Posts tagged Class Actions

Delaware Supreme Court Reverses the Superior Court's Certification of Class in Suit Against Securities Dealers

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. More › Share

District Court Dismisses Potential Securities Fraud Class Action Involving Only Foreign Parties

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. More › Share

Partial Summary Judgment Denied by Court Of Chancery On "Entire Fairness" And Disclosure Grounds

In re Tele-Communications Inc. Shareholders Litig., C.A. No. 16470, 2005 WL 3547674 (Del. Ch. Dec. 21, 2005), opinion revised and superseded by No. CIV.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 <and a lack of fairness of the impugned merger transaction. More › Share

Class Representative Awarded Additional Fee Compensation For Shouldering Extra Burden By Court Of Chancery

Raider v. Sunderland, et al., C.A. No. 19357 NC, 2006 WL 75310 (Del. Ch. Jan. 04, 2006) (Revised Jan. 05, 2006). This is a class action involving board actions and fee requests by the plaintiff representative. More › Share

Federal Court Appoints Metzler Group as Lead Plaintiff Under the PSLRA And Fed R. Civ. Pro. 23

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. More ›

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The District Court Holds That Group of Investors Led By German Investment Firm was Entitled to Appointment as Lead Plaintiff

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. More › Share

Entire Fairness Applied to Third-party Merger Transaction Where Controlling Shareholder Acquired Minority Stake in Resulting Company

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. More › Share

District Court Denies Motion for Leave to File a Second Amended Complaint

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. More › Share

District Court Finds in Favor of Alleged Alter Ego Predecessor to Bankrupt Corporation

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. More ›

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Court of Chancery Slashes Fees to Plaintiffs' Counsel Where Complaint Was Filed on Negotiable Merger Proposal

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." More › Share

Motion for Summary Judgment Granted Where Shareholders Ratified Internal Recapitalization

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. More › Share

Court of Chancery Dismisses Stockholders' Claims Because Claims were Derivative and Demand was Not Excused

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. More › Share

Court of Chancery Outlines Quasi-Appraisal Remedy for Minority Shareholders Cashed Out in a Short-Form Merger

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. More › Share

Court Sanctions Counsel Under R.11 & R.37 For Inexcusable Violations

Heinrich Beck v. Atlantic Coast PLC., et al., C.A. No. 303-N, (Del. Ch. Feb. 11, 2005)(published at 868 A.2d 840 (Del. Ch. 2005)). This opinion deals with attorney sanctions under Court of Chancery Rules 11 and 37. More › Share

Defendant Fails To Rebut Presumption Of Beneficial Causation For Merger Fee Award

In re Plains Resources Inc. Shareholders Litigation, C.A. No. 071-N, 2005 WL 332811 (Del. Ch. Feb. 04, 2005). This is an action for plaintiff's attorney fees following settlement of fiduciary duty-based shareholder class actions. More › Share