At Grant & Eisenhofer, we recognize the importance of recovering the financial losses of our institutional investor clients. We also acknowledge the importance of securing corporate governance improvements and safeguarding shareholder rights. Grant & Eisenhofer has been very successful in achieving significant change in corporate governance. G&E’s influence on corporate governance is reflected in the changes that have resulted from notable cases.

In re: ACS Shareholders Litigation

Delaware Chancery Court

In another shareholder victory, G&E reached a $69 million dollar settlement on behalf of ACS’s class B shareholders.  The case alleged that members of the Board breached their fiduciary duties by allowing the Company’s founder and Chairman, Darwin Deason, to extract hundreds of millions of dollars through the acquisition at the direct expense of ACS’s public shareholders for his high vote Class B shares.  The final settlement provided shareholders with approximately 80 cents more per share and was one of the largest settlements in the history of the Delaware Chancery Court.

American Federation of State, County & Municipal Employees Pension Plan v. American International Group, Inc.

Southern District of New York

G&E represented the American Federation of State, County & Municipal Employees (“AFSCME”) in litigation against insurance giant AIG.  AFSCME was seeking to compel AIG to include a proxy access proposal in the company’s proxy statement pursuant to SEC Rule 14a-8.  Long considered a primary goal of corporate governance reform, proxy access would require corporations to publish the names of director candidates nominated by shareholders in the corporation’s proxy statement.

The Second Circuit’s decision in favor of AFSCME in this case reversed several years of No Action Letters from the Securities and Exchange Commission’s Division of Corporation Finance that had effectively prevented shareholders from installing proxy access regimes at their corporations.  This decision renewed the debate on the merits of proxy access that had stagnated following the Securities and Exchange Commission’s failure to adopt a mandatory rule in 2004 and confirmed that shareholders have an existing right under the federal securities laws to propose bylaw amendments to require their companies to publish the names of shareholder-nominated candidates.

In re American International Group, Inc., Consolidated Derivative Litigation

Delaware Chancery Court

In January 2011 G&E achieved a settlement of derivative claims against former American International Group CEO Hank Greenberg and other officers of the insurer in connection with a well-documented bid-rigging scheme used to inflate the company’s income. The scheme ─ which included an array of wrongful activities, such as sham insurance transactions intended to deceive shareholders and illegal contingent commissions which amounted to kickbacks to obtain business ─ caused billions of dollars worth of damage to AIG, and ultimately led to the restatement of years of financial statements.

On Jan. 25, 2011, Delaware Chancery Court Vice Chancellor Leo E. Strine, Jr. approved the settlement, which returned $90 million to AIG. Bloomberg Businessweek reported that at the hearing, Vice Chancellor Strine said the settlement was “an incentive for real litigation” with “a lot of high-quality lawyering.”

Amerigroup-WellPoint Merger Litigation

Delaware Chancery Court

Grant & Eisenhofer served as co-lead counsel  asserting claims on behalf of the shareholders of Amerigroup Corp. (“AMG” or the “Company”) against the company’s board of directors (“the Board”) for breach of fiduciary duty in connection with the Board’s approval of the sale of the Company to WellPoint, Inc. (“WellPoint”)., and against Goldman Sachs (“Goldman”) for aiding and abetting the Board’s breach.   In late 2011, after the passage of the Patient Protection and Affordable Care Act,  Amerigroup’s thriving managed care business was a prime acquisition target for larger companies in the health care industry.   Accordingly, Amerigroup’s CEO met with many interested suitors and in March 2012, the Board retained Goldman to advise on the Company’s strategic alternatives.  This arrangement came with complications, however,  as Goldman had a conflict of interest resulting from its possession of certain financial instruments which incentivized it to drive up Amerigroup’s stock price between August and October of 2012.

