Posted on August 20, 2010 by Edward M. McNally
Dubroff v. Wren Holdings LLC, C.A. 3940-VCN (August 20, 2010)
This decision clarifies when a class action may be brought arising out of a claim based on the duty of disclosure. Briefly, when there was no request for the stockholders to vote [such as when they just receive notice of a completed corporate action], then a plaintiff must prove "reliance, loss causation and damages." As those elements of the claim may vary for each individual plaintiff, a class action is inappropriate. Delaware does not recognize the "fraud on the market" theory in those instances.
Posted on April 15, 2010 by Edward M. McNally
Coughlan v. NXP B.V. , C.A. 5110-CC (April 15, 2010)
When a payout in an M&A deal is dependent on post closing events, somehow the former stockholders must be represented if there are to be any adjustments. Appointment of a stockholder representative is often done for that purpose. Here the Court held that the stockholder representative may also sue to enforce the rights of a class of stockholders to such payments.
Posted on March 8, 2010 by Katherine J. Neikirk
In re Revlon, Inc. Shareholders Litigation, Consol. C.A. No. 4578-VCL (March 16, 2010)
Vice Chancellor Laster took the unusual step of removing and replacing co-lead counsel and Delaware liaison counsel in a proposed settlement of a class action challenging a proposed merger by a controlling stockholder and a subsequent exchange offer by the target company. Despite the refusal of the Special Committee's financial advisor to render a fairness opinion on the proposed merger and the refusal of the Special Committee to recommend the original transaction, plaintiffs' counsel engaged in minimal litigation efforts and quickly reached a settlement with the defendants. Vice Chancellor Laster was highly critical of the actions of the New York and Delaware firms representing the class and proposing the settlement. Among other things, Vice Chancellor Laster noted the New York and Delaware law firms' extensive history of filing and settling representative cases in the Court of Chancery, the existence of significant discrepancies between the plaintiff counsel's actions as set forth in the memorandum of understanding and the exchange offer, the strong possibility of the entire fairness standard applying to the exchange offer, the failure of the exchange offer to receive a majority of the minority shares and the lack of litigation by the plaintiffs' counsel. Although the new counsel had only sought to represent stockholders who exchanged their shares in the exchange offer, Vice Chancellor Laster appointed that counsel to represent the entire class and take over the litigation. Interestingly, Vice Chancellor Laster rejected the leadership structure proposed by new counsel, which would have consisted of two non-Delaware firms known for performing the same type of work as former counsel as lead counsel and a Delaware firm less known for performing similar work as Delaware liaison counsel. Instead, Vice Chancellor Laster appointed the Delaware firm to act as lead counsel along with the non-Delaware firms and gave the Delaware firm decision-making authority in the event of disagreements.
Plaintiffs' counsel and defense counsel should pay close attention to this decision in negotiating settlements, drafting disclosures related to such settlements and defending such settlements in the Court of Chancery. This decision could also encourage law firms not traditionally associated with frequent representative litigation in the Court of Chancery to bring such actions and seek appointment as lead counsel.
Posted on October 2, 2009 by Edward M. McNally
Dutiel v. Tween Brands Inc., C.A. 4743-CC (October 2, 2009).
The Court has recently explained the criteria to determine who should be appointed lead counsel in a class action. In this decision it added a new twist, giving advantage to counsel that has shown it gets along best with co-counsel in the case. This just makes sense, if only to avoid the Court supervising the play in the sandbox.
Note, however, that on a motion for reargument, the Court stressed that not too much should be made of its re ference to coorperation among some counsel as a factor to be consided. Moreover, in that October 28, 2009 opinion the Court detailed how to assess the relative stockholder interest in deciding whose counsel should lead.
Recently, at least one fellow Delaware attorney has suggested that the way to win such favor from your co-counsel is to known as generous with the fee splitting that occurs when the case ends. Given that the division of the fee awarded by the Court among all the plainitff attorneys is not done publicly, that may be an insight into the world of plainitffs counsel that is worth remembering.
Posted on August 24, 2009 by Edward M. McNally
In Re Countrywide Corporation Shareholders Litigation, C.A. 3464-VCN (August 24, 2009)
This is another in a series of decisions explaining the limits of a release in settlement of a class action. The opinion particularly focuses on when a common law fraud or federal securities law claim may be released.
Posted on July 30, 2009 by Edward M. McNally
Kuo v. Genius Products Inc., C.A. 3329-CC (July 30, 2009).
It is settled law that, when a corporation abandons a proposed corporate transaction after a suit is filed, to avoid payment of fees, the corporation must prove the litigation was not the cause of the transaction's termination. That burden was not carried here and, as a result, fees were awarded. The decision is also interesting because it shows that it is possible that the amount of the fees will be reduced when there is some doubt the litigation was the sole cause of the end of the transaction.
