Justia Mergers & Acquisitions Opinion Summaries

The case revolves around a dispute concerning a 2018 merger between FanDuel Ltd. and the U.S. assets of nonparty Paddy Power Betfair plc. The plaintiffs, founders and shareholders of FanDuel, alleged that the defendants, including FanDuel's board of directors and certain shareholders, deliberately undervalued FanDuel's assets during the merger negotiations, resulting in the preferred shareholders receiving all the benefits of the merger while the common shareholders received nothing. The plaintiffs claimed that the defendants breached their fiduciary duties by failing to obtain a fair valuation of the merger consideration and by promoting their own interests at the expense of the common shareholders.The Supreme Court of New York County partially granted and partially denied the defendants' motions to dismiss the complaint. The court held that New York law applied to the plaintiffs' claims because the internal affairs doctrine was inapplicable where the defendants were not current officers, directors, and shareholders at the time of the lawsuit. The court further held that the plaintiffs adequately stated their claims for breach of fiduciary duty under New York law.The Appellate Division reversed the order of the Supreme Court, holding that Scots law applied to the plaintiffs' claims under the internal affairs doctrine. The court stated that the directors of a company generally owe duties only to the company as a whole rather than to the shareholders, except in special factual circumstances not present in this case. Therefore, the court concluded that the plaintiffs failed to state a claim for breach of fiduciary duty under Scots law.The Court of Appeals of New York reversed the order of the Appellate Division, holding that while Scots law applied to the plaintiffs' claims, the plaintiffs' allegations could give rise to a possible inference that special circumstances were present, which could give rise to a cognizable fiduciary duty claim under Scots law. Therefore, the court held that the Appellate Division erroneously granted the defendants' motions to dismiss the first, second, and fourth causes of action. View "Eccles v Shamrock Capital Advisors, LLC" on Justia Law

The case involves 21 U.S. citizens and the family of a deceased U.S. citizen who were victims of rocket attacks by the Hizbollah terrorist organization in Israel in 2006. The plaintiffs allege that the Lebanese Canadian Bank (LCB) provided financial services to Hizbollah, including facilitating millions of dollars in wire transfers through a New York-based correspondent bank. In 2011, LCB and Société Générale de Banque au Liban SAL (SGBL), a private company incorporated in Lebanon, executed a purchase agreement where SGBL acquired all of LCB's assets and liabilities. In 2019, the plaintiffs brought similar claims against SGBL, as LCB's successor, in the Eastern District of New York for damages stemming from the 2006 attacks.The federal district court dismissed the action for lack of personal jurisdiction over SGBL. The court interpreted several Appellate Division and federal decisions to allow imputation of jurisdictional status only in the event of a merger, not an acquisition of all assets and liabilities. On appeal, the Second Circuit certified two questions to the New York Court of Appeals, asking whether an entity that acquires all of another entity's liabilities and assets, but does not merge with that entity, inherits the acquired entity's status for purposes of specific personal jurisdiction, and under what circumstances the acquiring entity would be subject to specific personal jurisdiction in New York.The New York Court of Appeals answered the first question affirmatively, stating that where an entity acquires all of another entity's liabilities and assets, but does not merge with that entity, it inherits the acquired entity's status for purposes of specific personal jurisdiction. The court declined to answer the second question as unnecessary. The court reasoned that allowing a successor to acquire all assets and liabilities, but escape jurisdiction in a forum where its predecessor would have been answerable for those liabilities, would allow those assets to be shielded from direct claims for those liabilities in that forum. View "Lelchook v Société Générale de Banque au Liban SAL" on Justia Law

Google Inc. and On2 Technologies, Inc. entered into a merger agreement in 2009. Thereafter, Plaintiff brought a class action on behalf of himself and other similarly situated On2 shareholders, alleging that On2’s board of directors had breached its fiduciary duty to its shareholders. Plaintiffs subsequently agreed with One2 and its directors to settle all claims with respect to the merger. After a hearing, Supreme Court found the settlement to be fair and in the best interest of the class members but refused to approve the settlement because it did not afford out-of-state class members of the opportunity to opt out, thereby prohibiting class members from pursuing any individual claims that are separate and apart from the class settlement. The Appellate Division affirmed. The Court of Appeals affirmed, holding that the lower courts properly refused to approve the proposed settlement because the settlement would deprive out-of-state class members of a cognizable property interest. View "Jiannaras v. Alfant" on Justia Law

In 2012, Defendant Kenneth Cole proposed a going-private merger of Kenneth Cole Productions, Inc. that was subject to approval by both a special committee of independent directors and a majority of the minority shareholders. Several shareholders, including Plaintiff, commenced separate class actions alleging breach of fiduciary duty by Cole and the directors. Although the shareholder vote occurred after an amended complaint was filed, 99.8 percent of the minority shareholders voted in favor of the merger. In the amended complaint, Plaintiff sought a judgment declaring that Cole and the directors had breached the fiduciary duties they owed to the minority shareholders, an award of damages to the class, and a judgment enjoining the merger. Supreme Court granted Defendants’ motion to dismiss. The Court of Appeals affirmed, holding (1) in reviewing challenges to going-private mergers, New York courts should apply the business judgment rule as long as certain shareholder-protective conditions are present; (2) if those measures are not present, the entire fairness standard should be applied; and (3) applying that standard to this case, the courts below properly determined that Plaintiff’s allegations did not withstand Defendants’ motions to dismiss. View "In re Kenneth Cole Prods., Inc." on Justia Law