Opinion ID: 164235
Heading Depth: 3
Heading Rank: 1

Heading: Adequacy of Fidelity's Representation

Text: 51 In seeking to avoid our holding in Integra I on the adequacy of Fidelity's representation, the appellants accuse the Integra I court of failing to appreciate the seriousness of the issue and treating it only narrowly. Defendants-Appellants' Br. at 48. In support they cite Wright & Miller's criticism of Integra I. 15A Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3902.1 at 105-06 & nn. 6-7 (Supp. 2003). And, as indicated above, they also invoke the perceived impact of Devlin and manifest injustice. 52 In particular the appellants contend first that Fidelity was not typical of the class members because it was the largest recipient of ShowBiz stock as a result of the Spin-Off and had sold those shares at a price [$37 per share] higher than practically all other class members. Defendants-Appellants' Br. at 46. Second, they argue that, as a large mutual fund, Fidelity's primary duties to its shareholders conflicted with the interests of the members of the class. Id. at 45-46. And, third, they assert that the agreement for the payment of Fidelity's attorneys' fees out of the settlement fund both created and demonstrated a conflict of interest as to members of the class. Id. at 47. In short, the appellants contend that Fidelity was not an adequate representative because it was atypical of members of the class and had irreconcilable conflicts, thus violating the requirements of Rule 23(a) and due process. 53 Each of those arguments, and others, regarding the adequacy of Fidelity's representation, were presented to and considered by us in Integra I. See Defendants-Appellants' Br. (Docket Nos. 99-1483, 99-1498 and 99-1523) at 33-38. We held, in part: 54 Fidelity's purported conflicts did not render it inadequate to represent the class either at the beginning of the proceedings or at any later stage of the litigation. Although we recognize that Fidelity's potential liability far exceeded that of any other class member, its interests were aligned with those of the other class members in that all concerned wished to limit their liability to the lowest possible amount. Moreover, Fidelity's ownership of a large block of shares would have created a greater incentive to bring the per-share costs of settlement down to the lowest possible level. For similar reasons, although Fidelity had fiduciary duties to its shareholders in addition to its responsibilities to the class, we do not believe those duties were in conflict because Fidelity's duty to each was vigorously to litigate the class issues and to reduce the class liability as much as possible. 55 Likewise the settlement agreement's provision for partial payment of Fidelity's expenses in litigating the suit, while potentially troubling, does not in and of itself render Fidelity inadequate..... 56 In this case, the district court did not abuse its discretion in concluding that Fidelity remained an adequate representative notwithstanding that the settlement agreement created a pool to offset some of their litigation costs. 57 Integra I, 262 F.3d at 1112. 58 We are unpersuaded that Integra I either failed to consider and decide the issues on representation raised by the appellants here, or that Devlin compels us to revisit those issues, or, finally, that any sufficient basis exists to justify ignoring the law of the case established by Integra I: Fidelity was an adequate representative of the class. 59