Posted on June 25, 2009 by Edward M. McNally
CME Group Inc.v. Chicago Board Options Exchange Inc., C.A. 2369-VCN (June 25, 2009)
Class action settlements often have a claim procedure that is complicated. Class members miss the deadlines and mess up their filings. However, as this decision illustrates, the Court is liberal in extending deadlines and forgiving filing mistakes.
Posted on June 12, 2009 by Edward M. McNally
Gatz v. Ponsoldt, C.A. 174-CC (June 12, 2009)
This decision raises an interesting question over whether attorneys fees should be paid when the fees in a way that does not benefit the company for whom the suit was filed. Briefly, the facts were that the defendant directors were found to be entitled to have the settlement of the claims against them paid by their company under their rights to be indemnified. The settlement balance was to go to the stockholder class. The Court's concern was that this meant the company's stockholders were not really benefiting if they, in effect, were funding the settlement by their company.
This issue was resolved when it turned out that under the odd circumstances of this case that the stockholders who were receiving the benefit of the settlement were largely different from those who now owned the company. Had that not been the case, however, the result may not have been the same. This means that there is a potential issue when defendant directors are indemnified for the damages. Whether the amount of fees will be affected in those circumstances remains to be seen.
Posted on May 29, 2009 by Edward M. McNally
Oliver v. Boston University, C.A. 16570-VCN (May 29, 2009)
What to do about unclaimed funds from a class action settlement is often a problem. While the funds should not go back to the defendants, thereby rewarding them, the funds otherwise might be escheated to the State or sent to a charity. Here the Court has the unclaimed finds going to Boston University, and the discussion will serve as guidance in future cases.
Posted on April 29, 2009 by Edward M. McNally
Tooley v. AKA Financial Inc., C.A. 18414-CC (April 29, 2009)
While it is well known that the failure to prosecute a class action may lead to the case being dismissed, many practitioners just do not believe in the need to move a case along or risk losing it. Here, the Chancellor of the Delaware Court of Chancery sends a clear message that delay in litigating a case will lead to the dismissal of the claims in the future.
Posted on March 31, 2009 by Edward M. McNally
In re Countrywide Corporation Shareholders Litigation, C.A. No. 3464-VCN (Del. Ch. March 31, 2009)
This decision provides an excellent outline of what claims may be released in a class action settlement. Here the objectors to the settlement had a damage claim unique to them but that the proposed settlement would have released. The Court held that the objectors needed to be given the right to opt out of the settlement or the release that was part of the settlement must be more limited so as to not affect their rights in their individual claim.
Posted on December 19, 2008 by Edward M. McNally
Marie Raymond Revocable Trust v. MAT Five LLC, C.A. 3843-VCL (Del. Ch. Dec. 19, 2008)
This decision has a good summary of the law governing certification of a class and when to approve a class settlement. Here the settlement permitted class members to opt out without the loss of any rights to pursue other related litigation. Thus, this decision distinguished the recent decision in Off v. Ross that had disapproved a settlement without opt out rights.
The interesting question is whether these two cases now mean that opt out classes are favored in Delaware. We doubt it. However, it is certainly the case that settlements with hardly any benefits to class members are receiving even greater scrutiny.
Posted on July 29, 2008 by Edward M. McNally
In Re: TD Banknorth Shareholders Litigation, C.A. 2557-VCL (Del. Ch. July 29, 2008)
It has long been known that some pension funds and other institutional investors use the same counsel over and over to bring their class actions. This decision recognizes that fact and holds that it is not a reason to disqualify the proposed class representative.
Posted on July 2, 2008 by
The plan of allocation approved in Ginsburg v. Philadelphia Stock Exchange et. al., C.A. No. 2202-CC is a landmark decision for those in the business of litigation arbitrage, buying shares of a company that is involved in a class action that may lead to substantial settlement proceeds.
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Posted on April 10, 2008 by R. Christian Walker
In re The Bear Stearns Companies, Inc., Shareholder Litig., C.A. No. 3643-VCP (Del. Ch. Apr. 9, 2008).
In an opinion issued yesterday by Vice Chancellor Parsons (HT: M&A Law Prof and Pileggi), which you can access here, the Court of Chancery ordered a stay of the Delaware actions filed against Bear Stearns in favor of those filed in New York. The Court’s reasoning recognizes the national importance of the matter and a concern for the stability of the financial markets and national economy.
This blog previously reported here on the class actions filed in Delaware against Bear Stearns and its directors, seeking to enjoin the sale to JPMorgan Chase. A few days earlier, however, other Bear Stearns stockholders had filed similar suits in the New York Supreme Court. Based on those earlier New York filings, the defendants moved the Court of Chancery to dismiss or stay the Delaware action. This blog provided coverage of the oral argument here, remarking that the arguments raised several interesting questions, such as (1) the extent to which Delaware courts would defer to New York courts on matters of Delaware corporate law and (2) how Delaware courts would handle the issue of comity urged by the defendants.
