Quinn Emanuel lawyers are at the forefront of corporate governance disputes. By corporate governance disputes we mean shareholder litigation, entity control disputes, and challenges to M&A and other strategic transactions. We have successfully litigated plaintiff and defense-side derivative and class actions, takeover battles, proxy contests, books and records demands, founder disputes, and disputes between stockholders. When contested corporate governance matters arise, clients often turn to their corporate counsel for litigation assistance. Our clients make a different choice. Quinn Emanuel, as a litigation-only firm, approaches these cases from day one as trial lawyers and, for that reason, among others, is consistently ranked by in-house corporate counsel as the firm they most fear opposing in litigation. Time and again, we have been at the helm of precedent setting wins in corporate governance matters, from successfully litigating the seminal case establishing the pleading-stage test for when directors of Delaware corporations owe fiduciary duties to creditors to obtaining the largest settlement ($1 billion) ever in Delaware on behalf of a class of former stockholders in the Dell shareholder litigation (which is pending court approval).
We excel at the fast-moving, expedited litigation that oftentimes characterizes corporate governance disputes. From the start, we craft the legal strategy with a single-minded focus on developing the best possible record to win at trial, whether or not trial is the ultimate goal. We bring a unique perspective gained from litigating on both sides of the “v.” – unlike our peer firms, we regularly represent both plaintiffs and defendants in derivative and class action corporate governance matters. Too often, defendants in corporate governance disputes mount technical defenses that will not play well at trial and assume that plaintiffs will ultimately blink and settle. We do not make the same mistake. Instead, we quickly marshal and develop the strongest possible factual record and then focus on developing a consistent narrative for our clients. This approach maximizes the prospects for success at trial or of achieving a favorable settlement for our clients pre-trial. And it has enabled us to achieve major post-trial victories in bet-the-company cases (both defense and plaintiff side) and market-setting settlements.
As one of the few top-tier firms without a corporate practice, we do not inherit corporate governance litigation from our corporate practice as many of our peer firms do. Thus, when we are retained to handle a corporate governance-related dispute, it is because clients recognize that we can bring a disinterested and fresh perspective to the matter and change the entire dynamic (whether pre-litigation or after litigation has commenced). We then work seamlessly with the client’s existing corporate counsel to advance the client’s best interests in litigation.
Oftentimes governance disputes can span multiple forums, and we have unparalleled expertise in pursuing or defending multi-forum litigation to obtain the best possible results for clients. We pride ourselves on thinking outside the box and will work with our clients to develop a strategy that maximizes the prospects for achieving their strategic objectives while minimizing management distraction.
While skilled in the courtroom, we are regularly brought in to provide litigation counsel to clients to facilitate their business objectives in corporate deals and to resolve pre-litigation governance disputes. Clients often consult us before or at the outset of a deal or potential strategic transaction, either in anticipation of litigation or simply because they value our perspective, expertise, and experience, and we often work side-by-side with clients’ transactional teams to develop strategies to maximize leverage in pre-litigation disputes, to minimize litigation risk, or to best position the client for success if future litigation should arise.
We have had unparalleled success handling corporate governance disputes in the following areas:
- Plaintiff and defense-side shareholder class actions
- Plaintiff and defense-side derivate suits
- Asserting and defending fiduciary-related claims on behalf of directors and controlling shareholders
- Majority/Minority shareholder disputes
- Founder disputes
- Disputes arising out of limited liability company, limited partnership, and investor agreements
- Disputes related to changes in control
- Litigation arising out of proxy fights
- Prosecuting and defending books and records demands
- Leveraged buyouts, restructurings, and large complex sale and merger transactions
- M&A related litigation
- Tender offer litigation
- Representing special committees of outside directors
While the following list is far from exhaustive, our notable representatives in the corporate governance context include:
- We represented Warren Lichtenstein in an expedited Delaware Chancery action involving corporate control of Aerojet Rocketdyne Holdings, Inc., securing a declaratory judgment, permanent injunction, and other equitable relief against defendants who had used Company resources without authorization to advantage themselves in a proxy contest against our client.