In early July 2012,  after choosing not to further explore the interest expressed by the Company’s other suitors, the Board approved entry into a merger agreement with WellPoint which would provide the Amerigroup shareholders with $92/share.  Grant & Eisenhofer led a plaintiffs’ team through expedited litigation, deposing 4 individuals in seven days, including the CEO of Amerigroup, an influential member of the Board, the head of the Goldman team which advised on the deal, and the head of the Barclays team which served as co-advisors to the Board.   Faced with the prospect of an injunction which could have blocked the deal indefinitely, the Board and Goldman agreed to a settlement which re-opened the bidding process and lowered barriers for other interested suitors to pursue an acquisition of Amerigroup, ensuring that the Company’s shareholders received the maximum value for their shares.  On January 16, 2013, the settlement was approved by Delaware Chancery Court Chancellor Leo E. Strine, Jr.

Barnes & Noble
In re Barnes & Noble Stockholder Derivative Litigation

Delaware Chancery Court

Grant & Eisenhofer is currently serving as co-lead counsel asserting derivative claims on behalf of the shareholders of Barnes & Noble, Inc. (“B&N”) against the company’s board of directors (“the Board”) for breach of fiduciary duty in connection with the Board’s approval of the acquisition of Barnes & Noble College (“College”) for $596 million.  In 2009, as the threat of digital books and e-readers began to impact the traditional bookstore, the B&N Board approved the purchase of College, a national bricks and mortar college textbook retailer, from Leonard Riggio, B&N’s founder, chairman and long-time CEO.  Plaintiffs alleged that the acquisition, which was the largest in the history of B&N, was an overpayment for a company which essentially doubled B&N’s exposure to the growing digital threat, and that the driving purpose behind the deal was to enrich Leonard Riggio at the expense of the B&N shareholders.   Grant & Eisenhofer led a plaintiffs’ team which deposed 20 individuals, including Leonard Riggio, his brother Stephen Riggio (CEO of B&N at the time of the transaction), each member of the B&N Board, the financial advisors to both B&N and College, and executives of both companies.

Faced with the prospect of a trial after a March 27, 2012 ruling from Chancellor Leo E. Strine, Jr. that a civil trial may move forward against him and two other members of the B&N Board, Leonard Riggio agreed to a settlement which requires him to personally return $29 million gained from the sale of his College business to B&N.   Leonard Riggio’s personal refunding of the $29 million to B&N is of particular note, as it stands as one of the largest non-insurance funded settlements secured by shareholders in a derivative case.  The settlement was approved in September 2012.

Bebchuk v. CA Inc.

Delaware Chancery Court

G&E represented renowned corporate governance expert Professor Lucian Bebchuk of the Harvard Law School in this action seeking to establish that shareholder-adopted bylaws that limit a board’s ability to adopt or implement a “poison pill” rights plan are legal under Delaware law.

The shareholders’ right to adopt and amend corporate bylaws is enshrined in Delaware law.  Yet for many years, corporate boards have sought to limit this right by arguing the directors’ statutory obligation to manage the day-to-day affairs of a corporation somehow restrict the shareholders’ rights to amend bylaws in areas that directors considered to be within their business judgment.  A board’s ability to adopt a “poison pill” rights plan is one such area.  In early 2006, Prof. Bebchuk introduced a shareholder proposal to be considered by the shareholders of CA Inc. at that company’s 2006 annual meeting that would have placed restrictions on the CA board’s ability to adopt and implement a shareholders’ rights plan.  CA, in turn, stated that it intended to exclude the proposal from the company’s 2006 proxy materials on the grounds that the bylaw was illegal under Delaware law.

In this litigation, before the Delaware Court of Chancery, Prof. Bebchuk sought a declaratory judgment that his proposed bylaw was legal under Delaware law.  Although in the factual context of the litigation, the Court held that Prof. Bebchuk’s specific request for a declaratory judgment was not ripe, the Court’s decision made clear that bylaws enacted by shareholders that may restrict a board’s ability to adopt and implement a “poison pill” plan are not necessarily illegal under Delaware law.

The Court’s decision in this case is noteworthy because it specifically rejected the company’s argument that the bylaw was plainly illegal, and thus rejected the very argument upon which corporate boards have relied for years to exclude important shareholder proposals from corporate proxy statements.

Louisiana Municipal Employees’ Retirement System, et al. v. CBOT Holdings Inc., et al.

