Thursday, September 23, 2010
In local news, quasi-mythical shareholder plaintiff Alan R. Kahn recently filed suit in MA challenging the Genzyme-Sanofi transaction. In his complaint (which is sadly not available online) he alleged various breaches of fiduciary loyalty by the board, etc. The suit seeks (i) class action status, (ii) an order enjoining the defendants from initiating any defensive measures that would inhibit the defendants' ability to maximize shareholder value, (ii) compensatory damages and (iii) an award to plaintiffs of the costs of the action, including reasonable attorneys' and experts' fees and expenses.
Wait a minute ... there is no Genzyme-Sanofi deal, not yet anyway. Talk about jumping the gun! Well I guess he had the joy of being able to yell "FIRST!"
Well bad news for Mr. Kahn - if he thinks that he'll be able to get an injunction or an order out of the MA courts to prevent or even slow down this deal when and if it ever gets announced he's sadly mistaken. This Skadden Arps memo via the Boston Bar Association (H/T EDJ) notes that the MA courts are especially stingy when it comes to handing out injunctions to block deals:
The lesson of Elliot and its brethren is clear. Massachusetts law is increasingly unreceptive to injunction motions seeking to interfere with sophisticated corporate transactions, particularly where such motions would seek to interfere with shareholder votes. While such cases may occasionally find litigation “traction” elsewhere — indeed, there are Delaware cases granting injunctions in some circumstances,including injunctions delaying shareholder votes — our judges have been skeptical.
At least they are more predicable. It wasn't long ago that the knock on business litigation in MA was that there results were often no better than a lottery.