Make A Difference Foundation, Inc. v. Hopkins et al

Filing 145

ORDER Denying Without Prejudice 139 Plaintiffs Unopposed Motion for Preliminary Approval of Derivative Litigation Settlement by Judge William J. Martinez on 10/6/2011.(erv, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 10-cv-00408-WJM-MJW
MAKE A DIFFERENCE FOUNDATION, INC., a Mississippi corporation,
Plaintiff,
v.
CHRISTOPHER H. HOPKINS;
T. MURRAY WILSON;
RONALD BLAKELY;
PAUL CHING;
BRIAN MACNEILL;
RONALD PHILLIPS;
JOHN READ;
GORDON TALLMAN;
PAMELA WALLIN;
THOMAS MILNE; and
W. SCOTT THOMPSON,
Defendants,
and
OILSANDS QUEST, INC., a Colorado corporation,
Nominal Defendant.

ORDER DENYING WITHOUT PREJUDICE PLAINTIFF’S UNOPPOSED MOTION
FOR PRELIMINARY APPROVAL OF DERIVATIVE LITIGATION SETTLEMENT

This matter is before the Court on Plaintiff Make A Difference Foundation, Inc.’s
Unopposed Motion for Preliminary Approval of Derivative Litigation Settlement. (ECF
No. 139.) In the Motion, Plaintiff requests that the Court (1) preliminarily approve the
Amended Stipulation and Agreement of Settlement and Release between the parties
(“Stipulation”) (see ECF No. 138); (2) approve the form and program of notice described

in the Stipulation and in the [Amended Proposed] Order Preliminarily Approving
Derivative Litigation Settlement and Providing for Notice (“Proposed Order”) (see ECF
No. 142); and schedule a fairness hearing before the Court to determine whether the
proposed settlement should be finally approved. (ECF No. 139, at 2 ¶ 3.) For the
following reasons, Plaintiff’s Unopposed Motion for Preliminary Approval of Derivative
Litigation Settlement is DENIED WITHOUT PREJUDICE.
I. ANALYSIS
One of the primary reasons for the Court’s denial of Plaintiff’s Motion is the
inadequacy of Plaintiff’s proposed program of notice. As part of that program of notice,
Plaintiff has submitted to the Court a proposed Notice of Pendency of Derivative Action,
Proposed Settlement of Derivative Action, and Settlement Hearing (“Detailed Notice”)
(ECF No. 138, Ex. B), and a proposed Summary Notice (ECF No. 138, Ex. C). The
Court finds the Detailed Notice and Summary Notice to be acceptable forms of notice,
and directs Plaintiff to re-submit the Detailed Notice and Summary Notice when it files its
amended motion for preliminary approval of settlement to the Court.
However, Plaintiff’s proposed program of notice, under which it and Nominal
Defendant Oilsands Quest, Inc. (“Oilsands”) will distribute the Detailed Notice or
Summary Notice to Oilsands shareholders and to the public, is deficient in several
respects. First, Plaintiff proposes that only the Summary Notice will be mailed to the
current record holders and beneficial owners of common stock of Oilsands. The Court
rejects this proposal. For the notice to Oilsands shareholders to be sufficient, the
Detailed Notice must be mailed to each Oilsands shareholder. See, e.g., DeJulius v.
New England Health Care Emps. Pension Fund, 429 F.3d 935, 939 (10th Cir. 2005);
2

Lucas v. Kmart Corp., 234 F.R.D. 688, 696 (D. Colo. 2006); In re Storage Tech. Sec.
Litig., No. 92-B-750, 1994 WL 1721015, at *1 (D. Colo. Dec. 29, 1994).1 The Detailed
Notice must be mailed to each Oilsands shareholder via first-class mail through the U.S.
Postal Service, or an equivalent method of mailing.2
Second, Plaintiff proposes that the newswire service CNW Group issue the
Summary Notice to the public. The Court’s review of CNW Group’s website does not
sufficiently indicate that CNW Group’s issuance of the Summary Notice will result in a
sufficiently broad distribution of the Summary Notice throughout both the United States
and Canada. See http://www.newswire.ca/en/services/Newswire%20.cgi (last visited
Oct. 4, 2011) (“CNW Group is the largest news release distributor in Canada.”). Plaintiff
either shall provide evidence to the Court showing why CNW Group’s issuance will result
in a sufficiently broad distribution, or shall propose issuing the Summary Notice through
both a Canada-based newswire service and a U.S.-based newswire service.
And third, Plaintiff proposes that Oilsands will provide access to the content of the
Detailed Notice on Oilsands’ website (www.oilsandsquest.com). The Court only
mentions this proposed method of notice to clarify that, for that method of notice to be
sufficient, the home page of the Oilsands website must contain a statement or heading
(albeit brief) identifying the settlement, along with a hyperlink that brings users directly to

1

The Court has directed Plaintiff to re-submit the Detailed Notice when it files its
amended motion for preliminary approval of settlement, because the Detailed Notice contains
the level of detail necessary for the notice to Oilsands shareholders to be sufficient.
2

The Court, of course, leaves it to the parties to resolve how they will split the costs of
mailing the Detailed Notice to Oilsands shareholders, given that the costs are likely to be
greater than they would have been if only the Summary Notice had been mailed. (ECF No. 138,
¶ 4.2; ECF No. 142, ¶ 4.)

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a web page containing the content of the Detailed Notice.
The other primary reason for the Court’s denial of Plaintiff’s Motion is that there is
an insufficient lapse of time between (1) the dates on which notice will be provided (via
the methods discussed supra), and (2) the date of the settlement hearing. For Plaintiff’s
proposal to be sufficient, there should be a lapse of 90 calendar days between the date
that all of the different forms of notice have been provided, and the date of the settlement
hearing.
The Court also notes that the Stipulation does not appear to have been entered
into by and among all parties to this action. Specifically, it appears Defendant T. Murray
Wilson is not a party to the Stipulation. In Plaintiff’s amended motion for preliminary
approval of settlement, Plaintiff shall make clear whether the settlement is entered into
by and among all parties to this action, and is therefore intended to conclusively resolve
this litigation.
Finally, the Court notes that the parties (or at least those parties who have
entered into the Stipulation) have agreed that $250,000 is the appropriate amount of
attorney’s fees to seek from the Court. While the Court appreciates the parties’ efforts at
reaching agreement on the amount of fees to be sought from the Court, the parties are
put on notice that the Court will independently evaluate and determine the appropriate
amount of attorney’s fees to be awarded in this action.

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II. CONCLUSION
For the foregoing reasons, Plaintiff’s Unopposed Motion for Preliminary Approval
of Derivative Litigation Settlement (ECF No. 139) is DENIED WITHOUT PREJUDICE.
Dated this 6th day of October, 2011.
BY THE COURT:

_______________________
William J. Martínez
United States District Judge

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