Delaware Chancery Court

Grant & Eisenhofer represented institutional shareholders, led by the Louisiana Municipal Employees’ Retirement System (“LAMPERS”), challenging the merger agreement between Chicago Board of Trade (“CBOT”) and the Chicago Mercantile Exchange (“CME”).  After extensive and expedited discovery, G&E was able to negotiate important changes to the announced transactions that resulted in significantly more compensation paid to the shareholders of the acquired corporation.  The CBOT/CME merger provided CBOT shareholders with an additional $485 million.

Clear Channel Outdoor Holdings
In re Clear Channel Outdoor Holdings, Inc. Derivative Litigation

Delaware Chancery Court

Grant & Eisenhofer represented two institutional investors asserting derivative claims on behalf of Clear Channel Outdoor Holdings, Inc. (“Outdoor”) against the company’s board of directors for breach of fiduciary duty in connection with the company’s unsecured loan of nearly all its cash to its parent company and controlling shareholder, Clear Channel Communications, Inc. (“Clear Channel”).

In 2008, two private equity firms, Bain Capital Partners, LLC and Thomas H. Lee Partners, L.P, took Clear Chanel private in a $24 billion leveraged buyout – one of the largest leveraged buyouts in history. Since that time, Clear Channel has been saddled with billions of dollars in debt and has been using Outdoor as a primary source of funding. Specifically, through a cash management agreement that allowed Clear Channel to sweep all cash held by Outdoor on a daily basis, Outdoor’s board of directors has permitted Clear Channel to borrow over $700 million, nearly all of Outdoor’s cash, on an unsecured basis from Outdoor at approximately half of the going interest rate for similar loans. Meanwhile, rating agencies view a Clear Channel default as “imminent or inevitable,” and there is serious concern that Clear Channel could file for bankruptcy any day. In that case, Outdoor would be left as an unsecured creditor, unable to recover the funds it has provided to Clear Channel.

In 2013, Grant & Eisenhofer was able to negotiate a settlement that returned $200 million to Outdoor’s shareholders, through an immediate reduction in the outstanding loan and the payment of a special dividend.  In addition, the settlement included substantial changes in the cash management agreement between the companies that, among other things, permits the independent directors of Outdoor to unilaterally recall the loan and declare a special dividend in the event that the loan balance exceeds certain thresholds, and establishes several reporting requirements on Clear Channel’s financial position to assist the Outdoor board in controlling the financial risk of the company.

Countrywide Financial Corporation
Louisiana Municipal Police Employees’ Retirement System v. Countrywide Financial Corporation

Delaware Chancery Court

Grant & Eisenhofer represents the Louisiana Municipal Police Employees’ Retirement System (LAMPERS), an institutional shareholder of Countrywide Financial Corporation, seeking access to books and records to determine why stock options were repeatedly issued to executives just prior to large stock price increases. Countrywide was ordered to turn over internal records to LAMPERS for further review regarding corporate misconduct.

CVS Caremark
Louisiana Municipal Police Employees’ Retirement System and The R.W. Grand Lodge of Free & Accepted Masons of Pennsylvania v. Edwin M. Crawford, et al.

Delaware Chancery Court

Grant & Eisenhofer represented two institutional shareholders in this derivative litigation challenging the conduct of the board of directors of Caremark Rx Inc. in connection with the negotiation and execution of a merger agreement with CVS, Inc., as well as the board’s decision to reject a competing proposal from a different suitor.  Through the litigation, Caremark’s board was forced to provide substantial additional disclosures to public shareholders and renegotiate the terms of the merger agreement with CVS.  The settlement ensured statutory rights of Caremark shareholders, providing an additional $3.19 billion in cash consideration.

Del Monte
In re Del Monte Foods Company Shareholders Litigation

Delaware Chancery Court

G&E served as lead counsel in shareholder litigation that resulted in an unprecedented and immediate change in lending policy practices among major investment banks regarding the way the banks approach financing transactions in which they represent the seller and an $89.4 million settlement against Del Monte Foods Co. and its investment bank Barclays Capital. On February 14, 2011, the Delaware Chancery Court issued a ground-breaking order enjoining not only the shareholder vote on the merger, but the merger agreement’s termination fee and other mechanisms designed to deter competing bids. As a result of plaintiff’s efforts, the Board was forced to conduct a further shopping process for the company. Moreover, the opinion issued in connection with the injunction has resulted in a complete change on Wall Street regarding investment banker conflicts of interests and company retention of investment bankers in such circumstances.