Those questions have now been answered. The Court of Chancery decided to exercise its discretion to stay the Delaware proceedings for reasons of comity and the orderly and efficient administration of justice:
As discussed in this memorandum opinion, I have decided in the exercise of my discretion and for reasons of comity and the orderly and efficient administration of justice, not to entertain a second preliminary injunction motion on an expedited basis and thereby risk creating uncertainty in a delicate matter of great national importance.
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Posted on March 27, 2008 by Edward M. McNally
In The Matter Of The Philadelphia Stock Exchange Inc., Del. Sup., C.A. 613/615, 2007 (Del. March 27, 2008)
This comprehensive decision explains Delaware law on the settlement of a class action when the proceeds of a settlement will involve buyers, sellers, and holders of stock in a Delaware corporation. This allocation problem is a difficult one and the Supreme Court held that allocation issues may be resolved in a separate hearing after the settlement with the defendants is approved.
The opinion is also important in explaining the scope of a release that the court will approve in connection with a settlement. There is often a tension between the interests of the defendants who ask for the broadest release possible and the interests of other litigants who want the release limited. Here, for example, objectors to the settlement had a federal case pending that arose out of the same core facts involved in this settlement. The Delaware Supreme Court permitted the release to include a claim arising out of those core facts even if it might affect the federal litigation.
Posted on March 24, 2008 by R. Christian Walker
See latest developments on 03/31/08 above: Last Thursday, a class action complaint was filed against Bear Stearns and its directors in the Court of Chancery. The complaint alleges that the company has failed to maximize shareholder value by agreeing to be purchased by JPMorgan Chase for $2 per share. The complaint further alleges that, by agreeing to the deal, the company has favored numerous constituencies over the shareholders. You can access the complaint here.
Update: The New York Times reports here that JPMorgan Chase raised its offer to $10 per share. Professor Ribstein has commented here, along with Pileggi here.
Further Update: An additional class action was filed against Bear Stearns on Monday by the Wayne County Employees' Retirement System (access the complaint here). And, yesterday a TRO was filed on behalf of the plaintiffs in both actions, seeking to enjoin the sale, which is set to close on April 8 (access the TRO here). Both actions, and the accompanying TRO, have been assigned to Vice Chancellor Parsons.
Posted on March 6, 2008 by Edward M. McNally
In re SS&C Technologies, Inc. Shareholders Litigation, C.A. No. 1525-VCL (March 6, 2008)
For a long time it has been evident that some plaintiffs show up frequently as class representatives. The recent scandal involving perhaps the major securities class action law firm has only reminded everyone of the odd "coincidence" that one person could have so many class actions to bring. Now the Court of Chancery has done something about it and a warning has been issued as a result. This decision awarded attorney fees to the defendants in a man-bites-dog twist to the ending of a class action.
Of course, the facts in this case are highly unusual. When the named plaintiff tried unsuccessfully to have the court approve a settlement basically for attorney fees alone, he then tried to just dismiss the case, conditioned upon defendants' agreement to keep certain information confidential. Instead, the defendants fought back and discovered the named class representative had a string of investment entities that in turn owned very small stakes in many publicly owned corporations. No rational financial purpose justified these investments, except as a way to pursue law suits. When the plaintiff conditioned settlement on secrecy, the court held that was bad faith and awarded attorney fees to the defendants for resisting such a dismissal.
It is now likely that we will see much more aggressive pursuit of oppositions to class certifications. Discovery of the named plaintiff and his connections to the class counsel will be the new trend. As this decision illustrates, the ability to do data searches to find all the actions filed by a plaintiff and any law firm will also aid in that effort.
Posted on February 28, 2008 by R. Christian Walker
Yesterday, February 27, 2008, two new complaints were filed against Yahoo! in the Court of Chancery. The first is a class and derivative action, Plumbers and Pipefitters Local Union No. 630 Pension-Annuity Trust Fund v. Yahoo!, C.A. 3578, which you can access here. The second, Mercier v. Yahoo!, C.A. 3579, an additional class action to those previously filed, can be found here.
The plaintiff in the second action, Vernon A. Mercier, was also the lead plaintiff in Mercier v. Inter-Tel (Delaware), Inc., 929 A.2d 786 (Del. Ch. 2007), which you can access here. In a decision in that action last August, Vice Chancellor Strine denied the plaintiff’s application for a preliminary injunction and found that directors fearing that stockholders are about to make an unwise decision that poses the threat that all stockholders will irrevocably lose a unique opportunity to receive a premium for their shares have a compelling justification for a short postponement in the merger voting process to allow more time for deliberation. The decision is worth reviewing for its interesting discussion of the interplay between the Blasius and Unocal doctrines.
