dissenting:
Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997) heralded a new era of judicial scrutiny of class action certification and settlement. The majority opinion marks a significant retreat from that philosophy, sanctioning a class settlement obtained without any record evidence that the class representatives were even members of the class. Because the Delaware judgment extinguished .the rights of absent class members without affording them due process of law, I respectfully dissent.1
I
Before hedging its bet by reaching the merits, the majority first concludes that we are precluded from deciding the due process questions presented to us because the Supreme Court has already done so. The opening passage of Matsushita Electric Industrial Co., Ltd. v. Epstein, 516 U.S. 367, 116 S.Ct. 873, 134 L.Ed.2d 6 (1996) belies this:
This case presents a question whether a federal court may withhold full faith and credit from a state-court judgment ap*652proving a class-action settlement simply because the settlement releases claims within the exclusive jurisdiction of the federal courts.
Id. at 369, 116 S.Ct. 873.
The Court further explained:
We need not address the due process claim [of inadequate representation] ... because it is outside the scope of the question presented in this Court. See Yee v. Escondido, 503 U.S. 519, 533, 112 S.Ct. 1522, 118 L.Ed.2d 153 (1992). While it is true that a respondent may defend a judgment on alternative grounds, we generally do not address arguments that were not the basis for the decision below. See Peralta v. Heights Medical Center, Inc. 485 U.S. 80, 86, 108 S.Ct. 896, 99 L.Ed.2d 75 (1988).
Id. at 379 n. 5, 116 S.Ct. 873 (1996).
If the majority’s recognition of the scope of its holding were not already plain, Justice Ginsburg’s partial concurrence makes it pellucid:
Although the Ninth Circuit decided the case without reaching the due process check on the full faith and credit obligation, that inquiry remains open for. consideration on remand.
Id. at 389, 116 S.Ct. 873.
The nuances that the majority strains to draw from the opinion simply cannot bear the weight placed on them. There is nothing in the opinion that relieves us of our responsibility to examine the merits of the due process argument fully and fairly. Indeed, if any unmistakable signal were sent by the opinion, it was to do just that.
II
Judgments binding absent litigants in class action suits are an exception to the general rule that one is not bound by a judgment in personam in a litigation to which he or she is not a party. See Hansberry v. Lee, 311 U.S. 32, 40-41, 61 S.Ct. 115, 85 L.Ed. 22 (1940). Absent class members may be bound by the judgment if they have, in fact, been adequately represented by parties who are present. Id. at 42-43, 61 S.Ct. 115. Due process requires that the procedure employed to reach a binding judgment “fairly insures the protection of the interests of absent parties who are to be bound by it.” Id. at 42, 61 S.Ct. 115.
This is, in the words of the Hansberry court almost sixty years ago, a “familiar doctrine.” Id. Yet its import seems lost in this case. In order for absent class members to have “adequate representation” within the meaning of the Due Process Clause, the class must be free of structural conflict. Although analyzed in the context of Fed.R.Civ.P. 23, this proposition was central to the seminal analysis in Amchem. 521 U.S. at 625-28, 117 S.Ct. 2231. In a class settlement, there must be “structural assurance of fair and adequate representation for the diverse groups and individuals affected.” Id. at 627, 117 S.Ct. 2231. The class representative “must possess the same interest and suffer the same injury shared by all members of the class he represents.” Schlesinger v. Reservists Committee to Stop the War, 418 U.S. 208, 216, 94 S.Ct. 2925, 41 L.Ed.2d 706 (1974).
In the case at hand, there were three different types of shareholders who were part' of the class: (a) those who traded on the open market; (b) those who tendered their shares; and (c) those who received spin-off shares. . In addition, there were differences among the class members as to the legal theories available. The interests of the Epstein plaintiffs in advancing the federal claims were directly antagonistic to those of the Delaware class representatives, who were precluded by federal securities law from asserting those claims in state court. By the time settlement occurred, the statute of limitations prevented the Delaware class from litigating the federal claims in any court. Thus, there were irreconcilable differences in claims and damages among the class members. These structural conflicts should have act*653uated an inquiry by the Delaware Vice-Chancellor, and should have resulted in the creation of sub-classes to assure the adequate representation of absent class members.
The conflict prior to settlement approval was palpable. Because they could not assert federal causes of action, those claims were of no value to the class representatives and their counsel except as a bargaining chip to enhance the value of their state claims. Indeed, settlement of the federal action was the only method by which the Delaware class could receive any money from the federal claims. Thus, it was plainly in the best interest of class representatives to settle the federal claims at any price. Class representatives had absolutely no incentive to obtain fair valuation of the federal claims, because of their inability to assert the claims.