- We represented SoftBank Vision Fund in two lawsuits arising from the termination of a tender offer by SoftBank Group Corp. to purchase $3 billion in shares of WeWork from existing stockholders. The lawsuits, one filed by WeWork and one filed by Adam Neumann and his company, alleged claims for breach of contract and breach of fiduciary duty. The parties settled the dispute by agreeing to engage in a tender offer for half of the shares SoftBank Group Corp. was obligated to purchase previously.
- We represent The Carlyle Group in a derivative lawsuit pending in the Delaware Court of Chancery. A minority shareholder of Wildhorse Resource Development Corporation challenges the company board’s approval of the issuance and sale of preferred stock to a Carlyle investment entity to finance a major resource acquisition, and alleges that the Carlyle entity was unjustly enriched as a result of the transaction.
- We represented Sebastian Mejia, one of the founders of Rappi, Inc., in an action filed by Leon Malca in the Delaware Court of Chancery. Malca alleged breach of an investment agreement, conversion, unjust enrichment, and breach of fiduciary duty arising from a purported ownership interest in the leading grocery delivery app, Rappi, Inc. The matter settled prior to trial.
- We currently serve as lead counsel for Standard Industries Inc. (“Standard Industries”) and certain of its affiliates in parallel actions pending in Delaware superior court and New Jersey, both adverse to Ashland LLC (“Ashland”). These actions arise out of the $3.2 billion sale of the common stock of chemical manufacturer International Specialty Products Inc. (“ISP”), previously owned by Standard Industries affiliates, to Ashland in 2011. The cases relate to who is responsible for significant environmental liabilities associated with decades-old releases of hazardous substances from a former ISP chemical manufacturing plant. At the heart of the Delaware action is a complex stock purchase agreement by which Ashland acquired ISP as well as certain ancillary agreements.
- We represent NantCell, Inc. and Altor BioScience, LLC in litigation arising from NantCell’s acquisition by merger of Altor, a biopharmaceutical company engaged in the discovery, development, and commercialization of immunotherapeutic agents for the treatment of cancer, viral infections, and autoimmune diseases. We defeated plaintiffs’ efforts to enjoin the transaction and obtained summary judgment dismissal of the fiduciary duty claims brought by certain plaintiffs. Now that the merger has closed, plaintiffs’ claims are proceeding as appraisal claims and as claims for breach of fiduciary duty (including a would-be class action) relating to disclosures in connection with the merger and plaintiffs’ claim that the merger price was too low and the result of an unfair process. We asserted counterclaims for appraisal petitioners’ breach of prior covenants not to sue and won a key discovery battle to obtain related evidence. After the close of fact discovery, we entered mediation and negotiated a favorable settlement, which is being finalized for approval by the court. The case is pending in the Delaware Court of Chancery before Vice Chancellor Slights, but August 2022 trial dates have been adjourned by agreement of the parties in light of the pending settlement.
- We represent I.G. Capital in a derivative action brought in the Delaware Court of Chancery by a minority shareholder challenging H.I.G.’s sale of its controlling stake in Surgery Partners, a medical provider company, to Bain Capital for over $500 million. The plaintiff alleges that H.I.G. had a conflict of interest that tainted a related transaction in which Surgery Partners issued $310 million in preferred shares to Bain. Quinn Emanuel was retained after Chancellor Bouchard denied H.I.G.’s motion to dismiss in part, and has since been managing the case through discovery, with trial scheduled for February 2022.
- We recently represented the Canadian pension fund OMERS in an action to defend its right of first refusal over the sale of a minority stake in Texas utility company Oncor. While following trial the Delaware Court of Chancery allowed minority holder Hunt Consolidated to sell its interest to Oncor’s majority owner, Sempra Energy, we secured a 5-0 ruling from the Delaware Supreme Court in favor of OMERS.
- We represented JBS S.A. and six of its directors in a derivative action brought in the Delaware Court of Chancery by the minority shareholders of Pilgrim’s Pride Corp., which was controlled by JBS, claiming breach of fiduciary duty in connection with Pilgrim’s Pride’s 2017 acquisition of Moy Park, an entirely owned subsidiary of JBS. The matter was pending before Vice Chancellor Laster, and Quinn Emanuel, after negotiating the outright dismissal of certain individual defendants in the early stages of the litigation, subsequently obtained a favorable settlement for JBS and the remaining director defendants.
