Victory in Class Action Case by Mere Threat of Objection by CEI

Today, the Competitive Enterprise Institute's Center for Class Action Fairness achieved a victory on behalf of the shareholder class in In re Pepco Holdings, Inc. Stockholder Litigation, preventing a $405,000 payout to class attorneys as the case has been dismissed.

Shortly after the parties learned of CEI’s intent to object to the settlement, and before CEI even filed its client’s brief with the court, the parties stipulated to dismiss the action.

"The parties' decision to dismiss the case when faced with an objection demonstrates how valueless the settlement was for the class and why disclosure-only settlements such as this deserve close scrutiny," said CEI attorney Anna St. John.

In the Pepco case, C.A. No. 9600-VCMR in the Court of Chancery of the State of Delaware, plaintiffs claimed that electric service provider Pepco omitted certain disclosures to shareholders prior to the September 2014 shareholder vote to approve the merger with Exelon. To settle the litigation, Pepco agreed to provide shareholders with supplemental disclosures that either had already been disclosed or addressed trivialities. While the class received these insignificant disclosures, plaintiffs' attorneys sought $405,000 in fees.

Two of the plaintiffs' firms also were involved in CEI's recent victory in Hays v. Walgreens, in which the Seventh Circuit overturned approval of a disclosure-only settlement.

CEI worked with co-counsel Anthony A. Rickey of Margrave Law LLC on this matter.