The divergence of class interests quickly manifested itself. While Delaware counsel was admitting to the Chancery Court that they had reviewed the Wasserman claim “relatively quickly” and in the complete absence of discovery, before concluding that the claim was “frivolous,” the MCA shareholders were extensively litigating that very claim in federal district court in this Circuit. And while the Delaware counsel was arguing before the Chancery Court that the Ninth Circuit was “unlikely” to overturn the district court’s dismissal of the Wasserman claim, the MCA shareholders were in the process of successfully appealing that decision before this court. In addition to the inadequate representation of the Wasserman issue, it is also noteworthy that there is not a single mention of the $21 million payment to Sheinberg in the Delaware counsel’s mem-oranda or arguments to the Chancery Court, although it is clear that Delaware counsel was aware of this claim, which had a potential value of $17.80 per share.
“[A]dequate representation ... depends on ... an absence of antagonism.” Brown v. Ticor Title Insurance Co., 982 F.2d 386, 390 (9th Cir.1992). In this case, the antagonistic interests, injury and claims among the class members resulted in significant structural conflicts. Because these conflicts were unresolved, the class representation was constitutionally infirm and cannot bind absent class members.
In addition, the actual representation provided by Delaware class counsel was inadequate for reasons persuasively detailed in Judge Norris’s opinion on remand. See Epstein, 126 F.3d at 1251-55. Class counsel did not investigate or properly evaluate the federal claims. Class counsel provided a misleading and incorrect analysis of the claims to the Chancery Court. The interests of the Epstein plaintiffs were not represented adequately by class counsel; indeed, their interests were undermined by the antagonistic strategy of class counsel.
Finally, there is no record evidence that the class representatives were even members of the putative class. A non-waivable prerequisite to approval of a class settlement binding absent class members is that the class representative be a member of the class. See East Texas Motor Freight System, Inc. v. Rodriguez, 431 U.S. 395, 403, 97 S.Ct. 1891, 52 L.Ed.2d 453 (1977) (“As this Court has repeatedly held, a class representative must be part of the class.... ”). The best argument that the class representatives could offer was that such an allegation was contained in the complaint, that there were a large number of law firms involved and that the settlement was accepted by class members.2 *654None of this, of course, comes close to being record evidence. This explanation can be credited only if one believes that representational adequacy or adherence to procedural due process may be established by circumstantial evidence.
The majority decision correctly observes that Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 105 S.Ct. 2965, 86 L.Ed.2d 628 (1985), enumerated “various procedural safeguards that are necessary to bind absent class members.” In fact, Shutts specifically indicates that “the Due Process Clause of course requires that the named plaintiff at all times adequately represents the interests of the absent class members.” 472 U.S. at 812, 105 S.Ct. 2965 (citing Hansberry v. Lee, 311 U.S. 32, 42-43, 61 S.Ct. 115, 85 L.Ed. 22 (1940)). The litigation leading up to the Delaware settlement thus violated the “minimal procedural due process protection” due to the Epstein plaintiffs: adequate representation “at all times.”
“[I]f the plaintiff was not adequately represented in the prior action, or there was a denial of due process, then the prior decision has no preclusive effect.” Brown, 982 F.2d at 386. Thus, the Epstein plaintiffs are entitled as a matter of federal law to assert their claims in this action.
Ill
In addition to federal due process concerns, the Delaware Supreme Court’s own interpretation of Delaware Chancery Courts Rule 23, as articulated in Prezant v. De Angelis, 636 A.2d 915 (Del.1994), requires us to address the Epstein plaintiffs’ collateral attack of this settlement on the grounds of inadequate representation. Under Delaware law, issue preclusion attaches only when a question of fact essential to the judgment actually has been litigated and determined by a valid and final judgment. Messick v. Star Enterprise, 655 A.2d 1209, 1211 (Del.1995); Orange Bowl Corp. v. Jones, 1986 WL 13095, at *2 (Del.Super.1986); Evans v. Frank E. Basil, Inc., 1986 WL 3973, at *2 (Del.Super.1986). The Delaware record shows that the issue of adequacy of representation was not litigated during the settlement proceedings.
The notice to the class members regarding the settlement hearing did not indicate that the issue of adequacy of representation, either by class representative or by class counsel, would be addressed.
Perhaps as a consequence of the absence of notice, the four objectors who participated in the Delaware proceedings did not litigate the question of the adequacy of representation. In addressing the concerns that were litigated by the objectors, the Delaware Chancery Court first determined that the fact that few small shareholders would actually opt out of the settlement, as was their right, did not undermine the validity of the settlement agreement. In re MCA, Inc. Shareholders Litigation, 1993 WL 43024, at *4. Second, it determined that it did not need to await the Ninth Circuit’s appellate decision in the Epstein matter in order to approve the settlement. Id. at *5. Third, the Chancery Court concluded that those shareholders who received delayed notice had assumed the risk of such delays in holding their shares under a “street name.” Id. And finally, it determined that there was insufficient evidence to support the objectors’ claim that the agreement was a collusive *655means of obtaining settlement of the federal claims. Id.