Delphi Financial
In re Delphi Financial Shareholder Litigation

Delaware Chancery Court

Grant & Eisenhofer P.A. represented Cleveland Bakers and Teamsters Pension Fund in class action litigation against Delphi Financial Group, its Board of Directors, Tokio Marine Holdings and TM Investment Inc. The complaint alleged that Rozenkranz, founder, CEO and Chairman of Delphi, is taking buyout consideration for himself at the expense of Delphi’s shareholders. In connection with the sale of Delphi to Tokio Marine Holdings Inc., Rozenkranz influenced the Board to change the terms of the certain classes of stock to obtain a premium for his personal shares.

Vice Chancellor Glasscock allowed the merger to go to shareholder vote but stated in his opinion “that the Plaintiffs have demonstrated a likelihood of success on the merits” regarding the Rosenkranz allegations. The defendants agreed to settle the breach of fiduciary duties class action for $49 million to be distributed to Delphi’s class A shareholders, excluding defendants, which was over 90% of the damages claimed in the action.

In re Digex, Inc. Shareholders Litigation

Delaware Chancery Court

G&E initiated litigation alleging that the directors and majority stockholder of Digex, Inc. breached fiduciary duties to the company and its public shareholders by permitting the majority shareholder to usurp a corporate opportunity that belonged to Digex.  G&E’s efforts in this litigation resulted in an unprecedented settlement of $420 million, the largest settlement in the history of the Delaware Chancery Court.

El Paso
In re El Paso Corporation Shareholder Litigation

Delaware Chancery Court

Grant & Eisenhofer  represented Pompano Beach Police & Firefighters’ Retirement System and was appointed co-lead counsel in a class action against El Paso’s Board of Directors, Goldman Sachs, and Kinder Morgan, Inc. alleging that the Board, aided and abetted by Goldman Sachs and Kinder Morgan, breached its fiduciary duties by agreeing to sell El Paso to Kinder Morgan for a less-than-value-maximizing price.   Plaintiffs alleged that the merger was tainted by significant conflicts of interest, including (i) Goldman’s serving as financial advisor to El Paso’s Board despite Goldman’s $4 billion buy-side interest in the deal stemming from its 19% ownership stake in Kinder Morgan, and (ii) the undisclosed interests of El Paso’s sole negotiator for the deal — CEO and Chairman, Douglas Foshee – in acquiring El Paso’s exploration and production assets for himself in a management buyout.  Although the Delaware Chancery Court “reluctantly” declined to enjoin the merger, it found that Plaintiffs had a reasonable likelihood of success in proving that the merger was “tainted by disloyalty” and that they had uncovered some “disturbing” behavior in connection with the negotiations. The case settled for $110 million.

In re Genentech, Inc. Shareholders Litigation

Delaware Chancery Court

In 2009, when Swiss healthcare company Roche offered to buy out biotech leader Genentech Inc. for $43.7 billion, or $89 per share, some minority shareholders of the San Francisco-based company objected to the proffered amount.  Although a 1999 affiliation agreement between the two companies permitted such a purchase by Roche as majority shareholder – even in the face of minority shareholder opposition – G&E filed a derivative claim on behalf of institutional investors opposed to the buyout, contending that the 1999 contract should be invalidated.  With the pressure of the pending litigation, the Firm was able to reach a settlement that provided for Roche to pay $95 per share, representing an increase of approximately $3 billion for minority shareholders.

HealthSouth Corporation
Teachers’ Retirement System of Louisiana v. Scrushy

Delaware Chancery Court

Grant & Eisenhofer represented the Teachers’ Retirement System of Louisiana as lead plaintiff in a class and derivative action against HealthSouth Corporation seeking an order to force the HealthSouth board of directors to hold an annual shareholder meeting to elect a new board. As a result of the negotiated settlement, five of the defendant directors agreed to resign and be replaced by directors selected by a committee comprised in part by the Teachers’ Retirement System of Louisiana and other representatives of large institutional investors of HealthSouth.

