merger objection lawsuits

These days just about every public company merger transaction draws at least one merger objection lawsuit. These lawsuits formerly were filed in Delaware state court alleging violations of Delaware law, but since the 2016 Delaware Chancery Court decision in the Trulia case, in which the court expressed its distaste for this type of litigation, the lawsuits have been filed in federal court based on alleged violations of Section 14 of the Securities Exchange Act of 1934. These cases, through frequently filed, are rarely litigated. They typically are resolved by the defendants’ voluntary insertion of supplemental proxy disclosures and agreement to pay the plaintiff a “mootness” fee.

However, in a recent case a corporate defendant refused to update the proxy and succeeded in getting the case dismissed. As discussed in a recent law firm memo about the dismissal ruling, the “usual playbook” for these kinds of cases – making supplemental disclosures and paying a mootness fee – may not be the best approach, and the ruling itself may provide ammunition for companies that want to try an “alternative to the status quo.”
Continue Reading Is There an Alternative to the Status Quo on Merger Objection Lawsuits?

As most readers are aware, litigation involving objection to mergers and acquisitions transactions has been proliferating in recent years, to the point that virtually every deal draws at least one lawsuit. While many of these actions are nuisance lawsuits, they are not without their costs. Indeed, according to one recent study, the costs to defend and settle these suits are growing.
Continue Reading The Growing Costs of Merger Objection Litigation

In general, securities litigation filing trends emerge gradually and across long stretches of time. These kinds of long term trends have been the subject of a number of recent reports discussed on this site – including, for example, recent reports from NERA Economic Consulting (about which refer here), Cornerstone Research (here), as well as my own report. Though trends often become apparent only over the course of months and years, sometimes they are apparent in much shorter time frames. As it happens, the securities suit filings on a single day last week managed to neatly encapsulate all of the important current securities litigation filing trends.
Continue Reading The Sum of All Securities Litigation Filing Trends

An acquired bank’s D&O insurer’s defense cost obligation to the bank’s directors and officers in connection with merger-related litigation continued after the merger transaction closed and was owed to the acquiring bank, a federal district court judge has held, rejecting the policy-based arguments on which the insurer relied to contend that its payment obligations ceased at the time of the deal closing. District of New Jersey Judge John Michael Vazquez’s unpublished September 18, 2017 opinion containing his ruling can be found here.
Continue Reading D&O Insurer Must Continue Defense Expense Reimbursement Post-Merger

Largely as a result of the continuing upsurge in the number of federal court merger objection lawsuits, securities class action lawsuits were filed at historic levels during the first half of 2017 and well above last year’s elevated pace. Though the number of filings in this year’s second quarter were slightly  lower than in the first quarter, the total number of filings in the first six months of the year overall were on pace for the highest annual number of securities class action lawsuits since 2001.
Continue Reading First Half 2017 Securities Suit Filings Continue at Exceptional Levels

rising numbersSecurities class action lawsuit filings have been going crazy. Securities suit filings during the first quarter 2017 set a pace that if continued would mean an unprecedented number of securities lawsuit by year end. But even more significant than the sheer number of lawsuits is the rate of litigation. The percentage of listed companies sued in the first quarter, if annualized, would mean that U.S. public companies are being sued at four times the long-term historical rate. As discussed below, three factors account for much of the upsurge in securities suit filings.
Continue Reading You Need to Know This: YTD Securities Class Action Lawsuit Filings are Off the Charts