Epstein v. Mca, Inc

126 F.3d 1235 (9th Cir. 1997)

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Nature of the Case

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Facts

Matshutsita submitted a tender offer for MCA at $71 and also signed side agreements with Wasserman and Sheinberg, who were two principal officers for MCA. The side agreements involved a buyout of the shares owned by Wasserman and Sheinberg. The tender offer gave rise to a class action suit that alleged rule 10b violations by Matshutsita and also alleged that the payments to Wasserman and Sheinberg were illegal. There were also allegations that Wasserman and Sheinberg violated their duty of loyalty to MCA by signing the side agreements with Matshutsita. Matshutsita won the case and while on appeal a settlement was reached with the class representatives. It is alleged that the class representatives wanted to settle the claim quickly because they knew that they could not get litigate their claim in state court and therefore wanted a fast settlement that would ensure themselves of some payment. That settlement was approved by the Chancery Court, and that approval is challenged here.