Full opinion text
OPINION AND ORDER WILLIAM D. BROWNING, District Judge. The parties to this action seek the Court’s approval of settlement agreements entered into by Class Plaintiffs, Chemical Bank as Trustee and attorney-in-fact for Bondholders, and all defendants remaining in the MDL 551 (All Cases) Class Action and difficult issues related to these settlement agreements, the Court approves the settlements of these actions and all relevant agreements. litigation (“MDL 551” or “MDL”). In addition, the parties to the Western District of Washington Class Action entitled Mirotznik v. Ernst & Whinney, CV No. C85-1105, which was consolidated with the MDL 551 Class Action for purposes of settlement, also seek approval of a settlement arrived at in that action. Rule 23(e), Federal Rules of Civil Procedure, requires this Court’s approval of the settlements of these class actions before they may become effective. Such a requirement does not exist in connection with the settlement of most private civil actions. For reasons that will become evident, after thorough deliberation of the exceptionally complex CONTENTS OF THIS OPINION Background of the Litigation. 1384 Standards for Approval of Settlements. 1387 Application of the Standards to All Settlements Herein. 1388 The Strength of Plaintiffs’ Case 1388 The Risk, Expense, Complexity, and Likely Duration of Further Litigation 1390 The Amount Offered in Settlement 1390 The Relationship of the Settlement Amount with the Likelihood of Success and Potential Range of Recovery at Trial 1391 The Extent of Discovery Completed and the Stage of Proceedings 1392 The Experience and Views of Counsel 1392 The Reaction of Class Members to the Proposed Settlement 1392 Analysis of Individual Settlements. 1395 The City of Seattle 1395 Ferry and Kittitas 1395 Oregon Public Entities 1396 Small Utilities 1396 Unaffiliated Participants 1397 Mid-Columbia Defendants 1397 Columbia Defendants 1398 Wood Dawson Smith & Heilman 1398 Washington Public Power Supply System 1401 R.W. Beck and Associates 1403 Central Electric Cooperative, Inc. 1404 Clallam County Public Utility District No. 1 1404 City of Richland 1405 The Individual Defendants 1406 The Consolidated Settlement — WPUG, Franklin, Klickitat, Mason, Steilacoom, Alder, BPA, and State of Washington 1406 Severability 1407 Washington Public Utilities Group 1408 Franklin 1409 Klickitat 1409 Bonneville Power Administration 1409 The State of Washington 1412 Snohomish County United and Ebasco t- OO t-i rH ^ Blyth Eastman 05 ^ Ernst & Whinney. 1419 Objections of Post-June 15, 1983 Bond Purchasers . 1420 BACKGROUND OF THE LITIGATION It is neither possible nor desirable to attempt to capture in this Order the complete history of this massive litigation. The docket alone contains almost 4000 entries. The litigation has been complex and the Court is aware of a number of misunderstandings concerning the nature and scope of the action that have arisen or have been revealed as a result of these settlement agreements. In an effort to clarify just what this litigation did and did not involve, the following historic overview is presented. Related Litigation In 1976 the Washington Public Power Supply System (“WPPSS,” “the Supply System,” or “the System”) entered into agreements with eighty-eight public utilities in the Northwest (“Participants’ Agreement”), under which each participant utility purchased a percentage of the “project capability” of two nuclear power projects (“Projects 4/5”) and agreed to pay its percentage share of costs incurred by the Supply System to finance, construct and operate those Projects. During the next five years, the Supply System issued $2.25 billion in bonds to finance Projects 4/5. On January 22, 1982, prior to their completion, construction of the Projects was terminated. Terms of the Participants’ Agreement would have obligated the Participants to commence payments to the Supply System one year later. Within months of termination, however, various lawsuits were filed by ratepayers, certain utilities and Chemical Bank in its capacity as Trustee for Project 4/5 Bondholders. On June 15, 1983 the Washington Supreme Court decided that certain municipal utilities had lacked authority to enter the Participants’ Agreement. Chemical Bank v. Washington Public Power Supply System, 99 Wash.2d 772, 666 P.2d 329 (1983), aff'd on rehearing, 102 Wash.2d 874, 691 P.2d 524 (1984). On remand to the state Superior Court, the Participants’ Agreements, which had unconditionally obligated the participating utilities to make payments to cover the costs of the projects, whether or not they were completed, operable or operating, were invalidated and rendered unenforceable. The decision was unsuccessfully appealed by Chemical Bank. A second decision of the Washington Supreme Court on November 6, 1984, Chemical Bank v. Washington Public Power Supply System, 102 Wash.2d 874, 691 P.2d 524 (1984), cert. denied, 471 U.S. 1065, 105 S.Ct. 2140, 85 L.Ed.2d 497 (1985), released the remaining public utilities in the Pacific Northwest from the Participants’ Agreements. The United States Supreme Court denied the Bond Fund Trustee’s petition for certiorari and declined to review the Washington courts’ decisions. Early in 1983, numerous Class Action suits alleging securities law violations in connection with the sale of the WPPSS 4/5 bonds were filed in the Western District of Washington and the Southern District of New York. Later that year Chemical Bank undertook similar litigation on behalf of Bondholders. The actions were consolidated by the Panel on Multidistrict Litigation in August 1983 and transferred to the Western District of Washington. Ultimately, twenty-nine separate actions were consolidated under the MDL 551 caption. The Plaintiffs Initially the class action complaints were brought on behalf of purchasers of WPPSS Project 4/5 bonds from March 1, 1977 through January 22, 1982. The complaint was later amended to include persons and entities that had purchased bonds from January 23, 1982 through June 15, 1983. These two groups of purchasers (excluding defendants in this action and related persons and entities) were later certified under Fed.R.Civ.P. 23, as the Pre-Termination and Post-Termination Classes, respectively. Proof-of-Claim procedures were employed to identify membership in the Classes. Persons or entities whose 4/5 bond purchases place them within either of the Classes are referred to herein as Class Members or Class Plaintiffs. They are Class Members regardless of whether they continue to hold bonds purchased during either of the Class periods, although some Class Members were permitted to “opt out” or exclude themselves from the Classes. The term “Bondholders” refers to persons or entities who, at a given time, hold a WPPSS Project 4/5 bond. Bondholders who purchased bonds during the Class periods, unless they opted out or are excluded because they are defendants or are related to defendants, are also Class Members. This Litigation This has been one of the most complex lawsuits in the history of securities litigation. Discovery and other pre-trial proceedings were extraordinarily large and sophisticated. Special Masters and protocols were utilized extensively. Courtroom facilities were specially prepared for the trial, which began in September 1988, and was suspended several months later when the last of these settlement agreements was consummated. A seventeen-member jury heard opening