In re J.Crew Group, Inc. Shareholder Litigation

Delaware Chancery Court

G&E was co-lead counsel in a well-known breach of fiduciary duty suit brought in connection with a proposed buyout of clothing retailer J. Crew by private equity firms Leonard Green & Partners, L.P. and TPG Capital, L.P.  Plaintiffs alleged that the sale price substantially undervalued J.Crew. The CEO of J.Crew released negative forecasting news for J.Crew around the same time that he was negotiating the deal, suggesting that he was not concerned about obtaining the highest possible price for the company. Also, J.Crew “rushed” to set a cut-off for shareholders who would be eligible to vote on the deal, implying that the company was not intent on seeking other higher offers.

Plaintiffs rejected an initial settlement claiming that J.Crew sought to “undermine the benefits” for shareholders of the settlement. When an amended settlement was finally approved in December 2011, G&E had achieved $6 million more than the initial settlement, resulting in $16 million cash for the shareholders.

Louisiana Municipal Police Employees’ Retirement System v. Tilman J. Fertitta

Delaware Chancery Court

The litigation involved two separate sets of claims concerning two separate attempts by Tilman J. Fertitta, CEO and the largest individual shareholder of Landry’s, to take the company private.  Plaintiff alleged that Fertitta attempted to steal control of Landry’s by systematically reducing the offering price and then buying the company’s stock on the open market instead of purchasing shares pursuant to and in the merger, and alleged that Landry’s directors breached their fiduciary duties by failing to protect the public shareholders from real and obvious threats to corporate welfare and complicity in Fertitta’s improper actions.  As a result of a two-part settlement, G&E was able to obtain for the shareholder class a $14.5 million settlement fund as well as the right to sell their shares in a going private transaction providing at least $24 per share, representing a 62% increase over the merger agreement’s $14.75 per share price.  The settlement also provided a virtually unprecedented 45 day go-shop process that could be extended for an additional 15 days, and in order to create an active go-shop process, Landry’s was required to reimburse up to $500,000 in actual out of pocket due diligence costs for each of up to the two highest bidders providing the bidders submit a proposal to acquire the company at a price that exceeds $24 per share.

Lone Star Steakhouse & Saloon
California Public Employees’ Retirement System v. Coulter, et al.

Delaware Chancery Court

Grant & Eisenhofer filed a derivative lawsuit on behalf of CalPERS against Lone Star’s former CEO, Jamie Coulter, and six other Lone Star directors.  The suit alleged that the defendants violated their fiduciary duties in connection with their approval of the company’s acquisition of CEI, one of Lone Star’s service providers, from Coulter, as well as their approvals of certain employment and compensation arrangements and option repricing programs.  Before filing the suit, G&E had assisted in CalPERS in filing a demand for books and records pursuant to Section 220 of the Delaware General Corporation Law.  The company’s response to that demand revealed the absence of any documentation that the board ever scrutinized transactions between Lone Star and CEI, that the board negotiated the purchase price for CEI, or that the board analyzed or discussed the repricing programs.  In August 2005, the Court approved a settlement negotiated by G&E whereby Lone Star agreed to a repricing of options granted to certain of its officers and directors, payments from certain of the officers and directors related to option grants, and a $3 million payment from Lone Star’s director and officer insurance policy.  Lone Star further acknowledged that the lawsuit was one of the significant factors considered in its adoption of certain corporate governance reforms.

Sterling Heights Police & Fire Retirement System derivatively on behalf of Mattel Inc.

Delaware Chancery Court

Grant & Eisenhofer represents Michigan-based institutional investor Sterling Heights Police & Fire Retirement System in a class action against Mattel on behalf of Mattel shareholders, alleging that the company issued false and misleading financial reports to investors after consistently refusing to abide by federally mandated guidelines governing disclosure of product safety issues that came to light following Mattel’s recalls of the company’s toys.

Medco Research
State of Wisconsin Investment Board v. Bartlett, et al.

