Nationwide, 85 percent of all public merger transactions valued at more than $100 million faced litigation in the first ten months of 2017. In the vast majority of these lawsuits, the shareholder class recovers only “supplemental disclosures” providing only extraneous information, while plaintiffs’ lawyers get six-figure fees and defendants get a broad release of claims.
According to the Competitive Enterprise Institute, the settlement deal in Evangelista v. Duggan follows this pattern, as it provides no new information or value for shareholders, but instead allows plaintiffs’ attorneys to extort a substantial “merger tax” in the form of attorneys’ fees.
On behalf of shareholder Sean Griffith, CEI’s Center for Class Action Fairness is challenging this unreasonable settlement deal, which stems from the 2015 merger between Pharmacyclics and AbbVie, that gives $509,000 to the plaintiffs’ attorneys and yet, provides nothing but worthless disclosures to shareholder class members.
CEI is asking the California’s Sixth District Court of Appeals to overturn the settlement and adopt the same “disfavor” toward such disclosure-only suits adopted in other jurisdictions, including the Delaware Court of Chancery in its landmark Trulia decision and the Seventh Circuit in the Walgreen appeal won by CEI.
ABOUT: CEI’s Center for Class Action Fairness (CCAF) represents class members against unfair class action procedures and settlements. Since 2009, the center has secured millions of dollars for consumers and shareholders, winning landmark precedents that safeguard consumers, investors, and the courts.