Boards Limit Where Investor Suits Are Filed: Business of LawEllen Rosen
On July 29, before announcing its plans to split into two, the board of directors of Gannett Co. adopted a bylaw that specified that any shareholder litigation must be filed in Delaware.
The company was one of hundreds to adopt such bylaws in an attempt to rein in the proliferation of investor lawsuits in multiple jurisdictions that often follow a merger announcement.
According to Claudia Allen, a partner in the Chicago office of Katten Muchin Rosenman LLP, “over 300 Delaware corporations and about 80 non-Delaware companies” have adopted these bylaws “stipulating the jurisdiction for these lawsuits” since June 2013, when a Delaware court upheld their validity. Fifty of the 300 companies are in the S&P 500, Allen added.
While some companies have adopted the bylaws on “a clear day,” Allen said, “a good number have adopted them concurrently with signing a merger agreement.”
These companies know, she said, “that as night follows day, there will be multiforum litigation following a merger announcement.” Allen, a corporate governance expert who tracks these provisions, expects the provisions to be upheld even when adopted as part of merger strategy so long as a majority of a corporate board is independent.
The provisions shouldn’t be controversial, she added, because “they don’t affect any fundamental rights. They just say where you must sue.”
Blackstone, KKR, TPG to Pay $325 Million to End LBO Lawsuit
Blackstone Group LP, KKR & Co. and TPG Capital LP, among the biggest alternative-asset managers, agreed to pay a combined $325 million to settle seven-year-old claims they colluded to keep leveraged-buyout prices low, Bloomberg News reported.
The accords, made public yesterday in a federal court filing in Boston, leaves two entities of Carlyle Group LP, the world’s second-biggest private-equity firm, as the only defendants in the case. A trial is scheduled to start Nov. 3.
“Plaintiffs have overcome defendants’ attacks on multiple fronts, including early efforts to transfer the case, dozens of motions to dismiss and for summary judgment,” the plaintiffs’ lawyer Thomas Undlin, a partner at Robins, Kaplan, Miller & Ciresi LLP said in the filing.
The complaint, filed in December 2007, listed 19 leveraged buyouts and eight related transactions in which the private-equity firms were accused of shortchanging shareholders in target companies out of billions of dollars by agreeing to suppress takeover bids. The defendants deny the accusations.
The firms argued that the deals represented legitimate practices of the mergers-and-acquisitions business. A judge in March 2013 refused to dismiss the case.
“While we continue to believe that the plaintiffs’ allegations are spurious, we determined that after seven years it was best for KKR and our limited partners to put an end to the distraction and expense of this litigation,” the company said.
Blackstone didn’t immediately respond to a request for comment on the settlements. Lisa Baker, a spokeswoman for TPG, declined to comment.
“These claims are without merit and we will continue to vigorously contest the allegations,” Carlyle spokesman Chris Ullman said in a statement.
A federal judge dismissed suits against defendants including Apollo Global Management LLC and Providence Equity Partners Inc. over the past two years. The settlements disclosed yesterday still the court’s approval.
The case is Dahl v. Bain Capital Partners LLC, 07-12388, U.S. District Court, District of Massachusetts (Boston).
Law Firm News
Laterals Join Baker & McKenzie, K&L Gates, Kilpatrick & Stockton
Luis O’Naghten has joined the North American litigation practice and international arbitration group of Baker & McKenzie LLP as a partner in the Miami office. O’Naghten has represented parties in disputes before U.S. courts and international arbitration panels and handles arbitrations in Spanish as well. O’Naghten was previously a partner at Akerman LLP, where he served as chairman of the firm’s international litigation and arbitration practice.
The Tokyo office of K&L Gates LLP has added Haig Oghigian as a partner in its international arbitration practice. A former diplomat in Japan, Oghigian joins K&L Gates from Baker & McKenzie LLP, where he was co-chairman of the Tokyo litigation and dispute resolution practice group. Oghigian represents domestic and international clients in a variety of arbitration matters.
Joshua Pond, a patent litigator, joined the Washington office of Kilpatrick Townsend & Stockton LLP as a partner in the firm’s intellectual-property practice. Pond, whose practice focuses on intellectual-property counseling, including all aspects of patent portfolio strategy and litigation, was previously a partner at Fish & Richardson PC.