The opinion
WELLFORD, Circuit Judge,
concurring in part and dissenting in part.
I am in agreement with the analysis of Ohio law on the business judgment rule made by Judge Jones, and conclude also that the cases cited do not provide clear guidance, contrary to the district court’s characterization of that law as “crystal clear.”. I further agree that the Ohio application of the business judgment rule, although unclear, does not contradict the policies of § 14(a) of the Securities Exchange Act under the circumstances of this case. I concur also that the district court made an adequate analysis of, and granted sufficient discovery, with respect to the independence of the outside directors in this case, although the prior association of Henkel with General Tire rendered his position doubtful at best. I agree also with Judge Jones’ conclusion that denial of objector Schreiber’s motion to intervene was not an abuse of discretion.
I part company, however, on the question of the fairness of the settlement in this case. In the majority opinion, it is fully recognized that actions taken by RKO General, for which all the defendants may share some responsibility, and who certainly faced *1088 very serious exposure by reason thereof, had cost the company a valuable television license. The decision in RKO General v. F.C.C., 670 F.2d 215 (D.C.Cir.1981), cert, denied, 457 U.S. 1119 , 102 S.Ct. 2931 , 73 L.Ed.2d 1331 (1982) had already virtually determined this ultimate estimated loss of $100,000,000, and “[T]he district court did not consider the effect of that specific dollar loss in concluding that the settlement agreement was ‘fair, reasonable and adequate.’ ” 1 Majority opinion at 1080 (emphasis added).
The consideration of the reasonableness of the settlement did not take fully into account alleged “cover up” activities after 1975 with respect to administrative investigations and the effect of additional IRS actions pending against defendant General Tire and RKO General due to irregularities, and shareholders were not alerted to this' additional potential loss, for which defendant directors may have had some responsibility. The alleged benefits to the corporation arising out of the settlement, apart from what was already recommended by the special investigative committee to avoid such future financial disasters, were negligible in my view. $500,000 would be paid by General Tire to the plaintiffs’ attorneys; the only benefit was that two members of the RKO Board for three years would be non-officers and non-employees. 2
Even if settlement were deemed advantageous because plaintiffs “would have faced considerable difficulties had they brought this litigation to trial,” Pearl v. The General Tire & Rubber Co., MDL No. 265, slip op. at 12 (D.Ohio, Dec. 15, 1981), the miniscule benefits to the corporations and their shareholders do not sufficiently take into account the risks that defendants faced. 3 That plaintiffs’ lawyers are satisfied because they were to receive substantial fees without objection from defendants renders the fairness of such settlement even more dubious. See Jamison v. Butcher, 68 F.R.D. 479 (D.Pa.1975).
Particularly in view of then pending very serious additional F.C.C. and I.R.S. proceedings against General Tire, the action of the court in approving a bar of all future shareholders' claims arising out of these matters is an abuse of discretion. Whether or not the settlement terminated the present and any future class action challenges, 4 including the Miberg action it seems clear that the district court intended its order to do just that:
The complaints in these actions are dismissed on the merits and with prejudice and without costs. The order entered today represents a full and final discharge against all persons whatsoever of any and all claims which were, or could have been, alleged in the complaints, by reason of, in connection with, or which arise out of the matters or transactions set forth or referred to.
Pearl, slip op. at 14.
As suggested in oral argument before this court, at the very least the settlement could have eliminated (permanently or for a period of time) defendant directors’ options or perquisites of office, and/or imposed upon them responsibility to pay a portion of plaintiffs’ attorney fees.
I would conclude that the district court abused its discretion in approving this settlement as fair and reasonable under the circumstances indicated.
. In any event, whatever the amount of the actual total loss, it was large and “unprecedented.” RKO, supra, 670 F.2d at 235.
. The adding of two non-officer directors to the Board of Directors of RKO General is deemed to be no real benefit in view of the absolute control of RKO by General Tire.
. The trial judge conceded there was “[n]o monetary recovery to the corporation ... contemplated in this settlement.” Pearl, slip. op. at II. (Emphasis added).
. See footnote 7 of the majority opinion wherein Judge Jones states, without deciding, “[w]e do not understand this settlement, however, to encompass the denial of any such class action.” (Emphasis added.) Compare National Super Spuds v. N.Y. Mercantile Exchange, 660 F.2d 9 (2d Cir.1981).