arguments and listened to the testimony of a single witness during that time period. This Court has not had before it claims related to the enforceability of the Participants Agreements. Those issues were decided in the Washington state court litigation in 1983 and 1984. Because it lacks jurisdiction, this Court is powerless to nullify, change or modify the state courts’ decisions that invalidated the Agreements. The claims litigated before this Court have focused, almost exclusively, on allegations of material misrepresentations or omissions in connection with the issuance of Official Statements associated with the offer and sale of Bonds to finance the construction of the WPPSS 4/5 nuclear generating Projects. The settlement agreements that are the subject of this Order likewise concern the resolution of those allegations, not contractual or debt claims. The operative Class Complaint in this case alleges violations of federal securities laws, Washington state statutory law and the common law in connection with the offer and sale of WPPSS Project 4/5 Bonds. The operative Chemical Bank Complaint asserts securities fraud, negligence and other claims under state and federal law, as well as breach of contract claims on behalf of all Bondholders. The complaints name a multitude of defendants. Class Plaintiffs sued the Supply-System; its Directors; the nineteen public utilities and four cities that comprised the twenty-three member Supply System; the sixty-eight Project 4/5 Participants that were not members of the System; the individual and alternate members of the Participants Committee; Blyth Eastman Paine Webber, financial consultant to the System; R.W. Beck and Associates, consulting engineers to the System; United Engineers and Constructors, and Ebasco Services Incorporated, architect/engineers for Projects 4/5; Wood Dawson Smith Heilman, bond counsel; Houghton Cluck Coughlin & Riley, special counsel to the Supply System; Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Brothers Inc., Smith Barney Harris Upham & Co., Incorporated and Prudential-Bache Securities Inc., bond underwriters; Moody’s Investors Service and Standard & Poor’s Corporation, securities rating agencies; and the Bonneville Power Administration (“BPA”). The Chemical Bank complaint named the Supply System; its directors; the twenty-three member utilities; the eighty-eight Project 4/5 Participant utilities, some of which were also members of the Supply System; 4/5 Participants Committee members; and BPA. The “professional” defendants named in the Class complaint were not sued by Chemical Bank in this action. These Settlements The terms of these settlements appear in documents containing the provisions of agreements Plaintiffs arrived at over a period of approximately eight months with various groups of defendants or individual entities. The majority of settlements occurred prior to the start of trial, September 7, 1988. The remainder were reached in the two and one-half months that followed, during which the trial progressed. Each final settlement agreement is generally entitled “Stipulation and Agreement of Compromise and Settlement.” In order to expedite the stay and severance of defendants from further proceedings at the time settlement was achieved, these final agreements were normally preceded by memo-randa of understanding containing abbreviated terms of the parties’ agreements. The jury was dismissed and the trial terminated on January 9, 1989, after the final settlement was announced. The terms of these settlements require payment, into a Settlement Fund, of more than $580 million before any interest. Four settlement agreements in this action involving payments of nearly $107 million were previously approved by this Court. Notice of these settlements and of Settlement Hearings to be held to determine whether the proposed settlements are fair, reasonable and adequate was provided, pursuant to this Court’s Order dated February 6, 1989, to Class Members through an extensive mail and publication program in accordance with Rule 23. That Class Notice was sent to all known 4/5 Bondholders, as well. Chemical Bank also undertook to notify known Bondholders of the settlements in a separate Notice. Class Members were informed in the Class Notice of their opportunity to object to the terms of the settlements and Bondholders were also informed that they would be given the opportunity to express objections at the hearings, whether or not they were also Class Members. The Class Notice and the Chemical Bank Notice also informed recipients that matters dealing with the allocation of settlement proceeds would be dealt with by the Court in the future. Accordingly, following the rendition of this Order, a hearing will be set to determine a number of issues surrounding the allocation and distribution of the Settlement Fund. Issues that will be considered in connection with that hearing include matters related to the allocation of funds between Pre-Termination and Post-Termination Class Members and to the Bond Fund for the benefit of Bondholders. The Court currently has under advisement requests for an award of attorneys’ fees out of the Settlement Fund for Class Plaintiffs’ counsel, and for reimbursement of expenses, including more than $51.4 million that was advanced by the Bond Fund for Plaintiffs’ litigation expenses. Those issues will not be considered at the allocation hearing. Chemical Bank has advised the Court that it will not seek attorneys’ fees out of the Settlement Fund. Neither the fee and expense petitions nor matters related to the allocation and distribution of settlement funds will be addressed in this Opinion and Order. Settlement Hearings were held at the United States Courthouse in Seattle, Washington on April 11, 1989. The Court heard from all persons who wished to speak. In addition, papers in support of and in opposition to the settlements were submitted to the Court in accordance with terms of the Class Notice. The Court also received more than 400 letters from individuals. The Court has considered the arguments, objections and comments contained in all of those submissions as well as those made at the hearings. STANDARDS FOR APPROVAL OF SETTLEMENTS The Court’s primary concern is whether a settlement, taken as a whole, is fundamentally fair, adequate and reasonable to all concerned. Officers for Justice v. Civil Service Commission, 688 F.2d 615, 625 (9th Cir.1982), cert. denied, 459 U.S. 1217, 103 S.Ct. 1219, 75 L.Ed.2d 456 (1983). The Court’s approval is necessary to en sure that Class Members’ rights have been given due regard and adequate protection by the negotiating parties. It recognizes, however, that the essence of settlement is compromise. Compromise involves the moderation of lofty and idealized hopes and the relinquishment of unyielding and absolute positions. Officers for Justice, 688 F.2d at 624; Cotton v. Hinton, 559 F.2d 1326, 1330 (5th Cir.1977). The law favors settlement. It is indeed the preferred means of dispute resolution, particularly in complex class action litigation such as this. Voluntary resolution is in the public interest, Officers for Justice, 688 F.2d at 625, Van Bronkhorst v. Safeco Corp., 529 F.2d 943, 950 (9th Cir.1976), Nelson v. Bennett, 662 F.Supp. 1324, 1334 (E.D.Cal.1987), and the Court must determine whether the interests of the Classes will be better served by resolution of the litigation than by continuation of it. The Court must and will