Fulton County Employees' Retirement System v. Blankfein

Background

Fulton County Employees’ Retirement System brought a shareholder derivative action on behalf of The Goldman Sachs Group, Inc. against Lloyd Blankfein, David M. Solomon, M. Michele Burns, Mark A. Flaherty, William W. George, James A. Johnson, Ellen J. Kullman, Lakshmi N. Mittal, Adebayo O. Ogunlesi, Peter Oppenheimer, David A. Viniar, and Mark O. Winkelman. Goldman Sachs was named as the nominal defendant. The parties asked the court to approve a settlement described in their settlement agreement.

The court held a hearing on January 13, 2023. It found that shareholders and other interested persons received the notice required by the court’s earlier order, that the notice was the best practicable under the circumstances, and that all Goldman Sachs shareholders were bound by the judgment. For settlement purposes, the court reconfirmed that the case was properly maintained as a shareholder derivative action and that the plaintiff fairly and adequately represented Goldman Sachs and its shareholders.

Settlement Approval

The court evaluated the settlement under Federal Rule of Civil Procedure 23.1, which governs certain shareholder derivative actions. It considered the litigation’s complexity, expense, likely duration, the stage of the proceedings, discovery completed, risks of proving liability and damages, risks related to maintaining the action, the absence of objections, the defendants’ ability to withstand a greater judgment, and the settlement’s reasonableness compared with the possible recovery and litigation risks.

The court found the settlement fair, reasonable, and adequate. It authorized the parties to carry out the settlement and directed the clerk to enter the final judgment. The order stated that the action and the released claims were dismissed on the merits with prejudice as to all defendants and released parties, except for fees or costs that the court awarded under the order.

Releases and Injunctions

The settlement released claims that the plaintiff or Goldman Sachs had asserted, or could have asserted, directly or derivatively on behalf of Goldman Sachs, to the extent those claims were based on or related to the allegations, transactions, facts, disclosures, or nondisclosures described in the complaint. The order also released specified claims that the defendants could have asserted against the plaintiff and related released parties concerning the institution, prosecution, settlement, or dismissal of the action.

The releases did not include claims to enforce the settlement. They also did not release certain direct claims, including direct federal securities-law claims, claims concerning directors-and-officers insurance policies against insurers, or claims Goldman Sachs or its affiliates may have against Timothy Leissner or Ng Chong Hwa, also referred to as Roger Ng, concerning employment-related compensation. The order barred the plaintiff, Goldman Sachs, and Goldman Sachs shareholders acting derivatively from bringing or participating in actions asserting released claims. It stated that the judgment and releases would have preclusive effects in pending and future proceedings involving released parties.

Fees and Service Award

The court granted plaintiff’s counsel’s fee application. It reviewed the requested award using a percentage-of-the-fund method and used a lodestar calculation as an additional check. The court awarded counsel attorneys’ fees equal to 25 percent of the monetary consideration provided under the settlement and found that award fair and reasonable.

The court also granted the plaintiff’s application for a service award. It awarded the plaintiff $5,000, payable from plaintiff’s counsel’s fee award under the settlement agreement.

Disposition

Judge Vernon S. Broderick ordered the settlement and final judgment to take effect according to the settlement agreement, retained jurisdiction over settlement administration and enforcement, and denied all other relief. The order stated that if the settlement did not become effective as provided in the agreement, the judgment would be rendered null and void and vacated to the extent specified by that agreement.