15, 1989, D&B disclosed for the first time that its earnings per share would fall; D&B blamed the fall on, inter alia, The Wall Street Journal's March 2, 1989 article. After D&B's November 15, 1989 announcement, D&B's common stock traded at a substantially lower price than it had prior to the announcement.
Following this series of events, numerous suits were filed by D&B shareholders against D&B in courts throughout the country. By order of the Judicial Panel on Multi-District Litigation dated August 14, 1989, related actions against D&B, pending in other federal district courts, were consolidated in this Court. A single consolidated complaint was filed in this Court on August 24, 1989. In an Opinion & Order, dated September 22, 1992, this Court certified a class "comprised of all persons (other than the defendants, or any officer, director, or partner of any defendant, members of their immediate families or entities controlled by them) who purchased Dun & Bradstreet Corporation common stock between October 2, 1986 and November 15, 1989." Trief v. Dun & Bradstreet Corp., 144 F.R.D. 193, 203 (S.D.N.Y. 1992).
II. The Proposed Settlement
Pursuant to a Stipulation of Settlement entered into by the parties (the "Settlement"), D&B has agreed to make available the sum of up to twenty million dollars (the "Settlement Fund") in full satisfaction of all claims that have, or could have, been asserted by plaintiffs. The costs of administering the distribution of the Settlement, and class counsels' fees and expenses will be paid from the Settlement Fund.
Briefly summarized, the Settlement Fund will be distributed in the following manner. Fifteen cents will be allocated, as a recognized loss, for each share of D&B common stock purchased on the open market between October 2, 1986 and March 2, 1989, and sold on the open market at a loss between March 2, 1989 and November 14, 1989. Thirty cents will be allocated, as a recognized loss, for each share of D&B common stock purchased on the open market between October 2, 1986 and March 2, 1989, and sold on the open market at a loss between November 15, 1989 and June 6, 1990. Fifty cents will be allocated, as a recognized loss, for each share of D&B common stock purchased on the open market between March 3, 1989 and November 14, 1989, and sold on the open market at a loss between November 15, 1989 and June 6, 1990. A claims administrator, KPMG Peat Marwick, will, inter alia, administer claims made by members of the plaintiff class, and determine claimants' eligibility for distribution. After all claims have been received and evaluated, payment will be made. If the sum of legitimate claims received exceeds the remainder of the Settlement Fund -- after distribution of fees and expenses to class counsel and other expenses associated with administering the Settlement Fund -- distribution will be made to eligible claimants on a pro rata basis.
I. The Parties' Joint Application for Approval of the Settlement
The approval of a settlement in a class action suit is a matter of discretion for the trial court. See In re Ivan F. Boesky Sec. Litig., 948 F.2d 1358, 1368 (2d Cir. 1991); Handschu v. Special Servs. Div., 787 F.2d 828, 833 (2d Cir. 1986); Breiterman v. Roper Corp., [1989-1990 Transfer Binder] Fed. Sec. L. Rep. (CCH) P 94,885, 1990 U.S. Dist. LEXIS 328, *2 (S.D.N.Y. 1990); Stull v. Baker, 410 F. Supp. 1326, 1332 (S.D.N.Y. 1976) (citing cases). In evaluating a proposed settlement, the court must determine whether "'the compromise is fair, reasonable and adequate.'" In re Masters Mates & Pilots Pension Plan and IRAP Litig., 957 F.2d 1020, 1026 (2d Cir. 1992) (quoting Weinberger v. Kendrick, 698 F.2d 61, 73 (2d Cir. 1982), cert. denied, 464 U.S. 818, 78 L. Ed. 2d 89, 104 S. Ct. 77 (1983)). The court has the fiduciary responsibility of ensuring that the settlement is fair and that class members' interests were represented adequately. In re Warner Communications Sec. Litig., 798 F.2d 35, 37 (2d Cir. 1986).
The standards governing review of class action settlements are as follows:
First, the proponents have the burden of proving that (1) the settlement is not collusive but was reached after arm's length negotiations; (2) the proponents are counsel experienced in similar cases; (3) there has been sufficient discovery to enable counsel to act intelligently; and (4) the number of objectants or their relative interest is small. If the proponents establish these propositions, the burden of attacking the settlement then shifts to the objectants, if any. Finally, the Court must approve the settlement only after finding it to be reasonable in light of the plaintiffs' ultimate probability of success in the lawsuit.