On November 5, 2015, the Center for Class Action Fairness (CCAF) at CEI filed an objection to the unfair class action settlement in Hays v. Walgreen Co. et al, specifically regarding the exorbitant plaintiffs’ attorneys’ fees and expenses of $370,000.
The litigation originated when Walgreen Co. was accused of withholding information from shareholders related to the drugstore’s merger with European drug store operator Alliance Boots. The plaintiffs sought to suspend the merger proceedings until alleged disclosure violations were remedied.
“If this settlement is approved, shareholders will pay hundreds of thousands of dollars in exchange for a few scraps of additional information that had no impact on the vote — the merger passed by over 97 percent,” said CCAF senior attorney Melissa Holyoak.
The objection was filed on behalf of shareholder and CEI senior fellow John Berlau who argues that the class not be certified and the case be dismissed. Or, at least, reduce the class counsel’s fees to $1.
The settlement was finalized on November 20, 2015 and CEI appealed the settlement agreement to the 7th Circuit on March 11, 2016.
On August 10, 2016, the Competitive Enterprise Institute’s Center for Class Action Fairness won its challenge in Hays v. Walgreen.
“This is a tremendous victory for shareholders and against rent-seeking,” said Ted Frank, Director of CEI’s Center for Class Action Fairness. “Strike suits affect over 97 percent of mergers, costing businesses millions. We hope other courts follow Delaware and the Seventh Circuit in taking steps to shut down this racket.”