Justia Corporate Compliance Opinion Summaries

This was an appraisal proceeding brought pursuant to 8 Del. C. 262. Petitioners, former shareholders and managers of a prison healthcare detention company, sought appraisal of their shares following an all cash acquisition of the company for $40 million. The court found that the fair value of Just Care as of September 30, 2009 was $34,244,570. The parties shall cooperate to determine the amount of the interest award in accordance with the rulings in the opinion and petitioners shall present, on notice, an appropriate proposed order of final judgment specifying, among other things, the corresponding fair value per common share and per Series A preferred share within 10 days.View "Gearreald v. Just Care, Inc." on Justia Law

This dispute arose from the merger between plaintiff's start-up company, LaneScan, and VSAC. Plaintiffs complained that the Merger improperly deprived them of their Notes and that a return of capital provision was inappropriately excised from LaneScan's Amended and Restated Limited Liability Company Operating Agreement in conjunction with the merger. For damages, plaintiffs requested a return of their original investment in LaneScan with pre- and post-judgment interest, attorneys' fees and expenses. The court granted plaintiffs' request for a declaratory judgment with respect to the Notes and the Security Agreement, and it reserved decision on plaintiffs' request for an award of legal fees and expenses related to the Notes Claims, to the extent such request was based upon section 2.3 of the Notes and plaintiffs' successful showing on the declaratory judgment claim. The court ruled in favor of defendants with respect to all of plaintiffs' other claims.View "Dawson v. Pittco Capital Partners, L.P." on Justia Law

This action arose out of the merger of Answers with A-Team, a wholly-owned subsidiary of AFCV, which in turn, was a portfolio company of the private equity firm Summit (collectively, with A-Team and AFCV, the Buyout Group). Plaintiffs, owners of Answers' stock, filed a purported class action on behalf of themselves and all other similarly situated public stockholders of Answers. The court concluded that the complaint adequately alleged that all of the members of the Board breached their fiduciary duties. Therefore, the motions to dismiss the First Cause of Action were denied, except as to the disclosure claim that plaintiffs have abandoned. The court also concluded that plaintiffs have adequately pled that the Buyout Group aided and abetted a breach of the Board's fiduciary duty. Therefore, the motions to dismiss the Second Cause of Action were denied. View "In re Answers Corp. Shareholders Litigation" on Justia Law

This was a class action brought on behalf of the common unit holders of a publicly-traded Delaware limited partnership. In March 2011, the partnership agreed to be acquired by an unaffiliated third party at a premium to its common units' trading price. The merger agreement, which governed the transaction, also provided for a separate payment to the general partner to acquire certain partnership interests it held exclusively. The court concluded that defendants' approval of the merger agreement could not constitute a breach of any contractual or fiduciary duty, regardless of whether the conflict committee's approval was effective. The court also found that the disclosures authorized by defendants were not materially misleading. Therefore, plaintiffs could not succeed on their claims under any reasonable conceivable set of circumstances and defendants' motion to dismiss was granted.View "In re K-Sea Transportation Partners L.P. Unitholders Litigation" on Justia Law

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

This action arose out of the merger of American Surgical with merger Sub, a wholly-owned subsidiary of Holdings, which, in turn, was an affiliate of Great Point. Plaintiff brought this purported class action to challenge the merger and alleged that American's Surgical Board and its Control Group breached their fiduciary duties in connection with the merger. Plaintiff also alleged that the Purchasing Entities aided and abetted those breaches of fiduciary duty. The court granted defendants' motion to dismiss Cause of Action IV, which alleged that the Purchasing Entities aided and abetted the breaches of fiduciary duty committed by the members of the Control Group and Board. The court, however, denied the motion to dismiss as to Causes of Action I, II, and III. View "Frank v. Elgamel, et al." on Justia Law

Stockholder plaintiffs sought a preliminary injunction to enjoin a merger between El Paso and Kinder Morgan. The CEO of El Paso undertook sole responsibility for negotiating the sale of El Paso to Kinder Morgan in the merger but did not disclose to El Paso's Board his interest in working with other El Paso managers in making a bid to buy El Paso's exploration and production (E&P) business. Further, the Board and management of El Paso relied in part on advice given by a financial advisor, Goldman Sachs, which owned 19% of Kinder Morgan and controlled two Kinder Morgan board seats. The court concluded that plaintiffs have a reasonable likelihood of success in proving that the merger was tainted by disloyalty. Because, however, there was no other bid on the table and the stockholders of El Paso, as the seller, have a choice whether to turn down the merger themselves, the balance of harms counseled against a preliminary injunction. Although the pursuit of a monetary damages award could not be likely to promise full relief, the record did not instill in the court the confidence to deny, by grant of an injunction, El Paso's stockholders from accepting a transaction that they could find desirable in current market conditions, despite the disturbing behavior that led to its final terms.View "In Re El Paso Corporation Shareholder Litigation" on Justia Law

This derivative action challenged a series of related-party transactions. Defendants moved for judgment on the pleadings, contending that laches barred the bulk of the claims. Defendants were partly right, laches barred the challenges to certain stock options granted in 2004 and 2005. Laches also barred a portion of the challenge to compensation received under certain employment agreements and rent-free sublease. With respect to these claims, the doctrine applied to the extent the compensation was paid and rent-free space provided before March 18, 2008. The doctrine did not apply to the extent that compensation was paid and rent-free space provided on or after March 18, 2008. On a final set of claims, the court granted plaintiffs leave to replead because although the complaint alleged facts sufficient to invoke the doctrine of equitable tolling, the pleading failed to identify when plaintiffs subsequently found out about the self-dealing transactions.View "Buerger, et al. v. Apfel, et al." on Justia Law

This action was before the court on a motion to preliminarily enjoin an all-cash negotiated tender offer for all of the shares of a biopharmaceutical company. Plaintiffs, shareholders of the target company, claimed that the offer was for an unfair price and was the result of an unfair and flawed sales process. Plaintiffs also claimed that the solicitation materials recommending the tender offer contained materially false and misleading information. As a result, plaintiffs sought to have the tender offer enjoined before its consummation. The court concluded that plaintiffs have failed to show a reasonable likelihood that they would succeed in proving that the challenged transaction was unfair or that the directors breached their fiduciary duties of care or loyalty, including their disclosure obligations, in approving the transaction. Therefore, the court denied plaintiffs' motion to preliminarily enjoin the tender offer.View "In re Micromet, Inc. Shareholders Litigation" on Justia Law

This case involved Bancorp's agreement to sell BankAtlantic to BB&T. Plaintiffs, institutional trustees, sued to enforce debt covenants that prohibited Bancorp from selling "all or substantially all" of its assets unless the acquirer assumed the debt. The evidence at trial established that Bancorp was selling substantially all of its assets, and BB&T had not agreed to assume the debt. The ensuing event of default would result in the debt accelerating. Bancorp could not pay the accelerated debt. Because this eventuality would inflict irreparable harm on plaintiffs, the court entered contemporaneously an order permanently enjoining Bancorp from consummating the sale.View "In re BankAtlantic Bancorp, Inc. Litigation" on Justia Law