Opinion ID: 1560325
Heading Depth: 1
Heading Rank: 7

Heading: The Adequacy of The Class Representative

Text: The Objectors attack the adequacy of plaintiff Ginsburg as class representative, on two grounds. First, they argue, Ginsburg cannot be an adequate representative, because he is a holder whose interests inherently conflict with the interests of class members who are buyers and sellers. For the reasons previously discussed, if there are any conflicts, they are only potential ( i.e., may not actually develop), not inherent. And, if conflicts do materialize, they can be remedied in the allocation process. Such potential, contingent problems cannot disqualify plaintiff Ginsburg from serving as class representative for purposes of entering into the settlement and seeking court approval thereof. The Objectors' second contention is that it was error to certify the settlement class with plaintiff Ginsburg as class representative, because the Chancellor never expressly determined, as Prezant v. De Angelis requires, that Ginsburg will adequately represent the class. The short answer is that in these circumstances there was no need for the Chancellor to do so, because the Court had previously made such an express determination five months before, and no subsequent event had developed that required the Chancellor to revisit that issue. Of cardinal importance in certifying a settlement class is the requirement that the trial court expressly find that the named plaintiff can fairly and adequately protect the interest of the class [43] before it can approve a settlement of a class action. Indeed, our case law requires this finding as a matter of due process. [44] The Objectors' argument that the Chancellor failed to determine that plaintiff Ginsburg was an adequate class representative, overlooks a critical fact that fatally undermines their position. On May 11, 2007, while this case was being litigated hammer and tong, and before any settlement of this action was within anyone's contemplation, the Chancellor entered an order determining that this action shall be provisionally maintained as a class action pursuant to Court of Chancery Rules 23(a) and (b)(1) and (2) on behalf of a class of all Class A common stockholders of [PHLX] on April 20, 2005, and their transferees or successors in interest, except defendants and their affiliates, employees, and immediate family members; [and that] . . . (e) the Class is adequately represented by counsel and that the representative party will fairly and adequately protect the interests of the Class.  [45] Had the Chancellor not previouslyand expresslydetermined that plaintiff Ginsburg would adequately represent the class for purposes of litigation, the Objectors' due process attack upon the settlement might have arguable merit. But where, as here, the Chancellor expressly made that adequacy determination in his initial certification order before any settlement was ever negotiated, that determination satisfied any Rule 23(a)(4) due process concern. Only if newly developed, post-certification events suggested the need to revisit that earlier finding would Prezant require a second look. Here, the Objectors have not identified, nor do they contend, that any new events arose post-certification that mandated a renewed express finding of Rule 23(a)(4) adequacy. Accordingly, there was no need for the Chancellor to make a second express finding in connection with certifying the class for settlement purposes.