consider many things in assessing the fairness, reasonableness and adequacy of these settlements. They include some or all of the following: —the strength of plaintiffs’ case —the risk, expense, complexity, and likely duration of further litigation —the amount offered in settlement —the relationship of the settlement amount with the likelihood of success and potential range of recovery at trial —defendant’s ability to pay a judgment larger than the amount provided by the proposed settlement —The extent of discovery completed and the stage of proceedings —the experience and views of counsel —the reaction of class members to the proposed settlement. See Officers for Justice, 688 F.2d at 625; Marshall v. Holiday Magic, Inc., 550 F.2d 1173, 1178 (9th Cir.1977); Order of July 28, 1988 at 3. Additionally, the Court must be convinced that each settlement is the product of good faith negotiations conducted at arms’ length and that there has been no fraud, overreaching, or collusion on the parts of the negotiating parties. Officers for Justice, 688 F.2d at 625, Ellis v. Naval Air Rework Facility, 87 F.R.D. 15, 18 (N.D.Cal.1980), aff'd, 661 F.2d 939 (9th Cir.1981). In conducting its analysis and making its determinations, the Court must take into consideration any unique facts and circumstances. Thus, the weight and relative importance of the enumerated factors will necessarily vary. The factors cannot be evaluated in isolation, however, but must be appropriately balanced and tailored to contemplate the particular circumstances that surrounded these settlements. Officers for Justice, 688 F.2d at 625. APPLICATION OF THE STANDARDS TO ALL SETTLEMENTS HEREIN The Court notes that the settlements before it together comprise a nearly “global” resolution of the litigation. While it is urged that it is appropriate to assess such a resolution by viewing the sum of its parts, the Court believes that scrutiny of each separate agreement is compelled. Although the parties, aided by the Court-appointed Settlement Master, Professor Juni-us Hoffman, participated in settlement negotiations that often involved more than one defendant, with one exception each of these settlement agreements was individually consummated with a single defendant or defendant group and was presented to the Classes and to the Court for its approval. While the terms of the settlements are often similar, they also reflect sometimes significant differences. The resolution of Plaintiffs' claims against each defendant or defendant group altered the circumstances of the litigation and enhanced the probability of yet additional settlements. Indeed, the prior severance of certain defendants in some instances had a significant influence on the consummation of succeeding settlements. That influence, which sometimes dramatically affected the risks and expense of further litigation, enters into the Court’s evaluation of those settlements. Despite this need to examine each of these settlements separately, however, certain of the Officers for Justice factors can be viewed from a broader perspective because they remained fundamentally unchanged or had a relatively uniform relationship to all of the settlements. Other factors can be assessed both in terms of their common significance to all settlements and also for their more individual bearing on the unique facts and circumstances of a particular settlement or settlements. The Court begins its assessment of these settlements by considering, where appropriate, the Officers for Justice factors in the context of the settlement agreements overall. Thereafter, the factors will be addressed in connection with particular settlements where they have a unique or special bearing. The Strength of Plaintiffs’ Case Before making any determination regarding the strength of Plaintiffs’ case, it is first necessary to observe that such an assessment is not intended to involve any ultimate conclusions regarding the contested issues of fact and law that underlie the merits of this litigation. See, e.g., Officers for Justice, 688 F.2d at 625. Such a determination would not be possible because the evidence was never fully presented. Furthermore, the settlements were induced in large part by the very uncertainty as to what the outcome would be, had litigation continued. Nonetheless, the Court is in a position to evaluate objectively the strengths and weaknesses inherent in the litigation and the impact of those considerations on the parties’ decisions to reach these agreements. Plaintiffs were limited as to the legal theories under which they could bring this action. Because the suit concerned the issuance of municipal bonds, Plaintiffs would have needed to prove scienter — intent to deceive or recklessness — in connection with the misrepresentations alleged under § 10(b) of the Securities Exchange Act of 1934. The legal requirements associated with proof of this mental state are exceedingly stringent and laden with peril. Success of the claims under § 21.20.430 of the Washington State Securities Act was similarly at risk because of developments in the law during the period of this litigation that threatened to restrict the Act's applicability and necessitate proof of scien-ter. Proof of negligent misrepresentation might have sufficed to establish liability under Plaintiffs’ common law claims, but ongoing developments in the Washington courts posed a risk to the viability of those claims, as well. Secondary liability claims and the allegation of a conspiracy among defendants also posed extraordinary legal obstacles. All of these considerations and the appreciable risks they presented had to be factored into the negotiating parties’ appraisals of the strength of their relative positions. The Court, also, recognizes the implications they presented. The particular misrepresentations that were alleged posed evidentiary hurdles that also helped to promote a voluntary resolution of this action. The Official Statements for Projects 4/5 were alleged to contain material misrepresentations and omissions in connection with six different topics discussed in those Statements. The alleged misstatements and omissions concerned: the region’s need for power; the estimated costs of construction and dates of operation of the two Projects; the eighty-eight Participants’ ability to raise sufficient revenue to fulfill the financial obligations they had, in the Participants’ Agreements, agreed to meet; the Participants’ willingness, at the time they signed the Agreements, to pay for the projects; statements regarding the Participants’ authority to have entered into the Participants Agreements; and the possibility that Projects 4/5 would be terminated before their completion because of either an absence of need for the power or an inability to continue financing the Projects. Although the Court denied motions for summary judgment on each of these allegations against most of the defendants because of the existence of material issues of fact, each alleged misrepresentation continued to be subjected to attack on a number of fronts by the particular defendants against whom they were claimed. Plaintiffs were under great pressure to convince the jury of the existence of misstatements and omissions and of each defendant’s liability for them under the previously discussed standards of proof. The task would not have been an easy one, though success would have been crucial to a verdict for Plaintiffs. The task that lay before them