MEMORANDUM OPINION

HONORABLE T.S. ELLIS, III, United States District Judge.

In this federal securities fraud class action, plaintiffs sued (i) MicroStrategy, Inc. ("MicroStrategy"), (ii) certain officers of MicroStrategy ("Individual Defendants"), and (iii) MicroStrategy's auditor, PricewaterhouseCoopers ("PwC"). Plaintiffs settled their claims against the MicroStrategy Defendants for a total consideration, payable wholly in notes, common stock, and warrants, of $100 — 135 million dollars, depending on the market for the securities. That settlement has received Court approval. See In re MicroStrategy, Inc. Sec. Litig., Civ. A. No. 00-473-A, 2001 WL 789184 (E.D. Va. July 10, 2001). Plaintiffs have now settled with the remaining defendant, PwC, for a total cash consideration of $55 million. At issue here is whether this settlement should be approved as fair and adequate and as meeting the requirements of Rule 23, Fed.R.Civ.P., and due process.

I.

No extended discussion of the allegations of the consolidated complaint or of the procedural history of the case is necessary here, for they have been filly discussed in two prior Memorandum Opinions. See In re MicroStrategy, Inc. Sec. Litig., 2001 WL 789184 (approving plaintiffs' settlement with the MicroStrategy Defendants); In re MicroStrategy, Inc. Sec. Litig., 115 F. Supp.2d 620 (E.D. Va. 2000) (denying motions to dismiss). In summary, this is a federal securities class action brought against the MicroStrategy Defendants and PwC on behalf of all persons who purchased MicroStrategy common stock or call options or sold MicroStrategy put options (collectively, "MicroStrategy securities") during the period June 11, 1998 through March 20, 2000 (the "class period"), asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act"), as amended by the Private Securities Litigation Reform Act of 1995 ("PSLRA"), and under Rule 1 Ob-5 promulgated pursuant to the Exchange Act. This action is also brought on behalf of a subclass of persons who purchased MicroStrategy stock contemporaneously with the sales of MicroStrategy stock by any of the Individual Defendants and who assert claims under Section 20A of the Exchange Act.

PwC (or its predecessor Coopers Lybrand LLP) was MicroStategy's outside accountant and auditor during the years 1997, 1998, 1999, and 2000. In this regard, PwC, among other services provided to MicroStrategy, issued reports that were included in MicroStrategy's filings with the Securities and Exchange Commission ("SEC"), in which reports PwC represented that it had examined MicroStrategy's financial statements for the years ended December 31, 1997, 1998, and 1999 in accordance with Generally Accepted Auditing Standards ("GAAS") and that those financial statements were presented in conformity with Generally Accepted Accounting Principles ("GAAP") In addition, plaintiffs alleged that PwC was actively involved in the preparation of MicroStrategy's publicly reported quarterly financial results.

This action arose out of MicroStrategy's March 20, 2000 announcement that its 1998 and 1999 financial statements had to be restated to correct previously reported earnings as significant losses. Plaintiffs alleged that, over a period of two years, the MicroStrategy Defendants repeatedly published materially false financial statements relating to MicroStrategy' s financial condition. PwC, in turn, issued "clean" unqualified audit opinions stating that the financial statements were in compliance with GAAP and allegedly participated in the preparation of MicroStrategy's quarterly reports, which allegedly contained misrepresentations and omissions about the company's financial condition. These statements allegedly transformed millions of dollars and losses into reported profits, caused the price of MicroStrategy common stock and options to be inflated and/or distorted significantly during the class period, and therefore damaged plaintiffs. Plaintiffs also alleged that, at the same time it was acting as MicroStrategy's auditor, PwC was also reaping substantial financial rewards as a reseller and systems integrator of MicroStrategy products. This business relationship, plaintiffs alleged, violated PwC' s obligation under GAAS to maintain its independence from its audit client.

On July 17, 2000, the MicroStrategy Defendants and PwC filed their respective motions to dismiss under Rule 12(b)(6), Fed.R.Civ.P. On September 15, 2000, these motions were denied, except for defendant Ingari's motion to dismiss plaintiffs' claim under Section 20A of the Exchange Act. See In re MicroStrategy, 115 F. Supp. 2d at 664— 65. Plaintiffs thereafter launched an intensive, multi-pronged discovery program that involved the acquisition of documentary and testimonial evidence from PwC, the MicroStrategy Defendants, and various nonparties. Discovery entailed, for example, two requests for production of documents directed to PwC, one request for production of documents directed to the MicroStrategy Defendants, and forty-two subpoenas duces tecum directed to nonparties. These initiatives ultimately yielded approximately 450, 000 pages of documents. In addition, plaintiffs engaged in a comprehensive and wide-ranging deposition program that proved critical to the development of plaintiffs' case, and served four sets of interrogatories upon PwC. On numerous occasions, plaintiffs' discovery efforts were met with resistance from PwC and necessitated judicial involvement in resolving the parties' disputes. Plaintiffs, in turn, were required to respond to discovery propounded by PwC, including documents requested, interrogatories, and depositions. Finally, plaintiffs conducted extensive expert discovery, retaining damages and accounting/auditing experts who prepared reports and were deposed by PwC, and deposing PwC's three dsignated experts.

