Justia Mergers & Acquisitions Opinion SummariesArticles Posted in Professional Malpractice & Ethics
In re Celera Corp. Shareholder Litigation
This putative class action was before the court on an application for the approval of settlement of the class's claims for, among other things, breaches of fiduciary duty in connection with a merger of two publicly traded Delaware corporations. The target's largest stockholder, which acquired the vast majority of its shares after the challenged transaction was announced, objected to the proposed settlement. In addition, defendants' and plaintiffs' counsel disagreed about the appropriate level of attorneys' fees that should be awarded. The court certified the class under Rules 23(a), (b)(1), and (b)(2) with NOERS as class representative; denied BVF's request to certify the class on only an opt out basis; approved the settlement as fair and reasonable; and awarded attorneys' fees to plaintiffs' counsel in the amount of $1,350,000, inclusive of expenses. View "In re Celera Corp. Shareholder Litigation" on Justia Law
Steinhardt, et al. v. Howard-Anderson, et al.
Plaintiffs filed this lawsuit on behalf of a class of stockholders of Occam. Defendants moved for sanctions against all plaintiffs other than Derek Sheeler for trading on the basis of confidential information obtained in this litigation. With respect to Michael Steinhardt and the funds, the motion was granted. Consistent with prior rulings by this court when confronted with representative plaintiffs who have traded while serving in a fiduciary capacity, Steinhardt and the funds were dismissed from the case with prejudice, barred from receiving any recovery from the litigation, required to self-report to the SEC, directed to disclose their improper trading in any future application to serve as lead plaintiff, and ordered to disgorge profits. With respect to Herbert Chen, the motion was denied. View "Steinhardt, et al. v. Howard-Anderson, et al." on Justia Law
Winshall v. Viacom Int’l, Inc., et al.
This case involved a dispute over earn-out payments related to a merger between Viacom and Harmonix where plaintiff was one of the selling stockholders of Harmonix. Plaintiff sued on behalf of the selling stockholders, alleging that Viacom and Harmonix purposefully renegotiated the distribution contract with EA so as to reduce the earn-out payments payable to the Harmonix stockholders, and thus breached the covenant of good faith and fair dealing implied in the Merger Agreement. The court dismissed plaintiff's claim and held that it would be inequitable for the court to imply a duty on Viacom and Harmonix's part to share with the selling stockholders the benefits of a renegotiated contract addressing EA's right to distribute Harmonix products after the expiration of the earn-out period. View "Winshall v. Viacom Int'l, Inc., et al." on Justia Law
In re Alloy, Inc. Shareholder Litigation
This case was a class action brought on behalf of the former shareholders of Alloy, challenging a going-private transaction (Merger) that cashed out the company's public shareholders for allegedly inadequate consideration. Although the shareholders voted to approve the Merger, two of Alloy's nine directors retained their senior management positions at and received an equity interest in the now privately-held company. The former shareholders claimed that those two directors thus unfairly extracted for themselves an opportunity to share in Alloy's continued growth without offering the same opportunity to the public shareholders. Regarding the alleged breaches of fiduciary duty by the directors in negotiating and approving the Merger, the court found that the complaint failed to state a claim for damages. The court also found that the complaint failed to allege sufficient facts to support an inference that the alleged disclosure violations were the product of anything other than good faith omissions by the directors who authorized them. Because of the exculpatory provision of Alloy's certificate of incorporation, the complaint thus failed to state a claim for damages against the Alloy directors for beach of their duty of disclosure. Finally, the court also dismissed the claims for aiding and abetting against defendants who were not affiliated with Alloy. Therefore, the court granted defendants' motions to dismiss in all respects. View "In re Alloy, Inc. Shareholder Litigation" on Justia Law
Sagarra Inversiones, S.L. v. Cementos Portland Valderrivas, S.A., et al.
This action arose out of the sale of Giant Cement Holding, Inc. (Giant) by defendant Cementos Portland Valderrivas (CPV) to defendant Corporacion Uniland S.A. Sagarra Inversiones, S.L. (Sagarra) challenged the transaction on the basis of CPV's self-dealing because of its position as the majority shareholder on both sides of the transaction. Sagarra purported to bring this action individually and derivatively on behalf of nominal defendant Uniland Acquisition Corp. (Uniland Delaware). The court held that to the extent the Complaint asserted a multiple derivative action on behalf of Uniland Delaware, it must be dismissed because Sagarra did not have standing to raise those claims based on the court's review of Spanish law. The court held that for the same reasons, Counts I and II, which assert multiple derivative claims on behalf of Uniland Delaware, were dismissed. The court's determination with respect to Sagarra's lack of standing as to Counts I and II was equally applicable to Count III. The court finally held that because Count IV raised fiduciary duty claims under Spanish law, the better course of action was for the court to exercise its discretion and dismiss Count IV. Therefore, defendants' motion to dismiss the Complaint was granted and an implementing order would be entered. View "Sagarra Inversiones, S.L. v. Cementos Portland Valderrivas, S.A., et al." on Justia Law
Achaian, Inc. v. Leemon Family LLC, et al.
This case stemmed from a dispute between Omniglow, LLC's three members (Leemon, Holland, and Achaian). At issue was whether one member of a Delaware limited liability company could assign its entire membership interest, including that interest's voting rights, to another existing member, notwithstanding the fact that the limited liability company agreement required the affirmative consent of all of the members upon the admission of a new member, or, must the existing member assignee be readmitted with respect to each additional interest it acquired after its initial admission as a member. The court held that the answer depended in the first instance on the specific provisions governing the transferability of Interests in Omniglow's LLC Agreement. When Omniglow's LLC Agreement was read as a whole, as it must be, it allowed an existing Member to transfer its entire Membership Interest, including voting rights, to another existing Member without obtaining the other Members' consent. Thus, Holland's assignment of its 30% Interest to an existing member, Achaian, was effective to vest all of the rights associated with that Interest in Achaian, and Omniglow now had two coequal 50% Members. View "Achaian, Inc. v. Leemon Family LLC, et al." on Justia Law
In re Ness Technologies, Inc. Shareholders Litigation
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