has been described as follows: Plaintiffs needed to show that hundreds of officers and employees of a large number of public and private entities conspired over a period in excess of ten years, frequently in public meetings, to borrow money they knew they could not and would not repay to build Projects that would be too costly to complete and were not needed in any event, often contrary to their own individual interests as Bondholders. Significant barriers were placed in the paths of Plaintiffs. Many of the defenses are unique to one or more of the defendants and will be discussed in Connection with their individual settlements. However, it is necessary to recognize that, throughout the course of the litigation, defendants vociferously protested, correctly, that hindsight was not actionable with respect to the alleged misrepresentations. There is no denying that the events described came to pass. The region’s need for power did not meet the projected expectations; the estimated costs of construction and dates of operation of the two Projects were significantly understated and required continual upward revision; the Participants’ ability to raise sufficient revenue to fulfill the obligations they had agreed to pay, absent the plants’ operation, became questionable; many Participants proved to be reluctant to pay once the Projects were terminated; certain Participants’ authority to have entered into the Participants Agreements was deemed not to have existed; and the Projects were, in fact, terminated before their completion because of a want of need for the power and a corresponding inability, in the face of extraordinarily high interest rates, to continue financing them. All of these occurrences are extraneous to this action, however, because it concerns Plaintiffs’ need to show falsity of these representations at the time they were made — years before the events materialized. The fact that a soundly-based opinion, projection, or forecast ultimately may have proven incorrect, without more, is not the equivalent of fraud. See, e.g., Marx v. Computer Sciences Corp., 507 F.2d 485, 489-90 (9th Cir.1974). The Court recognizes that certain circumstances were, of course, highly favorable to Plaintiffs’ case. Many Bondholders are elderly. Some had invested their life savings in these bonds. Many expressed belief that the State of Washington and/or the United States government stood behind the WPPSS 4/5 bonds. Few, however, understood that the tort claims in MDL 551 are quite different from the claims adjudicated by the Washington courts in the Chemical Bank litigation in which the Participants Agreements had been invalidated. Defendants were not about to let such misunderstandings infect the decisions to be made by the jury. Nor could the Court have permitted this to occur. The Court cannot fault Plaintiffs for having chosen to pursue settlement, given the burdens of proving their case to the jury. The Risk, Expense, Complexity, and Likely Duration of Further Litigation Because all of these settlements occurred during, or within the months prior to trial, evaluation of this factor really contemplates many risks, expenses, complexities and time factors common to all. When the earliest of these settlements was reached, estimates of a two-year trial were being suggested. Although the advent of each settlement presumably reduced the time that would have been required to try the case, it appeared likely that trial might nonetheless approach the original time estimate. Three months passed during the testimony of Plaintiffs’ first witness alone. A number of practical problems existed in the conduct of the trial. Washington area witnesses were beyond the reach of the Court’s subpoena power, forcing Plaintiffs to elect among alternatives of foregoing their testimony, offering video-taped or written depositions, or availing themselves of the use of satellite-transmitted televised “live” testimony. Each alternative had associated costs in terms of strategy, proof, and money. None would have been as effective as the presence of a live witness. The case, and the mechanics of trial, were enormously complicated. The litigation was characterized by complex issues. Its consolidation and massiveness alone generated a number of difficult conditions. Additionally, the absence of legal precedent in many areas and the constantly developing body of existing law in others further aggravated the complexities and increased existing risks throughout the six-year period of the litigation. Significant obstacles plagued Plaintiffs on some issues even upon the brink of these settlements. Strategic considerations required continuous reevaluation and revision of the litigants’ positions as settlement agreements were reached with various defendants. Costs of maintaining and managing Plaintiffs’ and Defendants’ data bases were extremely high, as were costs associated with the out-of-town parties’ presence for trial in Tucson, Arizona. Because attorney fees are awarded out of any common settlement fund obtained in Class litigation such as this, each day’s continuation of the litigation had the potential to reduce the sum available for distribution to Class Members. The complexity of this litigation and the sheer number of defendants necessitated considerable resources and personnel to provide adequate representation of Plaintiffs. Insurance coverage, the source of settlement payments for a number of defendants, was being depleted by the costs of litigation. Appeals of several rulings had already been taken and there was virtual assurance that any final decision would be appealed, regardless of who it might favor, necessitating additional monetary outlay and further delay for all parties. Thus, even a verdict for Plaintiffs might have proven to be a Pyrrhic victory for many Bondholders. The ultimate risk of continued litigation — the risk of an adverse verdict — also weighed heavily in the parties’ considerations. The significance to be assigned to this risk in assessing the fairness, adequacy and reasonableness of the settlements is not capable of measurement, but it is not inaccurate to say that there was never a moment when a Plaintiffs’ victory was assured. The uncertainty of victory and the certainty of ever increasing costs, both monetary and otherwise, thus, validate the undertaking of serious settlement negotiations. In many respects, these complexities, risks and costs effectively mandated compromise and settlement of this litigation. The Amount Offered in Settlement Although this factor will be considered in connection with each separate settlement, it is appropriate to make certain observations regarding the aggregate amount of these settlements. Even ignoring the potential for increased recoveries as a result of insurance litigation, these settlements combine to a total payment by defendants of more than $580 million. When added to the amounts paid by previously settling defendants, the pre-interest sum of all settlements in this action exceeds $690 million. The amount is quite clearly substantial. The figure approaches fifty percent of the amount of losses that were calculated as a result of Proof-of-Claim procedures that were implemented by this Court to aid in the conduct of litigation and were to be followed by Class Members. While a comparison of the proposed Settlement Fund to the face value of the bonds may make it appear to be less than ideal, the Court hastens to point out, once