- We represented Ripple Labs Inc. and an affiliate in one of the largest cryptocurrency cases to be litigated to date. The case related to the validity of an option to buy 5 billion units of the digital asset XRP, at a time when XRP was worth about $0.26 per unit. We successfully secured a complete dismissal of the case against Ripple and its affiliate in just over one month. In the months thereafter, XRP reached an all-time high price of over $3.00 per unit.
- We represented Athilon Capital Corp. and its board of directors against Quadrant Structured Products LLC in a lawsuit in the Delaware Court of Chancery in which Quadrant sought not only $200 million, but also an order requiring Athilon to liquidate its assets and shut its business down entirely. After a week-long trial, the court issued a complete defense verdict that denied all the relief Quadrant requested and permitted Athilon to continue executing the long-term business strategy that Quadrant challenged at trial. The decision was affirmed in its entirety on appeal.
- We represented Zach Nelson, the former CEO of NetSuite, a cloud computing company acquired by Oracle. Plaintiff alleged that the Oracle board breached its fiduciary duties by valuing NetSuite above its market price, creating a windfall for Larry Ellison, who founded both companies. Plaintiff further alleged that Mr. Nelson aided and abetting the Oracle board’s breaches of fiduciary duty by having behind-the-scenes conversations that anchored the proposed price for the NetSuite shares. The Delaware Court of Chancery rejected this theory and dismissed Plaintiff’s complaint against Mr. Nelson and another NetSuite executive.
- We represented Amur Finance Company and its founder Mostafiz ShahMohammed in a case brought by the hedge fund Pine River in the Delaware Court of Chancery. Pine River sought to unwind its $167 million credit facility with Amur seven years prior to its maturity under the contract. In an attempt to shutter the facility, Pine River filed a complaint in the Delaware Court of Chancery alleging breach of contract and events of default. Pine River moved for pre-discovery summary judgment. Pine River also sought to inspect Amur’s books and records under Section 220 based on a host of pretextual reasons. Quinn Emanuel successfully defended against virtually all of Pine River’s claims. Before discovery had even begun, the Vice Chancellor entered a stipulation dismissing the case with prejudice.
- We secured a favorable settlement for the controller of a leading petrochemical limited liability company in an action in the Delaware Court of Chancery alleging that the controller breached fiduciary duties by engaging in an allegedly unfair transaction that resulted in the dilution of minority members.
- We successfully defended a Section 220 books and records case filed against the Taipei American School Foundation (“TASF”). The plaintiff sought records from TASF related to the school’s decision to suspend his child for racially insensitive conduct.
- We obtained early dismissal on a “nominal” settlement for PIMCO Advisors L.P. in corporate control litigation in Delaware.
- We represent Fairstead and its owners in a governance dispute concerning the interpretation of various limited liability company agreements and whether certain executives were properly terminated for cause resulting in the forfeiture of their interests.
- We represent Youbi Capital, a leading crypto investment fund, in corporate governance dispute pending in New York State Supreme Court brought by a plaintiff who claims to be a shareholder and director of the company and thus entitled to a stake in the company’s profits and distributions.
- We have represented numerous corporations, directors, and officers in shareholder derivative litigation alleging improper revenue recognition, stock option backdating, or other forms of accounting fraud, obtaining complete dismissals for several clients, including GE Capital; the chairman and founder of E-Universe; the chairman and founder of Ariba, Inc., and PricewaterhouseCoopers.
- We represented two affiliates of Elliott Management in a $300 million-plus shareholder class action in New Jersey state court arising from the 2006 take-private merger of Metrologic Instruments. Elliott was a minority shareholder in Metrologic at the time of the merger and rolled over its stake in the company to the post-merger entity. Plaintiffs alleged that Elliott (among other defendants) breached fiduciary duties that it purportedly owed to plaintiffs. Quinn Emanuel took over the case from prior counsel after New Jersey’s Appellate Division reversed the trial court’s dismissal of Elliott from the case on summary judgment. Within a few months we (i) successfully moved to strike plaintiffs’ jury demand; (ii) identified an alternative path to summary judgment and quickly filed a renewed motion for summary judgment; and (iii) moved to reopen expert discovery to enable us to supplement the expert record before trial. Shortly thereafter, we reached a settlement on very favorable terms.
