- Professor John Hasnas, Georgetown Law
- Professor Jimmy Gurule, Notre Dame Law
According to the Competitive Enterprise Institute, over 97% of mergers and acquisitions result in "strike suits," litigation seeking to enjoin a merger that often quickly settles for attorneys' fees and supplemental disclosures to shareholders. In In Re: Walgreen Co. Stockholder Litigation, 832 F.3d 718, a recent case over such a settlement, Judge Richard Posner called the practice a "racket," and the Seventh Circuit rejected the lawsuit’s claims. Meanwhile, Delaware and New York courts have come out on opposite sides of the issue.
Ted Frank of the Competitive Enterprise Institute, who successfully argued Walgreen and has multiple appeals on the subject pending in other jurisdictions, will discuss developments in the area over the last year and answer questions
“Suggestions that President-elect Donald Trump put his business holdings in a 'blind trust,' which would mean selling them to avoid potential conflicts of interest are unrealistic and unfair,” says David Rivkin, of Baker and Hostetler, in a recent Washington Post piece. University of Minnesota Law School Professor Richard Painter said, in a New York Times piece, that President-elect Trump’s announced plans to cure conflict-of-interest concerns are “not enough.” Join us as these two legal scholars discuss their positions in greater detail.
This panel was sponsored by the Federalist Society's Corporations, Securities & Antitrust Practice Group on June 1, 2016, at the National Press Club in Washington, DC.
National Press Club
On January 25, 2016, the Supreme Court decided Amgen Inc v. Harris without oral argument. Former employees of an Amgen subsidiary had participated in a benefit plan that offered ownership of Amgen stock. When the value of Amgen stock fell in 2007, stockholders filed a class action against plan fiduciaries alleging a breach of fiduciary duties, including the duty of prudence, under the Employee Retirement Income Security Act of 1974. Although the U.S. Court of Appeals for the Ninth Circuit initially reversed a district court decision dismissing the class action complaint, the U.S. Supreme Court then vacated the Ninth Circuit’s judgment and remanded the case in light of the Supreme Court’s then-recent decision Fifth Third Bancorp v. Dudenhoeffer, which set forth the standards for stating a claim for breach of the duty of prudence against fiduciaries who manage employee stock ownership plans.
On remand, the Ninth Circuit reiterated its conclusion that the plaintiffs’ complaint stated a claim for breach of fiduciary duty, and the Supreme Court again granted certiorari. In a per curiam opinion the Court reversed the judgment of the Ninth Circuit by a vote of 9-0, holding that the Circuit had failed to properly evaluate the complaint. In its current form, the Supreme Court concluded, the complaint failed to state a claim for breach of the duty of prudence. In remanding the case, however, the Court indicated that the district court could decide in the first instance whether the stockholders might amend their complaint in order to adequately plead a claim for breach of the duty of prudence.
To discuss the case, we have George T. Conway III, who is Partner, Litigation at Wachtell, Lipton, Rosen & Katz.