again, that this suit was not a contract action. Proof of the misrepresentations that the case did involve was fraught with risk and recovery was far from certain. The amount offered in settlement cannot, in any event, be viewed in isolation. It must be considered in the proper context— that of the probable recovery, even assuming a finding of liability in Plaintiffs’ favor. The next factor contemplates considerations associated with the amount of damages potentially recoverable in an action such as this. The Relationship of the Settlement Amount with the Likelihood of Success and Potential Range of Recovery at Trial The amount of Plaintiffs’ total pre-inter-est recovery and many of the risks associated with the potential for success have been sufficiently described. There is yet a third important consideration that must be factored into the assessment of the amount of these settlements — the potential range of recovery had a verdict in Plaintiffs’ favor been reached. The issue of the proper measure of damages in this litigation was heatedly argued throughout. The propriety of using the restrictive out-of-pocket rule, as opposed to a more generous rescissory measure of damages, has been vigorously asserted as a virtually conclusive determinant of the fairness, reasonableness and adequacy of these settlements by nearly all parties seeking their approval. Both sides were prepared to offer protracted expert testimony on this crucial issue. The area is replete with peril, and the possibility loomed large that, even if a verdict for Plaintiffs were reached, the result might have been a monetary award considerably smaller than the aggregate amount of these settlements. Additionally, many of the issues related to the causes of investors’ losses had been the subject of earlier motions and briefing. Although the issues survived, Plaintiffs’ counsel recognized a significant risk that a jury would attribute much of the price decline in the 4/5 bonds to factors other than the misrepresentations alleged in this lawsuit. The Chemical Bank decisions, interest rate fluctuations, the nuclear power environment, and other independent market forces contributing to a general decline in the bond market, for example, may have been found to account for much of the investors’ loss. Determining the dates of disclosure of the claimed misrepresentations would have complicated the computation of a price differential and further exacerbated any calculation of damages. All of these concerns lend support to an affirmative conclusion about the fairness, reasonableness and adequacy of the settlements overall. The Extent of Discovery Completed and the Stage of Proceedings The next Officers for Justice factor that merits a broad overview concerns the stage of these proceedings at the time the settlements were reached. As indicated, the litigation had been going on for more than five years when the first of these settlements occurred. Trial was imminent and counsel were engaged in preparation for it. Discovery was virtually complete. Discovery in the litigation had been comprehensive. An estimated 200 million document pages were produced, reviewed and evaluated. Depositions of more than 300 persons were taken over a period of three and one half-years. A number of these witnesses provided expert testimony in the important areas of causation and damages. The completion of this vast amount of discovery provided a comprehensive picture and permitted counsel to evaluate the strengths and weaknesses of the litigation in connection with their contemplation and consummation of these settlements. The Court, also, is aware of much of the information discerned through discovery and is in a unique position to evaluate the strengths and weaknesses, as well as the equities, of the parties’ positions. This factor, therefore, presents no obstacles to this Court’s assessment of the settlements and provides assurance of the validity of its determinations. The Experience and Views of Counsel Both Class counsel and counsel for Chemical Bank deem the settlements to be fair, reasonable, adequate and deserving of the Court’s approval. Counsels’ opinions warrant great weight both because of their considerable familiarity with this litigation and because of their extensive experience in similar actions. Officers for Justice, 688 F.2d at 625. During the course of this litigation the Court has had abundant opportunity to appraise and evaluate the judgment and representation of all counsel. The litigation was characterized, as it should be, by aggressive advocacy and extraordinarily capable adversarial postures. There is likewise every reason to conclude that settlement negotiations were vigorously conducted at arms’ length and without any suggestion of undue influence. Unlike the situation in most cases such as this, Class Counsel were particularly well positioned to resist coercive pressures by any defendant because they were not required to advance tremendous out-of-pocket expenses. The continuous involvement of the Settlement Master further serves to confirm that the negotiations were undertaken and concluded in good faith and were otherwise untainted. The Settlement Master has un-qualifiedly recommended these settlements. The Court is aware that ground was given grudgingly after extensive — and often discordant — negotiations. There is no suggestion that any point of dispute was abandoned cavalierly, or for the purpose of counsels’ self interest, or for expediency. Counsels’ decisions to strive for and consummate these settlements will not, therefore, be reproached. The Reaction of Class Members to the Proposed Settlement The Class Notice delineated procedures to be followed by Class Members who wished to object to these settlements. Objecting Class Members were required, among other things, to specify in writing their objections, the settlement or settlements to which they applied, and the grounds for them or reason they desired to appear and be heard. These statements were to be submitted to the Court and to the parties. Several objections were filed that conformed, at least for the most part, to these requirements. These will be addressed in connection with the particular settlement or settlements with which they take issue. Other objections were filed by non-Class Members or by groups whose objections were presented on behalf of both Class Members and non-Class Member Bondholders. Finally, in response to suggestions contained in a form letter mailed by a group known as the Bond Investors Association, the Court received mail from numerous individuals, most of whom are, presumably, Class Members. Copies of all such correspondence received prior to the settlement hearings were provided to counsel. It is to the general content of these letters from Class Members that the Court now turns. The Bond Investors Association (or “Association”) describes itself as a “non profit Bondholders organization concerned with promoting the interest of Bondholders.” The organization maintains data on bond defaults throughout the nation. It has participated in a number of different kinds of efforts in pursuit of a recovery for WPPSS Bondholders. The organization itself, presided over by Mr. C. Richard Lehmann, is not a Class Member. Nor are some of its constituents, whose purchases of 4/5 bonds were made after June 15, 1983. However, many individual Bondholders who are affiliated with the organization are Class Members. Early in 1989 the Bond