## Facts

- NationsBank and BankAmerica merged in 1998 to form Bank of America Corporation.
- Multiple shareholder class actions alleged federal securities-law violations based on alleged misstatements and omissions concerning the merger and the predecessor banks’ financial condition.
- The cases were consolidated in multidistrict litigation in the Eastern District of Missouri, which certified four classes (two NationsBank classes and two BankAmerica classes) and appointed lead-plaintiff groups for each.
- After discovery and motion practice, the parties reached a global settlement of approximately $490 million, allocating about $333 million to the NationsBank classes and $157 million to the BankAmerica classes.
- Following a fairness hearing, the district court approved the settlement as fair, reasonable, and adequate.
- Three members of the NationsBank lead-plaintiff group objected, arguing the settlement and allocation undervalued NationsBank claims and that counsel lacked proper authority to accept the terms.

## Issues

1. Whether the district court abused its discretion in approving the global settlement and interclass allocation as fair, reasonable, and adequate under Rule 23(e) and the PSLRA.
2. Whether the settlement was invalid because mediation counsel allegedly lacked explicit authority from all members of the NationsBank lead-plaintiff group.
3. Whether the lead-plaintiff group structure or negotiation process violated the PSLRA such that settlement approval required reversal.

## Decision

- Affirmed the judgment approving the class settlement and allocation.
- Held the district court did not abuse its discretion in finding the settlement and allocation fair, reasonable, and adequate.
- Rejected the claim that dissenting members of a lead-plaintiff group could invalidate an otherwise fair settlement based on alleged lack of individual authorization.
- Held the settlement process and lead-plaintiff arrangements were consistent with the PSLRA’s requirements and purposes.

## Legal Principles

- Approval of a class action settlement under Rule 23(e) is reviewed for abuse of discretion; substantial deference is given to a district court that supervised the litigation and conducted a fairness hearing.
- A district court may approve a global settlement and allocation among multiple classes where the allocation is rationally related to relative claim strengths, reached through arm’s-length negotiations (including mediation), and supported by the record.
- The PSLRA’s lead-plaintiff provisions are designed to protect class members and limit lawyer-driven litigation, but they do not confer an individual veto power over settlement decisions within a multi-member lead-plaintiff structure.
- Absent proof that counsel acted beyond authorized representation or engaged in collusion, a settlement is not set aside merely because some lead plaintiffs later object to the negotiated terms.

## Conclusion

The Eighth Circuit upheld approval of a large, mediated securities-fraud class settlement and its allocation among related classes, emphasizing deferential appellate review, the district court’s central role in protecting class interests, and the absence of any PSLRA-based right for individual lead plaintiffs to block a settlement found fair to the class as a whole.


In re BankAmerica Corp. Sec. Litig., 350 F.3d 747 (8th Cir. 2003)