On March 6, 2001, PwC filed a motion for partial summary judgment seeking to narrow the class to only those persons who engaged in transactions involving MicroStrategy securities for the period of March 6, 200 through March 20, 2000, the end of the class period. In this regard, PwC argued that(i)under the PSLRA's damage cap, no person who purchased MicroStrategy stock prior to October 29, 1999 suffered cognizable damages; and (ii)PwC made no statement concerning MircroStrategy's quarterly earnings of other reports during the remainder of the class period for which it could be held liable until March 6, 2000, when it issued a clean audit option with respect to the company's year-end December 31, 19999 financial statements. Plaintiffs opposed PwC's motion and filed their own cross-motion for partial summary judgment on March 26, 2001 seeking a finding, as a matter of law, (i) that the MicroStrategy financial statements and PwC;s opinions thereon wee material; (ii) that those financial statements and PwC;s opinions thereon admittedly were false and misleading when issued to the public; and (iii) that those statements were made in connection with the purchase or sale of MicroStrategy securities. PwC, in turn, opposed plaintiffs' cross-motion. Oral argument on all motions was heard on April 20, 2001, and the matter was taken under advisement. See In re MicroStrategy, Inc. Sec. Litig., No. 00-473 (E.D. Va. Apr. 20, 2001) (Order).

In late April 2001, PwC filed a motion to decertify the class that had been conditionally certified by Order dated August 25, 2000. See In re MicroStrategy, Inc. Sec. Litig., No. 00-473 (E.D. Va. Aug. 25, 2000) (amended Order regarding class certification). PwC argued that the previously conditionally certified class did not satisfy Rule 23's commonality, typicality, or adequacy requirements with respect to the elements of reliance, materiality, loss causation, and damages. See Fed.R.Civ.P. 23. More specifically, PwC argued, inter alia, that any presumption of reliance was rebutted by the fact that MicroStrategy securities traded in inefficient markets during significant portions of the class period.

On or about April 27, 2001, before plaintiffs' response to PwC "s motion to decertify the class was due, PwC and plaintiffs reached an agreement in principle to settle and release plaintiffs' claims against PwC in exchange for consideration of $51 million in cash, plus interest accruing at a rate of 7% starting as of September 15, 2000, the date on which PwC's motion to dismiss was denied, for a total of $55 million in cash as of October 29, 2001. By the time the parties reached this agreement, the parties had completed extensive work to prepare for trial, which was scheduled to begin on June 5, 2001, and to comply with a pretrial schedule imposed by Order dated April 9, 2001. In this regard, plaintiffs and PwC had filed their respective trial witness lists, exhibit lists, and deposition designations, and plaintiffs were well into the process of formulating objections to PwC "s designated trial exhibits and preparing motions in limine.

This settlement was the culmination of exhaustive and extensive arm' s-length negotiations between plaintiffs' co-lead counsel and PwC that began when these parties initially discussed possible settlement of the action as to PwC in November 2000, shortly after plaintiffs agreed to settle and release their claims against the MicroStrategy Defendants (the "MicroStrategy settlement"). At the time, however, the parties held widely disparate views of the litigation, and the discussions ended with the parties at an impasse. The parties did not meet again to discuss a possible settlement until early March 2001. To this end, the parties accepted the Court's suggestion during the course of a pre-trial conference on March 15, 2001 that they meet for a mediation session with another judge in this division, and did so on March 21, 2001. This mediation session did not produce a settlement, although the parties continued to meet to discuss a settlement. These discussions intensified shortly after the April 20, 2001 summary judgment hearing and resulted in an agreement in-principle on April 27, 2001. The parties thereafter memorialized their agreement and finalized a stipulation that was signed by the parties on May 21, 2001 ("PwC Settlement). On May 24, 2001, the Court preliminarily approved the proposed settlement and directed the distribution and publication of notice of the settlement to the class.

Pursuant to an Order dated May 25, 2001, plaintiffs caused the distribution of over 69, 000 copies of the notice and accompanying proof of claim and the publication of a summary notice. Dissemination of the notice commenced before June 1, 2001 and has now been completed. Accordingly, the task at hand is to determine (i) whether the PwC Settlement should be approved as fair and adequate; (ii) whether the proposed plan of allocation should be approved as fair and adequate; (iii) whether the bar order provided for in the PwC Settlement is appropriate in the circumstances of this case; and (iv) whether the notice sent to the class and subclass comports with the requirements of due process.