Investors Association sent a letter to WPPSS 4/5 Bondholders regarding the proposed settlements in MDL 551. The letter referred to “the ugly truth behind the MDL 551 settlement and how you have been sold short.” It specifically attacked the proposed settlements with the Supply System, BP A, and the State of Washington. It contained comments critical of certain actions of Chemical Bank and a statement concerning the amount of attorney fees and expenses anticipated in MDL 551. The letter advised Bondholders that they could “write the judge” about each of the enumerated items, and informed recipients that “he can reverse any portion of the settlements ... and force those parties back to the negotiating table or back into court.” The fourth page of the bold-print letter was a form containing eight statements that could be checked to show the respondent’s agreement or disagreement (or satisfaction, dissatisfaction or “outrage”) with respect to the three settlements discussed in the letter; certain actions of Chemical Bank; legal fees requested; and the recipient’s reliance on the Bondholders Committee (of which Mr. Lehmann is treasurer), Chemical Bank or Class attorneys. The recipient was asked whether he had a claim filed in the MDL litigation, and a blank space allowed the writer to show the face amount of current holdings in WPPSS 4/5 bonds. It was suggested that recipients send copies of this completed “opinion survey” to the Court and to Chemical Bank. Addresses were provided. This letter generated a large volume of mail to the Court — in excess of 600 pieces. The Court read every letter. The correspondence ranged from long, thoughtful letters to mere copies of the survey form. Nearly all reflected dissatisfaction with the settlements. Many writers expressed their opinion that absolutely no settlement should be approved unless it returned to them the full principal they had invested in the WPPSS bonds, plus interest. A number of writers disclosed that they had invested their life savings in Project 4/5 bonds and went on to describe poignantly the impact that the default has had on their welfare. Many expressed their belief that this Court could simply compel full restitution of their investment. Many noted that this lawsuit was “their last hope” and indicated a belief that the litigation somehow provided the opportunity for this Court to “reverse” the decision of the Washington State courts that had invalidated the Participants’ Agreements. A significant number of writers expressed incredulity that some of the defendants had made a contract that this Court could not simply require them to perform. That matter was not before this Court for decision, however, and the Court lacked power to alter the Washington Supreme Court ruling. Many older writers noted that, because of their age, an expeditious resolution was desirable. Yet they demanded complete satisfaction. Some urged the Court to rewrite settlement terms, which it cannot do. A few suggested a return to trial. The Court is mindful of the length of time that would be consumed by a resumption of litigation, trial, post-trial proceedings, appeal and (unthinkably) re-trial. Even ignoring the possibility of no recovery, success after such proceedings would be years away and, for many older bondholders, no victory at all. Only a handful of letter writers indicated any real understanding of the nature of the claims in this action and the extent of relief that was potentially available. New made distinctions among the many defendants or seemed to recognize that valid defenses could be maintained. Many blamed their brokers, who have not been named in this action. Some demanded the full face value of their bonds, regardless of what they had paid or when they had purchased. The letters were often emotional and moving. Many stirred tremendous sympathy and aroused a strong sense of injustice on behalf of the writers. Those feelings, however, did not arise through valid criticisms of the terms of any particular settlement agreement. They stemmed, rather, from the generalized misfortune and outrage experienced and expressed by these correspondents. Almost universally they complained about buying a highly rated and recommended security only to find it to be essentially valueless. The Court does not have boundless power to rectify such grievances, however, even though they may be legitimate. The Court is constrained by our legal system, and the relief requested by many of these aggrieved Bondholders is simply outside the parameters of this Court’s powers and the issues in this case. It is both necessary and important to consider all substantive objections of Class Members to a settlement, See, e.g., Officers for Justice, 688 F.2d at 624-25, and, insofar as these writers’ comments were directed at the terms of specific settlements, they will be addressed in the following sections of this Order that deal with those specific settlements. Nonetheless a settlement is not to be deemed unfair or unreasonable simply because a large number of Class Members oppose it. See, Bryan v. Pittsburgh Plate Glass Co., 494 F.2d 799, 803 (3d Cir.1974), cert. denied, 419 U.S. 900, 95 S.Ct. 184, 42 L.Ed.2d 146 (1974); Equal Employment Opportunity Comm’n v. Hiram Walker & Sons, Inc., 768 F.2d 884 (7th Cir.1985), cert. denied, 478 U.S. 1004, 106 S.Ct. 3293, 92 L.Ed.2d 709 (1986); Reed v. General Motors Corp., 703 F.2d 170 (5th Cir.1983); Cotton v. Hinton, 559 F.2d at 1331. Thus, the volume of letters will not be given undue weight. In addition to the letters received by the Court in reaction to the Bond Investors Association communication, several other groups or individuals expressed general objections to the settlements overall. Both generalized and specific objections were voiced in papers filed on behalf of a group of four Institutional Investors. At this point it is appropriate to observe that, for the most part, the more general objections stem from these objectors’ assumption that the case assured certain victory for Plaintiffs. Their conclusion that the amounts of the settlements are unfair, unreasonable or inadequate is not supported, however, because this premise is fallacious. Contrary to contentions appearing throughout these objectors’ papers, this was not an “obvious fraud case” in which “no doubt existed as to the liability of many of the Settling Defendants.” In contrast to the broad, and remarkably naive, assertions of these arguably sophisticated objectors, the case did in fact “raise serious questions as to liability” of many defendants, and the risk of a finding of nonliability was very real throughout. The Court has already described the burdens facing Plaintiffs in this litigation, and there is more than adequate reason to conclude that the aggregate amount of these settlements, to which these Institutional Investors take exception, is fully satisfactory, given the risks associated with a full trial of the issues. ANALYSIS OF INDIVIDUAL SETTLEMENTS The Court will now consider the separate settlements and appropriate Officers for Justice factors associated with each to the extent they have not already been discussed. The Court’s rulings on the individual settlements are based upon the following considerations as well as the preceding analysis insofar as it pertains to a determination of the fairness, adequacy and reasonableness of each settlement. Repetition of the foregoing discussion will be avoided, therefore, only in the