## Facts

- Shareholders filed a derivative action under Federal Rule of Civil Procedure 23.1 on behalf of Archer Daniels Midland Co. (ADM) against ADM and certain officers/directors, alleging conduct exposing ADM to antitrust liability.
- The derivative plaintiffs and defendants reached a proposed settlement.
- The district court approved the settlement and entered final judgment.
- Two institutional shareholders, CalPERS and the Florida State Board of Administration, objected to the settlement in the district court but did not move to intervene as parties under Federal Rule of Civil Procedure 24.
- After judgment, the objectors filed a notice of appeal challenging the settlement approval despite never having become parties to the action.

## Issues

1. Whether nonparty shareholders who objected to a derivative-settlement approval, but did not intervene in the district court, may appeal the approval order.

## Decision

- The Seventh Circuit dismissed the appeal for lack of appellate jurisdiction.
- Under governing Supreme Court precedent and procedural rules, only parties (or those who properly become parties) may appeal.
- Because the objectors did not intervene, they lacked the required party status to pursue an appeal.

## Legal Principles

- Only parties to a lawsuit, or those who properly become parties, may appeal an adverse judgment; a nonparty seeking appellate review should intervene, and denial of intervention is itself appealable.
- Federal Rule of Appellate Procedure 3(c)’s requirement that a notice of appeal identify the “party or parties” taking the appeal reinforces that appellant status presupposes party status.
- The intervention requirement applies in representative litigation, including both Rule 23 class actions and Rule 23.1 shareholder derivative actions, to preserve orderly control of the litigation and prevent fragmented decision-making.
- Objection rights in the district court do not, by themselves, confer standing to appeal; formal intervention is the mechanism for accepting the rights and obligations of litigant status.

## Conclusion

The court held that shareholder objectors in a derivative action must intervene in the district court to appeal a settlement approval; because the objectors did not intervene, the appellate court dismissed their appeal for want of jurisdiction.


Felzen v. Andreas, 134 F.3d 873 (7th Cir. 1998)