Posted on February 15, 2008 by Morris James
Millett v. Truelink, Inc., 2008 WL 345937 (D.Del. Feb. 7, 2008)
In this opinion the District Court granted the provider of a credit report monitoring service summary judgment on claims that it violated state consumer protection provisions and contractual obligations. Plaintiffs, who were spouses, had purchased a subscription to Defendant’s service, and alleged that Defendant failed to alert them to activity that resulted from theft of the husband’s social security number. Plaintiffs alleged that Defendant had violated Kansas’ Consumer Protection Act (“KCPA”) as well as breached the Credit Monitoring Member Agreement (“Member Agreement”) that Plaintiffs entered into when purchasing the service. Plaintiffs moved for class certification and summary judgment on their KCPA claims, and Defendant moved for summary judgment on the KCPA and several breach of contract claims. The Court found that neither the activity nor the advertising and marketing activities of Defendant were in violation of the KCPA provisions on unconscionable acts and practices, and Defendant was not in breach of the Member Agreement.
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Posted on July 30, 2007 by Morris James
Baker v. MBNA Corp., 2007 WL 2009673 (D. Del. July 6, 2007)
This case is a consolidated class action against MBNA and certain officers for violations of §§ 10(b) and 20(a) of the Exchange Act, as wells as regulations promulgated thereunder. Plaintiffs alleged that the Defendants violated the Act in connection with allegedly false statements made in announcements and public filings regarding restructuring charges incurred and anticipated growth. Plaintiffs further alleged that the Defendants engaged in insider trading. Defendants moved to dismiss the complaint under F.R.C.P. Rules 9(b) and 12(b)(6). The District Court granted the motion with respect to the 10(b) claims again two of the officers, but denied it in all other respects.
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Posted on July 30, 2007 by Morris James
Baker v. MBNA Corp., 2007 WL 2009673 (D. Del. July 6, 2007)
This case is a consolidated class action against MBNA and certain officers for violations of §§ 10(b) and 20(a) of the Exchange Act, as wells as regulations promulgated thereunder. Plaintiffs alleged that the Defendants violated the Act in connection with allegedly false statements made in announcements and public filings regarding restructuring charges incurred and anticipated growth. Plaintiffs further alleged that the Defendants engaged in insider trading. Defendants moved to dismiss the complaint under F.R.C.P. Rules 9(b) and 12(b)(6). The District Court granted the motion with respect to the 10(b) claims again two of the officers, but denied it in all other respects.
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Posted on July 30, 2007 by Morris James
Cannon v. MBNA Corp., 2007 WL 2009672 (D. Del. July 6, 2007)
In this class action lawsuit brought by former MBNA employees, Plaintiffs asserted various breaches of fiduciary duty arising under ERISA in connection with administration of their 401(k) plan. Plaintiffs’ claims arose out of MBNA’s 2005 announcement of expected 10% annual growth for several years. Plaintiffs’ 401(k) plan contained MBNA stock. Several months later MBNA announced lower-than-expected earnings and MBNA stock fell nearly 35%. Plaintiffs alleged that the Defendants breached various fiduciary duties that resulted in this loss. Defendants were MBNA, the former CEO of MBNA, the committee responsible for the administration of the 401(k), and the individual committee members. Defendants moved to dismiss the various claims under F.R.C.P. 12(b)(6). The District Court found that dismissal as to all counts in the complaint was inappropriate at the pleading stage, and denied the motion.
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Posted on July 20, 2007 by Edward M. McNally
Brand v. Deason, C.A. No. 2123-VCL (July 20, 2007).
When the Court is interested in the issues presented by a case and those issues are important to Delaware law, it will rarely grant an application for a stay of the proceedings in favor of another jurisdiction. When the application only comes after discovery has begun a stay is even less likely.
Here, the Court pointed out that option backdating law is still emerging in Delaware with only three decisions in this interesting area. Hence, there was good reason for a Delaware court to decide what is the law of Delaware and not stay its hand.
Posted on July 19, 2007 by Edward M. McNally
In Re: TD Banknorth Shareholders Litigation, C.A. No. 2557-VCL (July 19, 2007).
It is a mistake to take for granted that the Court of Chancery will approve any class action settlement. Here, the Court rejected a settlement because it appeared that a valid theory of recovery had been overlooked by the plaintiff and the settlement gave very little to the class.
Also of interest was the Court's interpretation of a standstill term in the stock acquisition agreement that limited the acquirer from seeking to obtain even more stock in the target. The Court implied that asking the target board to initiate merger discussions was an invalid attempt to get around that standstill provision.
Posted on November 29, 2006 by Edward M. McNally
In Re SS&C Technologies, Inc. Shareholders Litigation, C.A. No. 1525-N (Del. Ch. November 29, 2006).
The Court of Chancery for over 30 years has cautioned against reaching a settlement of a class or derivative case and closing the transaction that was the subject of the litigation without having first secured court approval of the settlement. The concern is that the closing may make the court's approval a moot question. Here, the settlement involved additional disclosures in connection with the stockholder vote and payment of attorney fees, but the Court was not asked to approve the settlement before the transaction closed. After the fact, the Court declined to approve the settlement.