Of these four explicit findings, it is clear that only the second and fourth claim are even tangentially relevant to the claims raised by the Epstein plaintiffs before this court today. The second finding indicated that the valuation of the state claims were not dependant upon the resolution of the federal matter. But the Chancery Court did not assert that the plaintiffs raising the federal claims were adequately represented in the Delaware action. The fourth finding simply makes clear the fact that there was no collusive settlement “deal” between the plaintiffs and attorneys on both sides of the state court matter. The fact that there was no finding of wrongdoing certainly does not preclude a finding that the federal plaintiffs were inadequately represented by the settling class.
In short, none of the Chancery Court’s findings address the claim of the plaintiffs before this court today: namely, that the federal plaintiffs were inadequately represented before the Delaware court, and that, consequently, a decision to bind them to the terms of the settlement would violate their rights to due process.
The Epstein plaintiffs correctly argue that to be bound by the settlement decision they are entitled under Delaware law to specific findings that they were adequately represented in the Delaware Chancery Court. Such findings are required in order to bind the federal litigants to the settlement terms. In Prezant, 636 A.2d at 924, the Delaware Supreme Court explicitly held that a Court of Chancery is required to “articulate on the record its findings regarding the satisfaction of the Rule 23 criteria and supporting reasoning.” Yet the statement offered by the Delaware Chancery Court asserting that the plaintiffs in the action “fairly and adequately protected the interests of the Settlement Class” offers no “supporting reasoning” aside from that offered to address the challenges raised by the four objectors. No findings exist in the Chancery Court’s decision that would indicate that the representation of the absent federal plaintiffs was adequate, because the matter was never actually litigated before that court.
Thus, while the Supreme Court decision in Matsushita makes it clear that the objectors will be bound by the judgment of the Delaware court with respect to the matters litigated,3 the Delaware court’s decision cannot be read to bind those whose claims were simply never represented before it. The individual objectors who voluntarily appeared at the fairness hearing were not authorized by the absent class members to represent their interests, nor were they certified by the state to do so. Their appearance at the hearing could therefore not bind other parties with respect to the issue of adequacy of representation.4 Thus, the majority’s determination today also runs against the settled law of Delaware.
IV
Providing the Epstein plaintiffs with the opportunity to raise their due process claims does not, as the majority claims, result in the “collateral second guessing” of the determinations and review of the *656Delaware courts. Those determinations are valid, and, to the extent that they comply with due process protections afforded by the Constitution, they are binding upon this court. Thus, the result originally reached by the panel on remand was not violative of cooperative federalism or comity. The majority today gives license to those who would run to a favorable and remote state court to obtain settlements premised on bargain-basement valuations of federal claims, even when those claims clearly predominate over potential state causes of action. This result must be especially discouraging to responsible law firms specializing in class action suits, who assiduously and carefully construct subclasses to assure adequate representation of diverse interests, even at the expense of their own fees.
The Epstein plaintiffs seek to raise claims that received neither determination nor review in the Delaware courts. Structural conflicts of interest precluded adequate representation of absent class members. The Epstein plaintiffs were not adequately represented in the Delaware state court proceedings by either the class representatives or the objectors, and their claim was never litigated in Delaware state court. In denying them the right to bring their meritorious federal claims before us, we deny them due process of law. We also significantly diminish the proper oversight role of the judiciary over class action settlements.
I respectfully dissent.
. Insofar as is possible, I shall not repeat Judge Norris's forceful analysis, as detailed in the panel opinion on remand. See Epstein v. MCA, Inc., 126 F.3d 1235 (9th Cir.1997). It demands an independent and careful examination and is, in my view, dispositive.
. The class representatives did not reply to this charge in their briefs. At oral argument, the following colloquy occurred:
Question: Where is there evidence in the record that any of the named representatives were actually members of the class?
Answer: In the Delaware proceeding, there were twelve different class representatives, represented by twenty different law firms and all of them were possessed of the state and federal claims that were resolved in the Delaware action.
*654Question: Is your answer basically that there is nothing of evidence in the record, but everyone was on notice and you are relying on that?
Answer: I'm certainly relying on the fact that a notice went to every single class member outlining the settlement, the pen-dency of the federal action, the pendency of state action, what each class member would receive and what each member would forfeit, and I'm relying on the fact that the settlement proceeds which were accepted by all class members, including the Epstein plaintiffs, were only paid to shareholders who tendered pursuant to the tender offer and I'm relying on the fact that the Delaware complaint was brought on behalf of all MCA shareholders.
. Thus, interpreting the Matsushita decision to leave the Epstein plaintiffs' due process claim open for determination on remand does not, as the majority contends, render Matsu-shita an "advisory decision.” On the contrary, the Court's decision makes it clear that all participants in the Delaware action will be bound by the judgment in spite of the exclusively federal nature of any claims they sought to raise elsewhere.
. This conclusion does not undermine the finality of a class action settlement to any degree greater than that already permissible under the law. In Prezant, the Delaware Supreme Court pointed out that prudent class action defendants can foreclose subsequent collateral action absolutely by asking for a judicial finding, supported through reasoning and evidence, that all plaintiffs' "due process right to adequate representation has been satisfied.” 636 A.2d at 925-26. Such a finding simply was not made in this case.