Stockholder Class Action Defense
In today’s environment, the announcement of a major M&A transaction frequently triggers the filing of one or more putative class actions by stockholders of the to-be-acquired company alleging that the company’s directors breached their fiduciary duties in agreeing to the proposed transaction. The acquiring company or private equity sponsor may also be named as a defendant on an aiding and abetting theory. Stockholder plaintiffs in such actions frequently pursue expedited discovery in connection with a motion to preliminarily enjoin the transaction. Post-closing damages litigation is also possible in certain cases.
Seitz Ross has extensive experience representing defendants in all phases of such actions, including expedited discovery, preliminary injunction hearings, post-closing damages litigation, and settlement. In addition, while a substantial portion of such stockholder class actions are brought in the Delaware Court of Chancery, plaintiffs may also file similar suits in the corporation’s headquarters state applying Delaware law or, in suits involving non-Delaware corporations, in other states that look to Delaware corporate law for guidance. Seitz Ross partners with out-of-state counsel on these matters as well.