There is no clear solution to the problems presented when there is a need to close a deal before a hearing may be scheduled, with the usual 45 days notice to the class. At a minimum, the Court should be notified of the settlement and probably should be asked for leave to close the deal before the settlement hearing occurs. This is particularly true when the settlement does not involve any post-closing relief, such as future corporate governance provisions.
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Posted on November 20, 2006 by
Gibbs v. Fairbanks Capital Corp., C.A. No. 04C-06-258-JRJ (Del. Super. Nov. 20, 2006).
In this opinion denying Defendant’s motion for summary judgment, the Superior Court rejected Defendant’s argument that the affirmative defense of res judicata barred Plaintiffs’ claims for damages. Plaintiffs, residential mortgage customers of Defendant, sued for breach of contract, consumer fraud, defamation, and violation of the Uniform Deceptive Trade Practices Act. After Defendant failed to answer the complaint, the Court entered default judgment against it, and Defendant’s subsequent motion for an order vacating that judgment was denied. Defendant then moved for summary judgment as to Plaintiffs’ damages claims, arguing that res judicata barred the claims because Plaintiffs were class members in a similar suit in Massachusetts, and could not relitigate the same damages claims in the Delaware action. The Superior Court denied Defendant’s motion for summary judgment, concluding that it “[could not] assert res judicata as an affirmative defense under the particular circumstances….”
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Posted on November 20, 2006 by Raj Srivatsan
American Seed Co., Inc. v. Monsanto Company, Civ. No. 05-535-SLR, 2006 WL 3276831 (D. Del. Nov. 13, 2006).
Plaintiffs brought a class action alleging that the defendant and its subsidiaries illegally maintained monopolistic practices in four product markets by driving competing biotechnology corn products out of the market through illegal financial incentives and bundled rebate programs. These programs allegedly enabled the defendants to charge monopoly prices to farmers and retailers.
Plaintiffs sought to certify three categories of classes pursuant to Fed.R.Civ.P. 23(b)(3): (1) a group of national direct purchasers of the products whose claims would be brought under federal antitrust law; and (2) groups of purchasers in Iowa and Minnesota, with claims under their respective state laws. The plaintiffs further identified various subclasses within each class on the basis of certain characteristics of the corn products purchased. The Court examined the challenges connected with the procedural requirements under R.23(a) in a detailed manner. First, the Court noted that if the plaintiffs were not direct purchasers of the corn seed, they may not be proper representatives of the national direct purchasers' class nor under the plaintiffs’ own definitions of class member. Second, the Court further noted that if the plaintiffs were direct purchasers, they may still not have suffered direct injury if they passed on the excess charges to their customers. However, because the Court denied certification on alternate grounds – namely under R. 23(a)(2) and (3) - it declined to address the standing issues.
The plaintiffs primarily relied on their expert witness to prove that common questions predominated in this case and they advanced the Bogosian presumption to demonstrate common impact injury, citing In re Linerboard Antitrust Litig., 305 F.3d 145, 151 (3d Cir. 2002)(in turn citing Bogosian v. Gulf Oil Co., 561 F.2d 434, 455 (3d Cir. 1977)). To this end they advanced their expert’s damage formulas for the dual purpose of damage measurement and common injury. The Court however rejected the plaintiffs’ claim because they did not furnish any factual basis demonstrating how the expert’s formulas could provide proof on damages and common injury. This is because the Bogosian presumption of impact requires additional evidence of class-wide impact to sustain class certification. In short, the Court rejected the plaintiffs’ expert’s common impact theory because it was not factually supported. Accordingly, the Court denied the plaintiffs’ motion for class certification.
Posted on September 21, 2006 by Patricia R. Uhlenbrock
Premier Parks, Inc. v. TIG Insurance Co., C.A. No. 02C-04-126-PLA, 2006 WL 2709235 (Del. Super. Ct. Sept. 21, 2006).
The parties filed cross-motions for summary judgment on counterclaims in an ongoing declaratory judgment action. The plaintiff, TIG Insurance Company ("TIG"), sought a declaration that it was only liable to pay an allocated share of a global settlement that its insured, Six Flags, Inc. ("Six Flags") negotiated in a class action civil rights lawsuit that alleged that Six Flags had engaged in discriminatory practices at one of its amusement parks. TIG also sought a declaration that it was not responsible for covering the attorneys' fees that Six Flags incurred in defending the class action and negotiating the settlement.
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Posted on August 18, 2006 by Edward M. McNally
In re PNB Holding Co. Shareholders Litigation, C.A. No. 28-N (Del. Ch. August 18, 2006).
