Shareholder litigation takes several different forms. Lewis & Roberts has experience in and has enjoyed success with each.
The most common type of shareholder litigation occurs after an investor has bought or sold shares of stock in a public or private company (and incurred a loss) based on what they believe was fraudulent or materially false information. The shareholder may sue the company that provided the false information for their damages. Or, in the event the false information was contained in an audit report, or similar material, the investor might sue the auditor for negligently compiling the information (if the auditor knew it might be relied upon by the investor).
Another form of shareholder litigation occurs in the context of mergers or takeovers of companies. A shareholder may assert that the merger's terms were economically unfair or that all shareholders in the same class were not treated the same. Or, in some cases, shareholders in one of the companies in a merger may contest the merger's terms. Or the shareholders may contend that a merger’s terms have been corrupted by violations of fiduciary duty or self-dealing by the corporate officers or board of directors of the company being merged or sold.
Lewis & Roberts has successfully litigated these types of cases.
North Carolina Business Court
In Barnhill v. Frontier Spinning, a North Carolina business court case, minority shareholders contested the terms of a private equity buy-out of a privately-held company. The plaintiff-shareholders, represented by Lewis & Roberts, contested the price they were paid for their shares. The plaintiffs contended the terms of the merger were unfair because some members of the same class of stock were paid more for their shares than others. The plaintiffs obtained a settlement on terms that were confidential.
Delaware Chancery Court
In Carsonaro v. Bloodhound, a Delaware Chancery Court case, the former chief executive officer of a software company contested terms of a merger that resulted in the preferred shareholders receiving virtually all the merger proceeds, leaving almost nothing for common shareholders. The case centered on the duties owed by a board of directors to its common shareholders versus those of the preferred shareholders. This case settled after the corporate defendants lost a motion to dismiss in the Delaware Chancery Court. The Delaware Chancery Court, rejecting their efforts at dismissal, issued an opinion favorable to the plaintiffs, which was analyzed at length in the "Dealbook" section of the New York Times. To read the Dealbook article click here.
If you are a shareholder in a public or private company, and you believe that you have been defrauded, or that you have been treated unfairly in the context of a corporate merger or buy-out, Lewis & Roberts can help determine whether you have a case. Jim Roberts (Raleigh) was the Lewis & Roberts partner who oversaw shareholder litigation at the firm. Lewis & Roberts welcomes your direct telephone call or email inquiry about your potential case.