Justia Mergers & Acquisitions Opinion Summaries

The City of New York sued defendants under federal and New York State antitrust laws, seeking to prevent the companies from merging. The city appealed from a judgment of the district court granting summary judgment to defendants and dismissing the city's complaint without leave to amend. The court agreed with the district court that the alleged relevant market definition, as the "low-cost municipal health benefits market[,]" was legally deficient and concluded that the district court's denial of leave to amend was not an abuse of discretion. Accordingly, the court affirmed the judgement of the district court. View "City of New York v. Group Health Inc., et al." on Justia Law

Plaintiffs, shareholders of Ness Technologies, Inc. (Ness), moved to expedite proceedings in this putative class action, which they filed to enjoin a proposed transaction through which Ness's largest shareholder, Citi Venture Capital International (CVCI), would, through a wholly owned subsidiary, acquire Ness in a cash transaction at $7.75 per share (Proposed Transaction). Plaintiffs contended that the Proposed Transaction was the product of a flawed sales process and that the members of the Board, aided and abetted by CVCI, breached their fiduciary duties to plaintiffs and the class by approving the transaction. Plaintiffs asserted both price and process claims and claims that the Board's disclosures regarding the Proposed Transaction were inadequate. The court held that plaintiffs' Motion for Expedited Proceedings was granted only to the extent that they could take expedited, but necessarily limited and focused, discovery regarding the question of whether either the Board's or the Special Committee's financial advisors were conflicted because of their relationships with CVCI. The motion was denied in all other aspects. View "In re Ness Technologies, Inc. Shareholders Litigation" on Justia Law

Intercontinental Exchange, Inc. and the Board of Trade of the City of New York, Inc. (collectively, defendants), merged in 2007. Plaintiff was a member of the Board of Trade before the merger and the merger agreement required that if a member, including plaintiff, wished to continue in the newly merged enterprise, the member had to submit an Election Form specifying that preference by a stated deadline. Plaintiff did not receive the Election Form until after the deadline had passed and thereafter, defendants learned that many members, including plaintiff, had failed to submit the Election Form. Defendants waived the deadline and then, in an ad hoc manner and without notice to any member, imposed a new deadline. Defendants subsequently decided that plaintiff's Form was untimely and, of all the post-deadline-filled Forms, plaintiff's Form was the only one that defendants deemed untimely and refused to honor. Thereafter, plaintiff filed an action alleging breach of contract and the Court of Chancery ruled in favor of defendants. The court concluded, however, that defendants waived the initial deadline and also failed to retract that waiver by providing reasonable notice of their new deadline. Because the retraction of the waiver was invalid as a matter of law, plaintiff's Election Form was timely. Accordingly, the judgment of the Court of Chancery was reversed and the matter remanded for further proceedings. View "Amirsaleh v. Bd of Trade of the City of New York Inc., et al." on Justia Law

This case arose out of a sale-leaseback transaction that occurred in 2001. On July 10, 2011, the seller-lessees' parent company announced plans for a proposed transaction whereby it would seek a new credit facility and undergo an internal reorganization. As part of a subsequent reorganization, substantially all of its profitable power generating facilities would be transferred from existing subsidiaries to new "bankruptcy remote" subsidiaries, except for two financially weakened power plants. On July, 22, 2011, plaintiffs brought this action seeking to temporarily restrain the closing of the proposed transaction on the grounds that it violated the successor obligor provisions of the guaranties and would constitute a fraudulent transfer. The court found it more appropriate to analyze plaintiffs' motion for a temporary restraining order under the heightened standard for a preliminary injunction. Having considered the record, the court held that plaintiffs have failed to show either a probability of success on the merits of their breach of contract and fraudulent transfer claims or the existence of imminent irreparable harm if the transaction was not enjoined. Therefore, the court denied plaintiffs' application for injunctive relief. View "Roseton Ol, LLC, et al. v. Dynegy Holdings Inc." on Justia Law

Plaintiff brought this lawsuit to challenge the approximately $42.5 million acquisition of American Surgical Holdings, Inc. (American Surgical) by AH Holdings, Inc. Now before the court was plaintiff's interim application for an award of attorneys' fees and expenses where plaintiff contended that an award of $450,000 was appropriate under Delaware law and would compensate his attorneys for bringing this action, which he argued resulted in American Surgical's corrective disclosures in its definitive proxy statement. The court denied plaintiff's Interim Application for an Award of Attorneys' Fees and Expenses as it was premature where the amount of $450,000 was interim in nature because plaintiff's price and process claims remained viable. The court held that it would reconsider the application once plaintiff's remaining claims have been litigated. View "Frank v. Elgamal" on Justia Law