As it has several times in recent years, the Court of Chancery has decided a case combining appraisal rights and a class claim for inequitable treatment in a merger. The Court held that when directors get together to freeze out the other stockholders the entire fairness test applies even when they do not own a majority of the stock. This follows because the interests of those directors in remaining shareholders differs from the other shareholders who will be frozen out. Absent some insulating procedure such a majority of the minority vote, the directors then have the burden of proving the merger was entirely fair.
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Posted on May 31, 2006 by Katherine J. Neikirk
Posted on May 23, 2006 by Patricia R. Uhlenbrock
In re Veritas Software Corp. Securities Litig., C.A. No. 04-831-SLR (Consol.) (D. Del. May 23, 2006).
Defendants moved to dismiss a consolidated securities class action that alleged violations of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 on the grounds that the plaintiffs failed to allege fraud with particularity as required by the Private Securities Litigation Reform Act of 1995 (the "PSLRA").
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Posted on May 18, 2006 by Katherine J. Neikirk
Gesoff v. IIC Indus. Inc., C.A. No. 19473, 2006 WL 1458218 (Del. Ch. May 18, 2006).
Plaintiff filed a class action, claiming a merger was the subject of unfair dealing and produced an unfair price. Another plaintiff filed a statutory appraisal claim based on the same merger.
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Posted on May 9, 2006 by Katherine J. Neikirk
Khanna v. McMinn, C.A. No. 20545-NC, 2006 WL 1388749 (Del. Ch. May 9, 2006).
Defendants moved to dismiss class and derivative complaint under Court of Chancery Rules 23.1 and 12(b)(6). Defendants also moved to disqualify the plaintiffs, to strike portions of the complaint and for continued sealing of the complaint.
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Posted on April 12, 2006 by Fotini A. Skouvakis
Regal Entertainment Group v. Amaranth LLC, C.A. No. 1226-N, 2006 WL 948257 (Del. Ch. Apr. 12, 2006).
Plaintiff, Regal Entertainment Group, asked the Court of Chancery to grant its motion for certification of defendant class. Plaintiff is the issuer of a series of convertible notes under an indenture and defendant Amaranth is one of the largest holders of these notes. After a public dispute regarding Regal's method of calculating the number of shares of common stock upon conversion, Regal filed a lawsuit against Amaranth seeking a declaration that its calculation was correct. Amaranth counterclaimed that its calculation of conversion was correct. The only objection that Amaranth raised to the motion for certification was that its status as a hedge fund should relieve it of the obligation to serve as the representative of a defendant class. The court granted Regal's motion for class certification finding that Amaranth is well-positioned to represent the class as it seeks to advance an interpretation of the calculation provisions of the indenture contrary to Regal's, which affects all noteholders.
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Posted on March 29, 2006 by Fotini A. Skouvakis
In re Triarc Companies, Inc. S'holders Litig., C.A. No. 16700, 2006 WL 903338 (Del. Ch. Mar. 29, 2006).
After the voluntary dismissal of a class action, plaintiffs petitioned the Court of Chancery for attorneys' fees and expenses. The court found that plaintiffs' counsel was entitled to fees for the preparation of the amended complaint and litigation efforts undertaken before the action that caused the voluntary dismissal. Plaintiffs' counsel was not entitled to fees for their work in connection with the original complaint nor for their work performed after the claims in the amended complaint were mooted.
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Posted on March 8, 2006 by Patricia R. Uhlenbrock
Hartman v. Pathmark Stores, Inc., C.A. No. 05-403-JJF, 2006 U.S. Dist. LEXIS 9349 (D. Del. Mar. 8, 2006).
Plaintiff filed a class action complaint against defendants, alleging violations of Section 14(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and breach of the fiduciary duty of loyalty by the directors of Pathmark Stores, Inc. ("Pathmark") in connection with a transaction between Pathmark and The Yucaipa Companies, LLC ("Yucaipa"). Plaintiff also moved for appointment as lead plaintiff, with his counsel as lead counsel. Defendants moved to dismiss the complaint.
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Posted on February 16, 2006 by Raj Srivatsan
In re Cencom Cable Income Partners, L.P., C.A. No. 14634-NC, 2006 WL 452775 (Del. Ch. Feb. 16, 2006).
This Court of Chancery action arose out of a breach of fiduciary duty claim filed on Oct. 20, 1995. Defendants unsuccessfully moved to dismiss for failure to prosecute under Court of Chancery Rule 41.
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Posted on February 7, 2006 by Patricia R. Uhlenbrock
Hyland v. Harrison, C.A. No. 05-162-JJF, 2006 WL 288247 (D. Del. Feb. 7, 2006).
Dr. Stephen Blau, the lead plaintiff in a securities class action pending in the U.S. District Court for the Northern District of Illinois (the "Illinois Action"), moved to intervene in the later-filed present action in Delaware that alleged similar claims against the defendants by the Delaware plaintiffs, after he learned that the Delaware plaintiffs had filed several amici curai briefs seeking to have the Illinois court vacate its order appointing Dr. Blau as lead plaintiff and to transfer the Illinois Action sua sponte to Delaware. Dr. Blau also sought to have the Delaware district court stay the Delaware action in order to allow the first-filed Illinois Action to proceed.
