Bachman v. A.G. Edwards, Inc.
344 S.W.3d 260
Mo. Ct. App.2011Background
- This Missouri Court of Appeals reviewed a circuit court judgment approving a class-action settlement against A.G. Edwards and related entities.
- The case involved alleged breaches of fiduciary duty and unjust enrichment tied to undisclosed mutual-fund revenue sharing kickbacks.
- SLUSA preemption and the possibility of removal warranting dismissal or remand influenced settlement posture and potential trial outcomes.
- The trial court certified the class; mediation produced a settlement with cash and voucher components, attorneys’ fees, and cy pres distribution to WFHF.
- Kirsteins moved to intervene; Gaynor objected to the settlement but did not intervene; the trial court approved the settlement and denied intervention.
- Gaynor and Kirstein appeal, challenging fairness, fees, intervention denial, and cy pres provisions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the settlement is fair, reasonable, and adequate. | Kirsteins/Gaynor contend it favors class members with insufficient cash value. | Edwards argues the settlement balances merits, risks, and recovery. | No abuse of discretion; settlement fair, reasonable, adequate. |
| Whether the attorneys’ fees were excessive. | Cited fee percentage and complexity against a reasonable award. | Court properly weighed factors; fee not arbitrary. | Fee award not an abuse of discretion. |
| Whether the trial court correctly denied intervention. | Kirsteins claim inadequate representation of their interests. | Class representatives adequately represented all members. | No abuse; denial of intervention affirmed. |
| Whether the cy pres distribution to WFHF is permissible. | Cy pres should benefit class members, not revert to defendant; WFHF questionable. | WFHF is a valid national charity; distribution appropriate. | Cy pres distribution upheld; WFHF appropriate. |
Key Cases Cited
- Ring v. Metropolitan St. Louis Sewer Dist., 41 S.W.3d 487 (Mo.App. E.D.2000) (abuse of discretion standard for settlements; factors re fairness)
- Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976) (standard for reviewing class-action settlements)
- Byrd v. Chadwick, 956 S.W.2d 369 (Mo.App. W.D.1997) (factors for fairness and adequacy; abuse of discretion)
- Nordstrom Com'n Cases, 186 Cal. App. 4th 576, 112 Cal. Rptr. 3d 27 (Cal. App. 2010) (courts approve settlements with coupons/vouchers as fair)
- Dabit, 547 U.S. 71 (2006) (SLUSA preemption; broad application to required dismissals)
- Devlin v. Scardelletti, 536 U.S. 1 (2002) (right to appeal for class members who object to settlement)
- Houck v. Folding Carton Admin. Comm., 881 F.2d 494 (7th Cir.1989) (cy pres considerations for nationwide class actions)