Delaware Chancery Court

In January 2000, G&E filed a shareholder derivative action on behalf of State of Wisconsin Investment Board against the directors of Medco Research, Inc. in Delaware Chancery Court.  The suit alleged breach of fiduciary duty in connection with the directors’ approval of a proposed merger between Medco and King Pharmaceuticals, Inc.  G&E was successful in obtaining a preliminary injunction requiring Medco to make supplemental and corrective disclosures.  Because of G&E’s efforts, the consideration to Medco’s stockholders increased by $4.08 per share, or $48,061,755 on a class-wide basis.

News Corp
In re News Corporation Shareholder Derivative Litigation

Delaware Chancery Court

G&E reached a $139 million settlement – the largest settlement of derivative shareholder litigation in the history of Delaware Chancery Court and the largest cash recovery in a settlement of any derivative suit ever – in a shareholder lawsuit News Corp’s Board of Directors alleging they breached their fiduciary duties by historically putting the personal and political interests of Rupert Murdoch, founder and CEO of News Corp, above those of the Company’s public stockholders. The complaint focused on, among other things, the Company overpaying for its acquisition of the Shine Group Ltd. (a company owned by Murdoch’s daughter) and the board’s very public failure to adequately investigate and remedy a years-long cover-up by News International, a News Corp subsidiary, of illegal activity associated with phone-hacking and other privacy violations. It is believed that no prior derivative case settlement involved a more valuable or broad-based set of corporate governance enhancements.

In re NYSE Euronext Shareholders

Delaware Chancery Court

The claims, filed February 15, 2011, arise from the acquisition of the publicly owned shares of NYSE Euronext common stock by Deutsche Boerse AG (“Deutsche Boerse”). The complaint allege that in facilitating the acquisition of NYSE Euronext by Deutsche Boerse for grossly inadequate consideration and through a flawed process, each of the Defendants breached their fiduciary duties.

A settlement was reached with the New York Stock Exchange on behalf of shareholders who objected to the NYSE’s original structure of a proposed merger with Deutsche Boerse. G&E represented plaintiff Amalgamated Bank as trustee for the Longview Funds in arguing that NYSE’s board failed to adequately consider a competing superior bid by NASDAQ and the IntercontinentalExchange.

On June 16, 2001, the parties entered into a Memoradum of Understanding that stipulated shareholders receive a one-time special dividend of €2 per share shortly after the closing of the transaction. The total dividend paid out is expected to amount to approximately USD $905 million.

In re New York Stock Exchange/Archipelago Merger Litigation

New York Supreme Court

G&E served as co-lead counsel in a class action in New York state court, brought on behalf of a class of seat holders of the New York Stock Exchange (“NYSE”) challenging the proposed merger between the NYSE and Archipelago Holdings, LLC.  The complaint alleged that the terms of the proposed merger were unfair to the NYSE seat holders, and that by approving the proposed merger, the NYSE board of directors had violated their fiduciary duties of care, loyalty and candor, because the transaction was the result of a process that was tainted by conflicts of interest and the directors failed adequately to inform themselves of the relevant facts.  The court denied the defendants’ motion to dismiss, and after expedited discovery, including over 30 depositions in a five week period, a preliminary injunction evidentiary hearing was held, in which plaintiffs sought to postpone the vote on the merger until a new, current fairness opinion was obtained from an independent financial advisor.  On the second day of the hearing, the defendants agreed to the relief being sought, namely that they would obtain a new, current fairness opinion from an independent financial advisor.

Occidental Petroleum
Teachers’ Retirement System of Louisiana v. Irani et al.

California Superior Court

G&E represented Teachers’ Retirement System of Louisiana and served as co-counsel in a shareholders’ derivative suit against the directors of Occidental Petroleum Corporation, challenging as corporate waste the company’s excessive compensation arrangements with its top executives.  Filed in California state court, the case settled when the company agreed to adopt CalPERS’s model principles of corporate governance and undertook to reconstitute its key committees so as to meet the tests of independence under those principles.

