Opinion ID: 1560325
Heading Depth: 2
Heading Rank: 3

Heading: The Settlement and Objections Thereto

Text: During the summer of 2007, class counsel and the defendants negotiated a definitive settlement agreement, including the scope of the release, based upon the terms of the MOU. The parties also requested the Court of Chancery to determine whether entities owned by the individual defendants should be excluded from the definition of the class. On August 29, 2007, the Chancellor entered an order revising the provisional class definition to include partners and stockholders of entities affiliated with the individual defendants, but prohibiting the individual defendants from recovering through those entities. As thus revised, the class definition for purposes of the settlement included: [A]ll Class A common stockholders of [PHLX] on April 20, 2005 [the date the Archipelago offer was rejected], and their transferees or successors in interest through June 20, 2007 [the date of the MOU], except (i) defendants; (ii) defendants' immediate family members; (iii) defendants' employees other than PHLX employees below the level of First Vice President; and (iv) defendants' affiliates, provided that non-defendant partners or owners of business entities that held Class A stock on April 20, 2005 shall be entitled to be members of the class to the extent of their ownership interest in the business entities (as if they held their ownership interests in their own names). On September 4, 2007, the parties filed a Stipulation of Settlement with the Court of Chancery. The plaintiff sought to present the settlement for Court approval immediately, and present a plan of allocation for approval thereafter. The Chancellor approved the proposed bifurcation and entered a scheduling order. On September 11, 2007, a notice of the settlement, of the settlement hearing, and of the revised class definition was circulated to the class members. After receiving the notice, certain class members, including Susquehanna International Group, [7] objected to the settlement. The objections fell into essentially five categories: (i) objections to the value of the settlement as a whole; (ii) objections to the proposed bifurcation of the settlement approval process; (iii) objections to the scope of the release; (iv) objections to the fitness of the class representative and class counsel; and (v) objections to the class definition. Upon agreeing to certain confidentiality provisions, the Objectors were provided copies of the MOU and the briefs and exhibits that had been submitted previously to the mediator. In addition, certain Objectors deposed one of the class counsel and all objectors were furnished a transcript of his deposition. The objections were then briefed and argued before the Chancellor at a lengthy hearing held on October 22, 2007. At the conclusion of the hearing, the Chancellor, in a bench ruling, approved the settlement and overruled the objections. Specifically, the Chancellor determined that: (1) the requirements for class certification under Chancery Rules 23(a) and 23(b)(1) and (b)(2) had been satisfied; (2) the proposed bifurcation of the settlement approval process in these circumstances was permissible and appropriate; [8] and (3) the settlement itself was fair and reasonable, both economically and procedurally. The Chancellor entered a Final Order and Judgment that same day. These appeals followed.