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Posted on February 7, 2006 by Patricia R. Uhlenbrock
In re AstroPower Inc. Securities Litig., C.A. No. 03-260-JJF, 2006 WL 288120 (D. Del. Feb. 7, 2006).
Plaintiffs alleged that defendants violated Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 by fraudulently overstating AstroPower's revenue in press releases and in SEC filings, and that, as a result, they had purchased their AstroPower stock at artifically inflated prices. Plaintiffs also alleged that the defendants qualified as "controlling persons", as that term is defined in Section 20 of the Exchange Act, of AstroPower and therefore liable to plaintiffs. Defendant Thomas J. Stiner, a Chief Financial Officer, Senior Vice President and director of AstroPower, moved to dismiss the complaint as to him.
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Posted on February 2, 2006 by Patricia R. Uhlenbrock
Eames v. Nationwide Mutual Insurance Co., C.A. No. 04-1324-KAJ, 412 F. Supp. 431 (D. Del. 2006).
Plaintiffs filed a proposed class action alleging that defendant Nationwide Mutual Insurance Company ("Nationwide") misrepresented to class members the limits of liability of the Personal Injury Protection ("PIP") coverage that was included in Nationwide's automobile policies. Nationwide moved to dismiss for failure to state a claim.
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Posted on January 31, 2006 by Jason C. Jowers
Wit Capital Group, Inc. v. Benning, No. 568, 2004, 2006 WL 249983 (Del. Jan. 31, 2006).
The plaintiffs sued the defendants, Wit Capital Group Inc. and Wit Capital Corporation ("Wit"), securities broker/dealers, alleging that the defendants breached their account agreement by failing to allow the plaintiffs to purchase certain IPO shares. The plaintiffs argued, pursuant to Superior Court Civil Rule 23(b)(3), that common questions of law or fact predominated over questions affecting individual class members. Reversing the Superior Court's decision to certify a class, the Delaware Supreme Court found that the plaintiffs failed to show fact of common injury affecting all plaintiffs.
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Posted on January 24, 2006 by Patricia R. Uhlenbrock
Blechner v. Daimler-Benz AG, C.A. No. 04-331-JJF, 2006 WL 167835 (D.Del. Jan. 24, 2005).
Plaintiffs, on behalf of themselves and other foreign shareholders who invested in securities of DaimlerChrysler AG, filed a class action complaint alleging securities fraud in connection with the merger of Chrysler Corporation and Daimler-Benz AG. Defendants moved to dismiss the complaint.
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Posted on January 10, 2006 by Raj Srivatsan
In re Tele-Communications Inc. Shareholders Litig., C.A. No. 16470, 2005 WL 3547674 (Del. Ch. Dec. 21, 2005), opinion revised and superceded by No. CIV. A. 16470, 2005 WL 3642727 (Del. Ch. Dec. 21, 2005), (revised Jan. 10, 2006)(Westlaw citation not available).
This summary judgment action originates from a Consolidated Amended Complaint that alleged nondisclosure of material information
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Posted on January 5, 2006 by Raj Srivatsan
Posted on December 9, 2005 by Raj Srivatsan
In re Molson Coors Brewing Company Securities Litig., 233 F.R.D. 147 (D.Del. Dec. 2, 2005).
This Memorandum Order deals with the appointment of lead counsel in three purported class claims for alleged violations of federal securities laws. The actions were consolidated by the Court. The class claims ensued from the 2005 merger and agreement between Molson, Inc., ("Molson"), the third largest brewer in Canada and Adolph Coors Company ("Coors"), the third largest brewer in the U.S., creating the Molson Coors Brewing Company ("Molson Coors").
The Court held that the Metzler Group would act as lead plaintiff and its counsel would be lead counsel.
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Posted on December 2, 2005 by Liza H. Sherman
In re Molson Coors Brewing Company Securities Litigation, 233 F.R.D. 147 (D.Del., December 02, 2005).
In a consolidated securities fraud actions, plaintiffs filed competing motions for appointment of lead plaintiff and approval of selection of lead counsel.
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Posted on November 4, 2005 by Joseph S. Naylor
In re LNR Propert Corp. Shareholders Litigation, C.A. No. 674-N, 2005 WL 3418631 (Del. Ch. Nov. 4, 2005, rev'd Dec. 14, 2005).
Former shareholders filed fiduciary class action in connection with a cash-out merger, naming corporation and former directors as defendants. The complaint alleged that the corporation's controlling shareholder negotiated to sell the company to a third-party investment firm in all-cash deal. The complaint further alleged that, as part of the transaction, the controlling shareholder and other members of company management agreed to invest approximately $184 million to acquire a 25% equity stake in the surviving entity. Defendants moved to dismiss for failure to state a claim.