Pepsi Bottling Group
In re PepsiAmericas Inc. Shareholder Litig./In re Pepsi Bottling Group, Inc. Shareholders Litigation

Delaware Chancery Court

G&E served as lead in a case regarding PepsiCo’s offer to acquire two of its distributors, PepsiAmericas (“PAS”) and Pepsi Bottling (“PBG”). The company, which essentially dominated and controlled the boards of both distributors, made offers that were inadequate.  In addition to other considerations, G&E obtained significantly higher acquisition prices that provided PBG shareholders as a group with $1.022 billion more in value ($36.50 per PBG share) and PAS shareholders as a group with $290 million more in value (increasing it offer from $23.27 to $28.50 per PAS share).

SFX/Clear Channel Merger
Franklin Advisers, Inc., et al. v. Sillerman, et al.,

Delaware Chancery Court

G&E filed a class action on behalf of Franklin Advisers, Inc. and other stockholders of SFX, challenging the merger between SFX and Clear Channel.  While the SFX charter required that in any acquisition of SFX  all classes of common stockholders be treated equally, the merger, as planned, provided for approximately $68 million more in consideration to the two Class B stockholders (who happened to be the senior executives of SFX) than to the public stockholders.  The merger was structured so that stockholders who voted for the merger also had to vote to amend the Charter to remove the non-discrimination provisions as a condition to the merger.  G&E negotiated a settlement whereby $34.5 million more was paid to the public stockholders upon closing of the merger.  This was more than half the damages alleged in the Complaint.

Teachers’ Retirement System of Louisiana v. Thomas M. Siebel, et al.

California Superior Court

G&E represented the Teachers’ Retirement System of Louisiana as lead plaintiff in a class and derivative action against Siebel Systems, a leading Silicone Valley-based software developer long considered to be an egregious example of executive compensation run amok.  Following a hard-fought and acrimonious litigation, G&E successfully negotiated a settlement that included numerous corporate governance reforms and the cancellation of 26 million management stock options with a value of over $56 million.  In addition, the company agreed to restructure its compensation committee, disclose more information regarding compensation policies, audit its option plans as part of the company’s annual audit through an outside auditor, and limit directors’ compensation.  The Siebel Systems settlement generated significant favorable press in the industry, as investors and compensation experts anticipated that the reforms adopted by Siebel Systems could affect how other companies deal with compensation issues.

In re Sprint Corporation Shareholder Litigation

District of Kansas

G&E represented lead plaintiff institutional investor Carlson Capital, L.P. in this class action suit against Sprint Corporation and its former CEO and directors for breach of fiduciary duty in the consolidation of two separate tracking stocks.  In December 2007, a $57.5 million settlement was approved.

Staples, Inc.
In re Staples, Inc. Shareholders Litigation

Delaware Chancery Court

On behalf of Teachers’ Retirement System of Louisiana, G&E challenged Staples, Inc.’s proposed “recapitalization” plan to unwind a tracking stock,, which it created in 1998.  G&E obtained a preliminary injunction against the deal and the deal terms were ultimately altered resulting in a $15-$20 million gain for shareholders.  Additional disclosures were also required so that shareholders voted on the challenged transaction based on a new proxy statement with substantial additional disclosures.

Sunrise Senior Living
SEIU Master Trust v. Sunrise Senior Living, Inc.

Delaware Chancery Court

G&E represented the Service Employees International Union (SEIU) in successfully preventing the company from structuring an annual meeting that would have improperly restricted the ability shareholders to present matters for consideration and nominate board candidates.

Titanium Metals
Louisiana Municipal Police Employees Retirement System derivatively on behalf of nominal defendant Titanium Metals Inc. v. Simmons et al.

Delaware Chancery Court

G&E represented the Louisiana Police Employees Retirement System in derivative litigation on behalf of Titanium Metals Inc. against members of Titanium Metal’s Board of Directors, including its controlling shareholder Harold Simmons. The complaint alleged that the board, through its actions and inactions, breached its fiduciary duties by allowing the company to engage in a series of transactions with other Simmons-controlled entities that were beneficial to Simmons at the expense of Titanium Metal’s minority public stockholders. These transactions included: (i) loans made to Simmons-related corporations at interest rates far below fair, market interest rates; and (ii) purchases of stock in a corporation that is more than 80% owned by Simmons at prices far above the true value of that company. Two factors led the Company to engage in these unfair transactions: a related-party transaction policy that, unlike similar policies at other publically-traded corporations, does not require any related-party transaction – no matter how large – to be approved by the company’s board, and the board’s lack of a majority of directors that are independent of Simmons.  G&E negotiated a settlement of the action pursuant to which: (i) Titanium Metals’ independent directors undertook an investigation of the transactions challenged in the complaint for their fairness to the company and its minority stockholders; and (ii) adopted a new, more stringent related-party transaction policy.  The Court of Chancery approved the settlement on January 10, 2013.