interest of simplicity. THE CITY OF SEATTLE Class Plaintiffs, Chemical Bank and defendant City of Seattle (“Seattle”) framed a memorandum of understanding of their settlement in April, 1988. Proceedings against the City were stayed and it was severed from further litigation by Order of the Court on May 5, 1988. The parties’ final agreement reflecting the terms and conditions of their settlement, the Stipulation and Agreement of Compromise and Settlement between Plaintiffs and the City of Seattle, was filed with this Court on September 30, 1988. The terms of this settlement embrace the City, a Washington municipal corporation, its insurance carriers as to policies insuring Seattle, and four individually named defendants who were employees of the Municipality of Seattle and designees on the WPPSS Board of Directors and Executive Committee. Unlike many of the settling defendants, the City of Seattle was not a Participant in Projects 4/5 and had not, therefore, signed a Participant’s Agreement, although its employees were members of the WPPSS Board of Directors and Executive Committee. Thus, there was some perception that the City’s liability was potentially less than that of the Participants in the projects. Discovery was virtually complete at the time of the settlement, and the parties had the ability to appraise the liability issue fully before agreeing to settle. Whatever their determination, the City has paid the immense sum of $50,000,000, mainly from relatively substantial insurance coverage, into an interest earning escrow account to end its involvement in this litigation and to permit its personnel to turn their attention elsewhere. No specific objections have been raised to this settlement and the Court has considered all relevant matters otherwise submitted to it. The Court finds that its appraisal of all appropriate factors indicates that the terms and conditions of the Seattle settlement are fair, reasonable, and assuredly adequate in accordance with the mandate of Rule 23, Fed.R.Civ.P. FERRY AND KITTITAS Public Utility District No. 1 of Ferry County, Washington (“Ferry”) and Public Utility District No. 1 of Kittitas County, Washington (“Kittitas”) reached an understanding of agreement with Plaintiffs in April, 1988. They were severed from the litigation and proceedings against them were stayed the following month. The terms of their agreement with Class Plaintiffs and Chemical Bank are contained in the Stipulation and Agreement of Compromise and Settlement Between Plaintiffs and Ferry and Kittitas, which was filed with this Court on October 6, 1988. Like Seattle, these two utilities were members of the Supply System, although neither was a Participant in Projects 4/5. Unlike Seattle, neither had a representative on the WPPSS Executive Committee. Their potential for liability, thus, stemmed largely from allegations that member utilities were vicariously liable for their appointed directors’ actions on the WPPSS Board. These allegations were vigorously defended and their proof fraught with difficulty. These two utilities are among the smallest in Washington in terms of revenues, customers and sales. Their proportionate rates, debt and operating expenses are among the highest in the state. Their settlement agreement requires a payment of $1,750,000 from insurance coverage into an interest earning escrow account. This coverage, which was being consumed by litigation costs, represented the only substantial asset that could be obtained by Plaintiffs without precipitating virtually certain bankruptcy proceedings for the utilities. The Court finds, after evaluating all relevant circumstances, that the terms and conditions of the Ferry and Kittitas settlement are fair, reasonable, and adequate in accordance with the mandate of Fed.R.Civ.P. 23. OREGON PUBLIC ENTITIES The Oregon Public Entities encompasses to a group of ten cities and utility districts that had signed Participants Agreements for Projects 4/5 but were not members of the Supply System. Seven individuals are also included in the terms of these public utilities’ settlements. Two separate settlement agreements were entered into with Plaintiffs on behalf of these defendants. The first agreement, involving the cities of Cascade Locks, Drain, Milton-Freewater, Springfield and the McMinnville Water & Light Commission, as well as three individuals, was set forth in a memorandum of understanding on April 29, 1988. On the same day an agreement in principle was reached with the City of Canby, the People’s Utility Districts of Central Lincoln, Clatskanie, Northern Wasco County and Tillamook and with four individuals. The terms and conditions of these settlements are contained in the Final Memorandum of Settlement Agreements Between Plaintiffs and Oregon Public Entities Defendants, filed with the Court on November 23, 1988. An amendment to the settlement was filed on December 22, 1988. The agreement of the five cities calls for a combined payment of $13,162,500. The second agreement requires payments totalling $18,837,500. The sum of payments included in these two settlement agreements, thus, amounts to $32 million. That amount has been accumulating interest in escrow accounts. Because these defendants did not sit on the Supply System Board, Plaintiffs would have had difficulty at trial establishing primary liability against them in connection with many of the reputed misrepresentations and omissions allegedly contained in the Official Statements. The Oregon Entities’ defenses on many issues, like those of other defendants, would be vigorous. Plaintiffs’ crucial allegations regarding misrepresentations of the entities’ ability to pay, willingness to pay, and authority were particularly vulnerable, in part because the Oregon Supreme Court, unlike that of Washington, had refused to find that its local officials lacked authority to execute the Participants’ Agreements. See DeFazio v. WPPSS, 296 Or. 550, 679 P.2d 1316 (1984). Considering the remoteness of the Oregon Public Entities from decisions regarding the content of the Official Statements and the sound defenses available to them, the Court concludes that the amount paid in settlement by these defendants, who together held a relatively small eight percent share in Projects 4/5, is acceptable. This decision is supported, also, by recognition of the impact of a decision announced shortly after this settlement was reached. Approximately two weeks later, this Court relieved Non-Member Participants such as these of a duty of disclosure to post-termination purchasers. Order of May 12, 1988. Having appraised these, as well as the circumstances surrounding the settlements in general, the Court finds that the terms and conditions of the Oregon Public Entities’ settlement are fair, reasonable, and adequate in accordance with the mandate of Fed.R.Civ.P. 23. SMALL UTILITIES The Small Utilities is the collective name for twenty-four small Participant utilities , none of which was a member of the Supply System. The Small Utilities reached a settlement agreement with Plaintiffs in May, 1988. The terms of this agreement are embodied in the Stipulation and Agreement of Compromise and Settlement, filed with this Court on October 6, 1988. The agreement requires the Small Utilities to pay $25,819,462 into interest bearing escrow accounts. Together these utilities, located in Washington, Oregon, Idaho, Nevada, Wyoming and Montana, shared approximately six and one half percent