II.

The legal principles applicable to the approval of this settlement have been filly discussed in the Memorandum Opinion approving the MicroStrategy settlement. See In re MicroStrategy, 2001 WL 789184, at *68. Simply put, the Court must assess whether the settlement here is both fair and adequate under the circumstances. See Evans v. JeffD., 475 U.S. 717, 742 (1986); In re Jiffy Lube Sec. Litig., 927 F.2d 155, 158— 59 (4th Cir. 1991). In doing so, the Court must consider the fairness of the settlement given "(1) the posture of the case at the time the settlement was proposed, (2) the extent of discovery that had been conducted, (3) the circumstances surrounding the negotiations, and (4) the experience of counsel in the area of securities class action litigation, and the settlement's reasonableness given

(1) the relative strength of the plaintiffs' case on the merits, (2) the existence of any difficulties of proof or strong defenses the plaintiffs are likely to encounter if the case goes to trial, (3) the anticipated duration and expense of additional litigation, (4) the solvency of the defendants and the likelihood of recovery on a litigated judgment, and (5) the degree of opposition to the settlement.

A. Fairness

As to fairness, it is important to note, as the Court earlier observed, that "counsel for both sides are nationally recognized members of the securities litigation bar." Clearly, the conduct of all counsel in this case and the result they have achieved for all of the parties confirms that they deserve the national recognition they enjoy. It is also clear that the PwC Settlement, like the MicroStrategy Settlement, resulted from extensive and intensive arm's-length negotiations that were conducted in good faith and without collusion, as evidenced by counsel's efforts through mediation and less-formal negotiations. Accordingly, it is "appropriate. . . to give significant weight to the judgment of class counsel that the proposed settlement is in the interest of their clients and the class as a whole."

But the factor that distinguishes this settlement from the MicroStrategy Settlementmdashiand more strongly compels a finding of fairness in this case — is the fact that plaintiffs' case against PwC was far more advanced by the time this settlement was reached than was plaintiffs' case against the MicroStrategy Defendants. Indeed, the PwC Settlement was reached practically on the eve of trial and after (i) plaintiffs had completed discovery, which included reviewing hundreds of thousands of pages of documents and taking and/or defending 34 depositions, which provided them with a detailed picture of the strengths and weaknesses of the case; (ii) cross-motions for summary judgment had been filed and argued; and (iii) the parties were well into their trial preparations, having exchanged exhibit lists, witness designations, and deposition designations. In this regard, it is clear that the stage of litigation at which the PwC Settlement was reached supports a finding of fairness, and that the totality of the circumstances warrant a finding that the PwC Settlement is fair.

B. Adequacy

It is also clear that an examination of the circumstances point persuasively to the conclusion that the PwC Settlement should be approved as adequate. As an initial matter, there is every reason to believe that continued litigation of plaintiffs' claims against PwC would have been as protracted and costly — if not more so — than continued litigation of plaintiffs' claims against the MicroStrategy Defendants. See In re MicroStrategy, 2001 WL 789184, at *9 Also likely is that post-trial motions and appeals would have extended the litigation and delayed any relief for plaintiffs significantly. See id In re Baldwin-United Corp., 607 F. Supp. 1312, 1320 (S.D.N.Y. 1985). Thus, as with the MicroStrategy Settlement, the old adage, "a bird in the hand is worth two in the bush," applies with particular force here.

A review of the parties' positions on the merits also favors the settlement reached. While plaintiffs believe, based on their investigation and discovery, that their claims against PwC have considerable merit and that they would prevail in a trial against PwC, no clear-eyed objective observer could fail to see that the path to victory for plaintiffs was anything but straight, smooth, or certain. As an initial matter, plaintiffs, by not compromising their claims pursuant to a fair and reasonable settlement, risked an adverse ruling on PwC's motion for summary judgment, which sought to narrow the class to only those persons who engaged in transactions involving MicroStrategy securities between March 6, 2000 and March 20, 2000, and/or PwC's motion to decertify the class. Such adverse rulings certainly would have dealt a severe blow to plaintiffs' case and likely narrowed the class significantly. It is also far from certain whether plaintiffs would have met their heavy burden of proving all elements of their Section 10(b) claimmdashinamely, that (i) PwC made a false statement or omission of material fact; (ii) with scienter; (iii) upon which plaintiffs justifiably relied; and (iv) that proximately caused plaintiffs' damages. See Herman MacLean v. Huddleston, 459 U.S. 375, 387 — 91 (1983); In re MicroStrategy, 115 F. Supp. 2d at 628. With respect to scienter, especially, plaintiffs would have confronted significant burdens in proving that PwC knew or, at the very least, recklessly disregarded that MicroStrategy' s financial statements in 1998 and 1999 were materially false and misleading and did not comply with GAAP. In this regard, PwC likely would have argued: (i) that under GAAS, auditing is a matter of judgment, and any mistakes PwC may have made were mistakes of judgment based on facts known at the time; (ii) that the transactions PwC audited were extremely complex; (iii) that PwC was misled by MicroStrategy's management; and (iv) that PwC was not responsible for MicroStrategy's quarterly financial statements because it did not audit them. Added to plaintiffs' heavy burden at trial, moreover, would have been the daunting task of demonstrating the amount of damages suffered by the class. In this respect, the damages issue would very likely have become "a battle of experts at trial, with no guarantee of the outcome in the eyes of the jury." Finally, even were plaintiffs to prevail on

