## Facts

- Purchasers of UnitedHealth Group Inc. securities filed a federal securities-fraud class action alleging misstatements and omissions tied to executive stock-option backdating.
- Plaintiffs alleged options were retroactively dated to low stock-price days, creating undisclosed “in-the-money” grants and distorting reported earnings and company disclosures.
- The case proceeded under the PSLRA, with CalPERS appointed lead plaintiff for the class.
- After substantial motion practice and discovery, the parties reached a global settlement requiring court approval under Rule 23(e).
- The settlement provided approximately $925.5 million in cash funded by corporate payments, insurance proceeds, and contributions from individuals.
- Class reaction strongly favored settlement: roughly 37 opt-outs among about 800,000 potential class members and only a small number of substantive objections.
- Several class members and “Objectors’ Counsel” challenged the settlement and class counsel’s fee request and sought an objector fee award.

## Issues

1. Whether the proposed class settlement was fair, reasonable, and adequate under Federal Rule of Civil Procedure 23(e).
2. Whether class counsel’s requested attorneys’ fees and expenses were reasonable under the PSLRA and applicable circuit standards.
3. Whether the objectors’ challenges justified modification or rejection of the settlement and whether objectors’ counsel were entitled to fees from the common fund.

## Decision

- The court approved the settlement as fair, reasonable, and adequate under Rule 23(e).
- The court approved the plan of allocation.
- The court awarded class counsel attorneys’ fees using a percentage-of-the-fund approach, with a lodestar cross-check, and allowed expenses as reasonable.
- The court overruled the substantive objections to the settlement and fee petition.
- The court denied (or sharply limited) objectors’ counsel’s requested fees because their efforts did not materially improve the settlement or confer a substantial benefit on the class.

## Legal Principles

- Rule 23(e) settlement approval turns on whether the compromise is fair, reasonable, and adequate, considering factors including case strength, litigation risks and expense, class reaction, and the stage of proceedings and discovery.
- In PSLRA securities class actions, attorneys’ fees must be reasonable; courts commonly apply a percentage-of-the-fund method and use a lodestar cross-check to test the implied multiplier.
- Substantial class support—few opt-outs and few meritorious objections—can weigh heavily in favor of approval.
- Objectors may receive fees from a common fund only if their work confers a substantial benefit on the class (e.g., increased recovery or curing a material settlement defect); filing objections alone is insufficient.

## Conclusion

The court granted final approval of a large securities-fraud class settlement and awarded class counsel fees and expenses as reasonable under the PSLRA, while rejecting objectors’ challenges and denying objectors’ counsel fees because the objections did not produce a material benefit for the class.


In re UnitedHealth Grp., Inc. PSLRA Litig., 643 F. Supp. 2d 1107 (D. Minn. 2009)