## Facts

- Shareholders brought a federal securities class action under the PSLRA alleging UnitedHealth and certain officers/directors engaged in stock-option backdating and related misstatements or omissions.
- CalPERS was appointed lead plaintiff for a class exceeding 800,000 potential members; 37 opted out.
- The parties negotiated a proposed global class settlement valued at approximately $925.5 million (cash and other consideration).
- Notice was disseminated; only three class members objected to the settlement.
- The court found the case presented substantial trial risks on liability and damages, and further litigation would be costly and lengthy, with a material possibility of no recovery.

## Issues

1. Whether the proposed $925.5 million class settlement was fair, reasonable, and adequate under Federal Rule of Civil Procedure 23(e).
2. Whether lead counsel’s requested attorneys’ fees and expenses were reasonable in light of the recovery achieved and the risks and work undertaken.

## Decision

- The court granted final approval of the class settlement, concluding it was fair, reasonable, and adequate under Rule 23(e).
- The court approved lead counsel’s attorneys’ fees and expenses, finding the request justified by the size of the recovery, the risks of continued litigation, and the result obtained for the class.

## Legal Principles

- A class settlement may be approved under Rule 23(e) only if it is fair, reasonable, and adequate, assessed by weighing the recovery against the risks, expense, complexity, and likely duration of continued litigation.
- In evaluating adequacy, a court may consider the class’s reaction to the settlement, including opt-outs and objections, as evidence of fairness.
- A defendant’s ability to pay may inform the practical adequacy of a settlement but does not require rejecting a substantial compromise merely because a larger judgment is theoretically possible.
- Attorneys’ fees in securities class actions may be awarded when reasonable in relation to the results obtained and the litigation risks assumed, commonly using a percentage-of-the-fund approach with consideration of market-based benchmarks and a lodestar cross-check where appropriate.

## Conclusion

The court approved a $925.5 million PSLRA securities-fraud class settlement involving alleged options backdating, emphasizing the significant risk of no recovery at trial, the burdens of continued litigation, and strong class support, and it also approved lead counsel’s fee and expense request as reasonable given the outcome achieved.


In re UnitedHealth Grp. Inc. PSLRA Litig., 643 F. Supp. 2d 1094 (D. Minn. 2009)