Plaintiffs drop proposed Pepco disclosure-only settlement after objector surfaces
Reuters reports on CEI's Center for Class Action Fairness's objection of a Pepco Settlement and discusses the case with CEI lawyer Anna St. John.
Two weeks after an objection by the Competitive Enterprise Institute killed a disclosure-only M&A shareholder settlement under review at the 7th U.S. Circuit Court of Appeals, CEI's Center for Class Action Fairness has drawn fresh blood from the shareholder M&A bar.
On Tuesday, plaintiffs' lawyers from Pomerantz, Wolf Haldenstein, Levi & Korsinsky and Rigrodsky & Long withdrew a stipulation to settle claims by Pepco Holdings, which was acquired by the power distributor Exelon in a $6.8 billion deal that closed in March. The settlement, announced in June in Delaware Chancery Court, granted shareholders only supplemental disclosures in proxy materials. Plaintiffs' lawyers were due to receive $405,000. Instead, in Tuesday's filing, the lawyers agreed to dismiss the case. They said they had received "no compensation in any form."
The withdrawal of the case came days after Pepco shareholder Michael Krauss – a professor at Scalia Law School who is represented by Anna St. John of CEI and Anthony Rickey of Margrave Law – said he planned to object to the settlement. According to St. John, Krauss' lawyers asked Pepco and plaintiffs' lawyers to see the memo in support of final approval of the settlement, which was filed under seal last week. St. John and Rickey formally entered appearances on Monday.
Class action objectors, including Fordham law professor Sean Griffith in addition to CEI clients, have been involved in several cases challenging disclosure-only settlements of shareholder M&A class actions. As you know, last year Delaware Chancery Court clamped down on agreements granting defendants broad releases in exchange for little benefit for investors (aside from fees for their lawyers).
"We hope to assist courts in spreading the new scrutiny" for such agreements, said CEI lawyer St. John.
Read the full article at Reuters.