ST. PAUL, Minn. (Legal Newsline)-The Minnesota Supreme Court ruled Thursday that it has very limited jurisdiction in the case involving a stock options settlement between UnitedHealth Group Inc. and its former chief executive officer.
The high court said state law says the courts can only get involved in the case if there is evidence that the agreement was in bad faith or biased.
The settlement between UnitedHealth and former Chairman and Chief Executive William McGuire calls for him to return $320 million in stock options and relinquish $99 million in departure benefits.
The settlement was to settle a shareholder derivative action over the backdating of stock options during his tenure as CEO of the UnitedHeath, which is based in Minnetonka, Minn.
U.S. District Court Judge James Rosenbaum will decide whether to approve the settlement.
Among other questions, Rosenbaum will be charged with deciding whether a special litigation committee that hammered out the settlement "possessed a disinterested independence."
The UnitedHealth Special Litigation Committee was comprised of two retired Supreme Court justices but were appointed by UnitedHealth's board.
"Under the Minnesota business judgment rule, a court must defer to a (Special Litigation Committee" decision to settle a shareholder derivative action if the proponent of that decision demonstrates that (1) the members of the SLC possessed a disinterested independence and (2) the SLC‟s investigative procedures and methodologies were adequate, appropriate, and pursued in good faith," the court ruled.
From Legal Newsline: Reach reporter Chris Rizo at firstname.lastname@example.org.