In Re Unitedhealth Group Inc. Shareholder
631 F.3d 913
8th Cir.2011Background
- Derivatives suit against UnitedHealth executives ended in a record derivative settlement.
- Scheeringa, a UnitedHealth shareholder, objected to the settlement and related fee reimbursement.
- Notice of settlement and fee request described potential fees up to $47 million and advised rights to object.
- Object deadline was January 23, 2009; Scheeringa filed a late objection after that deadline.
- Settlement hearing occurred; district court deemed Scheeringa's objection untimely and approved the settlement.
- Scheeringa appealed arguing notice defects and improper reimbursement of online-research costs; appellees moved to dismiss for lack of standing; court dismissed the appeal for lack of timely objection and standing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Scheeringa has appellate standing to appeal the derivative settlement | Scheeringa asserts Devlin exception may apply | Appellees contend no standing without timely objection | Appeal dismissed for lack of timely objection and standing |
| Whether a timely objection is required to pursue an appeal of a derivative settlement | Scheeringa argues deadline violated notice standards | Objection was untimely under Fed. R. Civ. P. 23.1(c) | Timely objection required; failure to object timely deprives right to appeal |
| Whether the district court abused its discretion by reimbursing online-research expenses | Online research costs should not be reimbursed under precedent | Costs were reasonable and customary; permissible to reimburse | Merits not reached; court would affirm if reached; but dismissal ends merits review |
Key Cases Cited
- Karcher v. May, 484 U.S. 72 (1987) (general rule: only parties may appeal adverse judgments)
- Devlin v. Scardelletti, 536 U.S. 1 (2002) (Devlin exception for unnamed class members in certified class actions)
- In re Integra Realty Res., Inc., 354 F.3d 1246 (10th Cir.2004) (timeliness of objections governs appellate rights in derivative settlements)
- Maher v. Zapata Corp., 714 F.2d 436 (5th Cir.1983) (notice sufficiency to enable rational decision to intervene)
- Grunin v. International House of Pancakes, 513 F.2d 114 (8th Cir.1975) (notice need not provide complete information; estimation acceptable)
- Petrovic v. Amoco Oil Co., 200 F.3d 1140 (8th Cir.1999) (notice sufficiency and fee-estimate conventions in settlements)
- Missouri v. Jenkins, 491 U.S. 274 (1989) (reasonableness of litigation expenses included in fees)
- Standley v. Chilhowee R-IV School District, 5 F.3d 319 (8th Cir.1993) (reimbursement of costs under fee-shifting statutes; not controlling here)
- Leftwich v. Harris-Stowe State College, 702 F.2d 686 (8th Cir.1983) (cost reimbursement under fee-shifting statutes; not controlling here)
- Yarrington v. Solvay Pharm., Inc., 697 F. Supp. 2d 1057 (D. Minn.2010) (district court treatments of online research costs in settlements)
- Arbor Hill Concerned Citizens Neighborhood Ass'n v. County of Albany, 369 F.3d 91 (2d Cir.2004) (reimbursement of computerized research costs)
- In re Continental Illinois Sec. Litig., 962 F.2d 566 (7th Cir.1992) (computer-assisted research costs recognized as recoverable)