M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Tuesday, December 13, 2011

Revolt of the shareholder plaintiff

Wait ... this is unusual.  According to a piece by Tom Hals of Reuters, the lead plaintiff - not his lawyer, but the lead plaintiff himself - is opposing settlement of the shareholder litigation in the J Crew transaction. The J Crew MBO was on the receiving end of a shareholder lawsuit and for good reason (here, here, and here).  The litigation moved towards settlement and then ran into some trouble when the plaintiffs counsel threatened to take the whole thing to trial.  Then the litgation kind of disappeared off the radar.  Now, it's back.  

Martin Vogel, one of the named lead plaintiffs in the J Crew shareholder litigation, is refusing to settle the case.  And, he's asking uncomfortable questions:

When "lawyers tell you that you absolutely must settle this case for a smidgeon of additional money which in no way begins to address the actual damages, one cannot help but wonder whether a fatal conflict of interest has arisen between counsel and the class," Vogel said

Vogel is looking to get rid of his counsel in this case and then litigate it rather than settle.  For anyone familiar with the typical role played by shareholder plaintiffs in these cases, this move is pretty unusual. Shareholder plaintiffs normally not even seen, much less heard when it comes to these kinds of cases.  Of course, in the post-PSLRA period, we are getting used to more vocal shareholder plaintiffs in the Federal courts, but that's not yet the rule in the state courts where the quasi-mythical shareholder plaintiffs like Alan Kahn are still quite active. But still this is a little unusual.  It may be that there are issues, internal to the plaintiffs' executive committee about strategy that has led to one of the named plaintiffs to speak out. Hard to say. In any event, it'll play itself out in front of Chancellor Strine tomorrow.



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