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Posted on October 13, 2005 by Liza H. Sherman
Brashears v. 1717 Capital Management, 2005 WL 2585247 (D.Del., October 13, 2005).
Plaintiff filed a motion for leave to file a second amended complaint. The Complaint alleged that Defendants 1717 Capital Management and Nationwide Mutual Insurance Co. d/b/a Nationwide Provident violated § 10(b) of the Securities and Exchange Act of 1934, 15 U.S.C. § 78j(b), and Securities and Exchange Commission Rule 10(b)-5 through their insurance sales practices. The Court denied Plaintiff's motion.
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Posted on September 13, 2005 by Liza H. Sherman
VFB LLC v. Campbell Soup Co., 2005 WL 2234606 (D.Del., September 13, 2005).
Plaintiff brought an action alleging that Defendant engineered a fraudulent transfer of over $600 million from Plaintiff's predecessor in interest, Vlasic Foods International, Inc., ("VFI"), to Defendant, that Defendant controlled VFI's directors and caused them to breach their fiduciary duties, that VFI paid illegal dividends to Defendant, that Defendant was VFI's alter ego, and that Defendant's Proof of Claim against VFI's bankruptcy estate was either voidable or should be equitably subordinated.
The Court dismissed the action in its entirety and found in favor of Defendant and against Plaintiff on all counts.
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Posted on June 6, 2005 by Liza H. Sherman
In Re Cox Communications Inc. Shareholders Litigation, C.A. No. 613-N, 879 A.2d 604(Del. Ch. June 6, 2005)
Vice Chancellor Strine ruled on a fee request in a case arising out of a proposal by the Cox Family to take Cox Communications private. The Family proposed a merger on fully negotiable terms with an opening bid of $32. The proposal was immediately followed by a flurry of class action lawsuits, as well as the formation of a special committee to review and evaluate the terms of the offer. The Family tentatively agreed with a special committee of independent directors to a price of $34.75 per share subject to approval by a majority of the minority stockholders and conditioned on settlement of the outstanding lawsuits, a final fairness opinion, and agreement on the terms of a final merger agreement.
Counsel for the plaintiffs eventually agreed that the $34.75 price accepted by the special committee was fair, accepted the other terms of the transaction, and agreed to settle their claims. After settlement, the Cox family agreed not to oppose a request by plaintiffs' counsel for payment of attorneys' fees of up to $4.95 million. Certain Cox stockholders, however, did object to the fee request and the Court of Chancery heard their obections.
The Court slashed a $4.95 million fee request to an award of $1.275 million and advised the plaintiff's bar to consider that award "generous."
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Posted on May 27, 2005 by Liza H. Sherman
Rosser v. New Valley Corporation, et al., C.A. No. 17272-N, 2005 WL 1364624 (Del. Ch. May 27, 2005)
Defendants filed a motion for summary judgment where Plaintiff alleged proposed internal recapitalization favored director shareholders. Plaintiff challenged the adequacy of the fairness opinion, the disclosures to shareholders and the sufficiency of the Proxy Statement because it failed to disclose separate valuations of New Valley's various assets and lines of business
The Court of Chancery granted the Defendants' motion for summary
judgment.
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Posted on April 29, 2005 by Fotini A. Skouvakis
In re J.P. Morgan Chase & Co. S'holder Litig., 2005 WL 1076069 (Del. Ch. April 29, 2005), aff'd, 2006 WL 585606 (Del. Mar. 8, 2006).
J.P. Morgan Chase & Co. ("JPMC") and Bank One agreed to a business combination that was expected to create the second largest financial institution in the country. JMPC paid a premium over the market share price for Bank One, effectively making JPMC the acquirer and the Bank One the target. After the merger was completed, the stockholders of the acquirer sued its directors, alleging breaches of fiduciary duty with regard to the acquisition. Their claims stemmed from the allegation that the directors paid too much for the acquired bank. The defendants moved to dismiss the complaint on the basis that the claims were derivative, not direct, and that demand was not excused. The court granted defendants motion to dismiss.
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Posted on March 4, 2005 by Fotini A. Skouvakis
Gilliland v. Motorola, Inc., 873 A.2d 305 (Del. Ch. 2005).
Plaintiff sought a class-wide "quasi-appraisal" remedy for minority stockholders eliminated in a short-form merger. Statutory appraisal was impractical for two reasons. First, formalistically, the minority stockholders no longer owned shares in the merged subsidiary and without the shares, they could not make the demand required by the appraisal statute. Second, from a practical standpoint, the two-year delay made it impossible to recreate the factual context necessary to have statutory appraisal. Therefore, Vice Chancellor Lamb granted the quasi-appraisal remedy and outlined its procedure.
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Posted on February 11, 2005 by Raj Srivatsan
Posted on February 4, 2005 by Raj Srivatsan