liability and damages issues, such a victory potentially would have been pyrrhic, as (i) there was a substantial risk that any dollar amount awarded plaintiffs by the jury would have been reduced significantly under the PSLRA's proportionate liability scheme, as PwC likely would have shifted as much blame as possible to the Individual Defendants; and (ii) any money award would have been reduced by the value of the MicroStrategy Settlement pursuant to the PSLRA's terms, so that plaintiffs would have had to persuade the jury that their aggregate damages were in excess of approximately $100 million before they could recover any money from PwC. These risks further support the adequacy of the PwC Settlement.

Finally, it is quite significant here, as it was with the MicroStrategy Settlement, that although notice of the proposed settlement was sent to more than 69,000 members of the class, no class member filed an objection. Moreover, no class members other than the seven who originally opted out of the MicroStrategy Settlement opted-out here. Because "the reaction of the class to the settlement is perhaps the most significant factor to be weighed in considering its adequacy," the lack here of any objections and the small number of class members choosing to opt-out of the case, as with the MicroStrategy Settlement, strongly compel a finding of adequacy. Sala v. National R.R. Passenger Corp., 721 F. Supp. 80, 83 (E.D. Pa. 1989); see also Flinn v. FMC Corp., 528 F.2d 1169, 1173 (4th Cir. 1975) ("The attitude of the members of the Class, as expressed directly or by failure to object, after notice to the settlement is a proper consideration for the trial court.").

III.

A. The Plan of Allocation

No extended discussion of the PwC Settlement's plan of allocation is necessary here, for its terms are identical in all relevant respects to the plan of allocation approved as fair and reasonable in the MicroStrategy Settlement. The PwC Settlement's plan of allocation, as does the MicroStrategy Settlement's plan of allocation, fairly and rationally allocates the settlement consideration among class members and accordingly should be approved as fair and reasonable. See Class Plaint ifs v. City of Seattle, 955 F.2d 1268, 1284-85 (9th Cir. 1992); Rubenstein v. Republic Nat'l Life Ins. Co., 74F.R.D. 337, 349 (N.D. Tax. 1976); In re Oracle Sec. Litig., 1994WL 502054, at *1 (N.D.Cal. June 18, 1994).

B. The Bar Order

The PSLRA has clearly eliminated all claims for contribution brought against any settling defendant. To that end, it provides for the entry of a "settlement bar order", discharging all of the settling defendant's obligations to any non-settling person or party "arising out of the action." 15 U.S.C. § 78u-4 (f)(7)(A); see Neuberger v. Shapiro, 110 F. Supp.2d 373, 381 (E.D. Pa. 2000). In this regard, and because as a practical matter, "settlement often may be impossible without an effective and comprehensive Bar Order," the stipulation of settlement's bar order provision should be approved. U.S. Fid. Guar. Co. v. Patriot's Point Dev. Auth., 788 F. Supp. 880, 882 (D.S.C. 1992).

C. The Notice of Settlement

Finally, it is also clear that the mail and publication notice program undertaken in this case was ""the best notice practicable under the circumstances including individual notice to all members who can be identified through reasonable effort," Eisen v. Carlisle Jacquelin 417 U.S. 156, 175 (1974), and that the content of the notice sent was sufficient to "apprise the prospective members of the class of the terms of the proposed settlement and of the options that are open to them," Maher v. Zapata Corp., 714 F.2d 436, 451 (5th Cir. 1983).

IV.

For the foregoing reasons: (1) the partial settlement and the plan of allocation of the PwC Settlement are fair, adequate, and reasonable, meet the requirements of Rule 23, and thus merit approval; and (2) the bar order of the partial settlement should be approved.

An appropriate Order has issued.