Justia Corporate Compliance Opinion Summaries

This matter involved a stockholders' suit over the proposed takeover of Delphi by TMH. Based upon the record, the court found that plaintiffs have demonstrated a likelihood of success on the merits at least with respect to the allegations against defendant. However, because the deal represented a large premium over market price, because damages were available as a remedy, and because no other potential purchaser had come forth or seemed likely to come forth to match, let alone best, the TMH offer, the court could not find that the balance of the equities favored an injunction over letting the stockholders exercise their franchise, and allowing plaintiffs to pursue damages. Therefore, the court denied plaintiff's request for a preliminary injunction.View "In re Delphi Financial Group Shareholder Litigation" on Justia Law

Series C-1 preferred shareholders, claiming that the forced conversion of their shares was unlawful, sued Omneon in the Superior Court for breach of contract. Those shareholders, as plaintiffs, claimed that, because the conversion of their preferred shares was integral to Harmonic's acquisition of Omneon, the conversion was part of a "Liquidation Event" under Omneon's certificate of incorporation, that entitled the shareholders to the liquidation "preference" payable for their shares. The Superior Court granted summary judgment in favor of Omneon, holding that under the plain language of Omneon's certificate of incorporation, only one series of preferred stock - the Series A-2.2 - was legally entitled to a liquidation preference payout. The shareholders were not entitled to a liquidation payout because the Series C-1 preferred shares had been validly converted into common stock before the Omneon-Orinda merger took place. The court agreed and concluded that the conversion was not part of a "Liquidation Event" as defined by Omneon's charter. Therefore, the court affirmed the judgment.View "Berkeley VI C.V., et al. v. Omneon, Inc." on Justia Law

Petitioners argued that defendants - who were the then-parent company and directors of Aristotle Corporation - breached their fiduciary duties by not disclosing all material facts in connection with a short-form merger under 8 Del. C. 253. At issue was whether petitioners, who already had the right to seek appraisal in connection with a section 253 merger, could add an additional claim alleging that the directors breached their fiduciary duty to disclose the material facts necessary for the stockholders to determine whether to seek appraisal when the only purpose of pressing the disclosure claim was to give petitioners the redundant right of a "quasi" version for something that they already possessed? Because petitioners have not alleged that they have suffered any cognizable injury that gave rise to standing, and because they were therefore asking in these unique circumstances for an improper advisory decision, the court granted defendants' motion to dismiss.View "In Re: Appraisal Of The Aristotle Corp." on Justia Law

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

Plaintiff challenged two transactions in this purported class action brought on behalf of the former public holders of LP units of EPE. On behalf of the first of the two purported classes, plaintiff challenged EPE's sale of Teppco GP to Enterprise Products (the 2009 Sale). On behalf of the second purported class, plaintiff challenged the merger of EPE into a wholly-owned subsidiary of Enterprise Products (the Merger). Defendants moved to dismiss all claims, or in the alternative, to stay this action pending the resolution of a related case. The court held that plaintiff had standing to bring the claims asserted in Counts I, III, and V on behalf of the public holders of EPE LP units who continuously held their units from the date of the 2009 Sale through the effective date of the Merger. However, all six counts were dismissed for failure to state a claim. Accordingly, defendants' motion to dismiss was granted.View "Gerber v. Enterprise Products Holdings, LLC, et al." on Justia Law

Holston sued LanLogistics for breach of contract when LanLogistics never gave Holston an opportunity to match Gartlan's offer to purchase LanBox. Holston was a citizen of Florida and LanLogistics was incorporated in Delaware, maintaining its corporate headquarters in Miami, Florida. But by the time Holston filed suit, LanLogistics had dissolved and formally forfeited its authority to conduct business in Florida. At issue on appeal was the citizenship of a dissolved corporation for purposes of diversity jurisdiction and whether summary judgment was appropriately entered where there could have been a genuine issue of material fact. The court held that LanLogistics was only a citizen of Delaware and the court had subject matter jurisdiction where LanLogistics dissolved and formerly withdrew from business before Holston filed suit. The court reversed the district court's supplemental summary judgment order and remanded for a determination regarding the fair market value of each company in the package deal to identify the percentage of the purchase price used to purchase LanBox. View "Holston Investments Inc. B.V.I., et al. v. LanLogistics, Corp." on Justia Law

This derivative suit was brought against the Grupo Mexico subsidiary that owned Minera, the Grupo Mexico-affiliated directors of Southern Peru, and the members of the Special Committee, alleging that the Merger at issue was entirely unfair to Southern Peru and its minority stockholders. The court concluded that the transaction was unfair and remedied the unfairness by ordering the controller to return to the NYSE-listed company a number of shares necessary to remedy the harm. The court applied a conservative metric because of plaintiff's delay, which occasioned some evidentiary uncertainties and which subjected the controller to lengthy market risk. View "In re Southern Peru Copper Corp. Shareholder Derivative Litigation" on Justia Law

Sagarra, a Spanish corporation, was a minority shareholder of Uniland, also a Spanish corporation. Sagarra brought a Court of Chancery action to rescind the sale, by CPV, of Giant, to Uniland. CPV was the controlling stockholder of both Giant and Uniland. Sagarra purported to sue derivatively on behalf of a wholly-owned Delaware subsidiary of Uniland, UAC, which was specifically created as the vehicle to acquire Giant. Defendants moved to dismiss the complaint on the ground that Sagarra lacked standing to enforce a claim on behalf of UAC. The Court of Chancery held that Sagarra's standing to sue was governed by Spanish law, because Uniland - the only entity in which Sagarra owned stock - was incorporated in Spain. The court upheld the Court of Chancery's reasoning and judgment because Sagarra failed to satisfy the demand requirements of Spanish law. View "Sagarra Inversiones, S.L., v. Cementos Portland Valderrivas, S.A., et al." on Justia Law

Plaintiffs sought a preliminary injunction against the acquisition of Compellant by Dell. The parties settled after significant discovery but before merits briefing or a hearing. The settlement consideration consisted of modifications to the deal protections in the merger agreement, including the rescission of a stockholder rights plan adopted in connection with the transaction, and six supplemental disclosures. Plaintiffs applied for a fee of $6 million and defendants argued for not more than $1.25 million. In addressing the fee application, and thus to estimate the value of the resulting benefits conferred by the settlement, the court relied primarily on four studies that measured market-wide rates of topping bid activity and the incremental value generated by multiple bidders. The court also evaluated the benefits conferred by the supplemental disclosures. In total, the court awarded $2.4 million. View "In re Compellent Technologies, Inc. Shareholder Litigation" on Justia Law

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