TRSL v. Greenberg, et al. and AIG
Teachers’ Retirement System of Louisiana v. Greenberg, et al. and American International Group, Inc.

Delaware Chancery Court

In the second largest settlement of derivative shareholder litigation in the history of Delaware Chancery Court, G&E reached a $115 million settlement in a shareholder lawsuit against former executives of American International Group Inc. for breach of fiduciary duty.  The case challenged hundreds of millions of dollars in commissions paid by AIG to C.V. Starr & Co., a privately held affiliate controlled by former AIG Chairman Maurice “Hank” Greenberg and other AIG directors.  The suit alleged that AIG could have done the work for which it paid Starr and that the commissions were simply a mechanism for Greenberg and other Starr directors to line their pockets.

Tyson Foods
In re Tyson Foods Inc.

Delaware Chancery Court

G&E represented Amalgamated Bank in a lawsuit involving the timing of stock option grants and breach of fiduciary duty at Tyson Foods. G&E obtained historic rulings from the Delaware Chancery Court, clarifying the fiduciary duties of corporate directors in connection with the administration of stock option plans.  Ultimately, G&E negotiated a $4.5 million cash settlement that required the company to install significant reforms in the nomination and appointment of directors, and that provided limitations on transactions between the company and members of the Tyson family.

UniSuper v. News Corp.
UniSuper Ltd. et al. v. News Corp. et al.

Delaware Chancery Court

In a case followed closely by corporate governance experts, G&E won a huge governance settlement with media giant News Corp. regarding the contested extension of the company’s anti-takeover “poison pill” defense, written to defend against a takeover bid by Liberty Media. G&E represented a group of international institutional investors from Australia, the United States, the United Kingdom and the Netherlands. After News Corp.’s motion to dismiss the case was denied, and just prior to the deposition of News Corp. chairman and majority owner, Rupert Murdoch, the company capitulated to the plaintiffs’ demands and agreed to put the controversial extension of the poison pill defense provision to a full shareholder vote at its next annual meeting. The outcome has been widely hailed as a milestone in corporate governance reform.

In re UnitedHealth Group Incorporated Shareholder Derivative Litigation

District of Minnesota

Grant & Eisenhofer represented the Ohio Public Employees Retirement System, State Teachers Retirement System of Ohio, and Connecticut Retirement Plans and Trust Funds as lead plaintiffs in a derivative and class action suit in which G&E successfully challenged $1.2 billion in back-dated options granted to William McGuire, then-CEO of health care provider UnitedHealth Group (“UHG”). This was among the first – and most egregious – examples of options backdating. G&E’s case against UHG produced a settlement of $922 million, the largest settlement in the history of derivative litigation in any jurisdiction.

Wyser-Pratte Management Co., Inc. & Franklin Mutual Advisors v. Swindells, et al.

Oregon Circuit Court

In January 2002, at the request of Wyser-Pratte Management Co., Inc. and Franklin Mutual Advisors, G&E filed a shareholder derivative action in Oregon state court claiming that the board of Willamette Industries, Inc. breached its fiduciary duties by attempting to cause Willamette to acquire the asbestos-ridden building products division of Georgia-Pacific Company as part of a scorched-earth effort to defeat a hostile takeover of Willamette by its chief competitor, Weyerhaeuser Company. G&E obtained an expedited hearing on its motion for a preliminary injunction and obtained an agreement from Willamette at the hearing not to consummate any deal with Georgia-Pacific without providing prior notice to G&E. Almost immediately thereafter, and after years of fighting against Weyerhaeuser’s take-over attempts, the Willamette board relented and agreed to sell the company to Weyerhaeuser.