Defendant entered into an Employment Agreement with his employer before the employer entered into a merger. After defendant was terminated by his employer and post-merger disputes arose as to the amounts his employer owed him, defendant filed a demand for arbitration under the Employment Agreement's arbitration provision. The employer commenced this action to enjoin the arbitration as preempted by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq. The employer alleged federal question jurisdiction under 28 U.S.C. 1331 because the severance dispute "arises out of an [ERISA] employee benefit plan" and therefore state law claims were preempted, and supplemental jurisdiction under 18 U.S.C. 1367 over non-ERISA claims. The court considered ERISA's statutory language, purpose, and historical context and held that an individual contract providing severance benefits to a single executive employee was not an ERISA employee welfare benefit plan within the meaning of section 1002(1). The court also held that ERISA preempted state laws that "relate to" an employee benefit plan. Consequently, further questions arose because the Employment Agreement included two provisions that could "relate" to the Employment Agreement to other programs of the employer that were ERISA plans. As neither parties nor the district court considered this jurisdictional issue, the court remanded for further proceedings. View "Dakota, MN & Eastern R.R. Corp. v. Schieffer" on Justia Law

This case arose when plaintiff filed a complaint asserting causes of action related to defendant's failure to repay certain loans. Defendant appealed from an amended judgment of the district court denying in part defendant's Federal Rule of Civil Procedure 60 motion to amend the court's August 28, 2008 judgment (original judgment), which, inter alia, requested that the court strike defendant as a party subject to the judgment because plaintiff had not moved for summary judgment against it. The court held that because plaintiff did not move for summary judgment against defendant, the district court erred in granting summary judgment against it. The court also held that the district court's determination that defendant defaulted in failing to file a timely answer to the complaint did not otherwise provide a valid basis for maintaining defendant as a party liable on the amended judgment. Therefore, the court reversed the decision of the district court insofar as it granted summary judgment against defendant and remanded with instructions to strike defendant as a party subject to the amended judgment. View "Priestley v. Headminder, Inc." on Justia Law

In 2002 one of the company's founders informed the company that he wanted the company to buy out his 23 percent stock ownership interest. The company agreed to pay $255,908 plus $400,000, the equivalent of one year's salary, for a one-year covenant not to compete. The company amortized the covenant payments over the 12-month duration, which straddled tax years 2002 and 2003. The IRS determined that the covenant was an amortizable section 197 intangible, amortizable over 15 years and not over the duration of the covenant. The tax court upheld the decision. The First Circuit affirmed. A "section 197 intangible" includes any covenant not to compete entered into in connection with the acquisition of any shares, substantial or not, of stock in a corporation that is engaged in a trade or business. View "Recovery Group, Inc. v. Comm'r of Internal Revenue Ser." on Justia Law

Plaintiffs, former shareholders and the representative and attorney-in-fact for all shareholders of Kinexus Corporation (Kinexus), commenced this action asserting claims against Advent Software, Inc. (Advent) for breach of contract and unjust enrichment arising out of a December 31, 2001 agreement entered into by Advent to acquire Kinexus. Advent subsequently moved to dismiss the action because of Kinexus' failure to prosecute and Advent argued that dismissal with prejudice was appropriate under Court of Chancery Rules 41(b) and 41(e). The court held that Advent's motion to dismiss for failure to prosecute was denied where the court was not convinced that these circumstances necessitated dismissal because of the court's preference for resolving cases on the merits and because Kinexus appeared to have renewed their efforts to diligently prosecute the matter. Accordingly, counsel were requested to confer and to promptly submit a case scheduling order so that discovery could be completed and a trial date could be established. View "Kinexus Representative LLC v. Advent Software, Inc." on Justia Law

This case arose when Del Monte Foods Company announced that it had agreed to be acquired by a consortium of Kohlberg Kravis Roberts & Co. L.P., Vestar Capital Partners, and Centerview Partners (collectively, Sponsors). A number of familiar entrepreneurial plaintiffs' firms filed putative class actions challenging the merger. Plaintiffs subsequently sought an interim award of attorneys' fees and expenses for causing defendants to issue supplemental disclosures and obtaining a preliminary injunction. The court held that the application for an interim fee award was granted with respect to benefits conferred by the Proxy Supplement. For those benefits, Lead Counsel was awarded fees and expenses of $2.75 million. Therefore, the court held that the application was otherwise denied without prejudice and could be renewed at a later time. View "In re Del Monte Foods Co. Shareholders Litigation" on Justia Law