of the ownership of Projects 4/5. Discovery indicated that these mainly remote defendants were essentially uninvolved in the preparation, review or approval of the Official Statements. Proof of Plaintiffs’ claims against them, thus, would have been especially difficult. Like many defendants, this group contends that the utilities that compose it relied on expert analyses and opinions in regard to many of the issues alleged against them. Settlement became a viable option, they say, only after they determined that prospective monetary and personnel costs and risks of jury confusion of the issues outweighed the benefits of continued litigation. For these reasons, as well as relevant ones discussed in connection with the settlement of the Oregon Public Entities, and because of the affirmative general assessment of pertinent Officers for Justice factors, the Court finds that the terms and conditions of the Small Utilities’ settlement are fair, reasonable, and adequate in accordance with the mandate of Fed.R.Civ.P. 23. UNAFFILIATED PARTICIPANTS On May 26, 1988 Plaintiffs and a group of five non-Member Participants reached agreement to settle. These five Washington defendants were the Benton Rural Electric Association, Oreas Power & Light Company, Public Utility District No. 1 of Pend Oreille County and the cities of Blaine and Sumas. The Stipulation and Agreement of Compromise and Settlement between Plaintiffs and these Unaffiliated Participant defendants was filed with this Court on October 6, 1988. The terms of this settlement require payment of $7,410,927 into interest earning escrow accounts. Together these Participants held less than a two percent share of Projects 4/5. Like the settlements of other non-Member Participants, no specific objections were raised to this settlement and, after due consideration of all relevant factors, the Court finds that the terms and conditions of the Unaffiliated Participants’ settlement are fair, reasonable, and adequate in accordance with the mandate of Fed.R.Civ.P. 23. MID-COLUMBIA DEFENDANTS Mid-Columbia Defendants is the name given to three Public Utility Districts that reached a settlement agreement with Plaintiffs on July 18, 1988. The memorandum of that agreement and an addendum to it were filed as attachments to the Stipulation and Order Regarding Settlement, Severance and Stay as to the Mid-Columbia Defendants, on August 30, 1988. A second addendum to the agreement was subsequently filed with the Court on October 12, 1988. These documents memorialize the agreement between Class Plaintiffs, Chemical Bank and defendants Chelan County PUD, Douglas County PUD, Grant County PUD and six individual officers, directors, employees and commissioners who were neither directors of the Supply System nor members of the Participants Committee. Together the documents constitute the Mid-Columbia settlement agreement. These public utility districts were both members of the Supply System and Participants in Projects 4/5. Together they held a minimal (1.23%) share of the Projects. They have paid a total of $20,000,000 to settle Plaintiffs’ claims against them in this action. That amount is being held in an interest-bearing escrow account. The substantial amount of these public utilities’ settlement payments reflects the availability to them of insurance coverage, a circumstance not shared by other Member Participants. Given the significant contribution and the modest share of the Projects held by this small group of public utilities, and after due consideration of the defenses propounded and of the assessment of other Officers for Justice factors, the Court finds that the terms and conditions of the Mid-Columbia settlement are fair, reasonable, and adequate in accordance with the mandate of Fed.R.Civ.P. 23. COLUMBIA DEFENDANTS The Columbia Defendants are seventeen rural electric cooperatives that, like the Oregon Public Entities and the Small Utilities, were Participants in Projects 4/5, but were not members of the Supply System. An eighteenth Columbia Defendant cooperative, Pacific Northwest Generating Company, was a non-member and non-Participant, though it was represented on the Participants’ Committee. This defendant group, along with three individuals who attended a number of Participants Committee meetings, reached a settlement agreement with Class Plaintiffs and Chemical Bank in August, 1988. The terms of the settlement are contained in the Stipulation and Agreement of Compromise and Settlement Between Plaintiffs and Columbia Defendants and the supplemental Stipulation and Agreement of Compromise and Settlement Between Plaintiffs and David Piper, Roy Lindley and Tom Howard, which were filed on October 31, 1988. In addition to assigning insurance rights of individual defendants who are present or former officers or employees of certain of the Columbia Defendant Utilities, this settlement calls for payment of $53,080,000 to Plaintiffs. Together the Columbia Defendants held a nearly 14% share of Projects 4/5. The decision of this group to settle the litigation several weeks before the start of trial powerfully demonstrates the significance of the inevitably high monetary and personal costs to defendants of trying and appealing the case. At that time the parties fully grasped the issues and facts involved. The Court had previously acknowledged several deficiencies in Plaintiffs’ case against these defendants stemming from their rather attenuated relationship to bond purchasers. Their defenses to Plaintiffs’ claims were strong, and there was more than a remote possibility that a jury might find an absence of liability for misrepresentation on the part of these defendants. Given these considerations, as well as those previously discussed, the Court finds that the terms and conditions of the Columbia Defendants’ settlement are fair, reasonable, and adequate in accordance with the mandate of Fed.R.Civ.P. 23. WOOD DAWSON SMITH & HELLMAN On August 22, 1988 Class Plaintiffs reached an agreement to settle their claims against the law firm of Wood Dawson Smith & Heilman (“Wood Dawson”). The terms of that settlement are contained in the Stipulation and Agreement of Compromise and Settlement Between Class Plaintiffs and Defendant Wood Dawson Smith & Heilman, filed with the Court on October 5, 1988. The terms of the Wood Dawson settlement, among other requirements, call for a payment of $500,000 to the Class. That amount has been deposited into an interest bearing escrow account. The settlement is subject to entry of an order barring claims for contribution under federal and Washington State Securities laws (“Bar Order”). Absent such an order, the settlement will be terminated in accordance with its terms. Wood Dawson was not sued by Chemical Bank in this litigation. The firm was prepared to present testimony to show that its opinion — that the Participants’ Agreements that it had examined were valid and enforceable — was reasonable and honestly held. Class Plaintiffs would need to convince the jury that the opinion itself was “false” or that Wood Dawson acted with scienter or recklessness in rendering it. Victory was by no means assured. Success on secondary liability issues was likewise uncertain. This settlement, unlike those discussed previously in this Order, contains a provision requiring a Bar Order in order to discharge this settling defendant from future liability arising from matters intended to be resolved by the settlement. The provisi