F.R.D. at 439, and may warrant its approval. As the court stated in Goldman: 130 Instead of choosing the course of securing the greatest possible money judgment from the [individual defendants], the parties and the court chose the course of terminating litigation and taking steps to assure that such conduct as had been disclosed could not occur in the future. 603 F.2d at 109. 131 We hold that, under the circumstances here, the district court did not abuse its discretion in approving the settlement agreement, even though it provided for no monetary consideration to be paid Zapata.