- Represented Masimo Corporation and its Board of Directors in Delaware Court of Chancery action brought by activist investment fund, in which CalPRS subsequently joined. After a year of hard-fought litigation and a proxy contest in which two of the activists’ candidates were elected to the Board, and shortly after Defendants moved to dismiss all counts for a second time, Plaintiffs voluntarily dismissed the remainder of the action.
- We represented Barrick Gold of North America, Inc., the Board of Directors of Barrick Gold of North America, Inc., and Barrick U.S. Subsidiaries Benefits Committee in a class action filed by two former Barrick Gold employees in which they alleged that Defendants breached the fiduciary duties of loyalty and prudence in violation of ERISA by purportedly failing to, among other things, investigate and select lower cost alternative investment options for the plan and monitor or control the plan’s recordkeeping expenses. In the summer of 2020, Quinn Emanuel filed a motion to dismiss Plaintiffs’ complaint, arguing that Plaintiffs’ claim that the plan’s investment options were more expensive than allegedly similar investments was inaccurate. Plaintiffs were not only making comparisons between dissimilar investment options, but they were also citing incorrect plan expense ratios that, when corrected, showed that the plan’s investment options were actually cheaper than the ones Plaintiffs cited as examples of “prudent” investment choices. The plan documents also proved that the plan administrator had acted prudently, renegotiating recordkeeping fees 17 times with the recordkeeper and consistently lowering the fees. The Court agreed and dismissed Plaintiffs’ Amended Complaint with prejudice.
- We obtained complete dismissal with prejudice for The Vanguard Group of a shareholder class and derivative action that asserted RICO and other claims against Vanguard and some of its officers, trustees, and advisors, on the theory that Vanguard had improperly invested in illegal gambling companies. After plaintiffs appealed, the Second Circuit Court of Appeals affirmed the dismissal.
- We likewise defeated a derivative action filed against Schwab’s YieldPlus Fund, alleging breach of fiduciary duty against the Fund officers and trustees and the Fund’s Manager when the Fund manager changed its investment objectives to increase purchases of mortgage-backed securities. Although the Fund ultimately lost $900 million in value, we successfully defended the claims on the ground that a special committee had reasonably determined the derivative action was not in the best interest of shareholders. (The shareholders had already received $235 million in a class action defended by another law firm.)
- We represented GP Investments in a shareholder dispute in New York arising out of its investments in Brazil. We succeeded in obtaining a very favorable outcome, including dismissal of all claims against GP Investments.
- We won a two-week trial in Bankruptcy Court for the Southern District of New York as lead counsel for private equity sponsor First Reserve, defeating breach of fiduciary duty and related claims asserted by the Creditors Committee arising from the chapter 11 bankruptcy of Sabine Oil & Gas.
- We obtained for our clients, senior executives of Paulson & Co. Inc., a complete and decisive dismissal of a civil complaint brought derivatively by Five Mile Capital which sought more than $158 million in damages. The executives were directors of a portfolio entity, MSR Hotels & Resorts, Inc. This total victory made clear that our clients properly served all duties and also cleared the way for MSR to successfully emerge from bankruptcy in 2014.
- We represent a class of former minority shareholders of Dell who owned publicly traded Class V stock while Dell was still private and majority controlled by Michael Dell and Silver Lake Partners. Class V stock, which was intended to track Dell’s interest in VMware, was repurchased in a December 2018 transaction for a combination of cash and Class C Dell shares. We allege that the transaction was neither fair in dealing nor fair in price. We defeated a motion to dismiss the class action and on the brink of trial, obtained a record-setting $1 billion settlement on behalf of the class (which is pending court approval).
- We represented a stockholder of Victoria’s Secret owner L Brands Inc. who sued the parent company in the Delaware Court of Chancery for access to records regarding an alleged “toxic culture” of sexual harassment and intimidation at the women’s lingerie retailer. After litigating the action through document discovery and deposition, we achieved, and the Court approved, a groundbreaking settlement that requires L Brands to implement significant corporate governance reforms for years to come.
- We represented Centerbridge in a partnership dispute involving approximately $200 million in auto loans. After suing in the Delaware Court of Chancery, we won a motion to expedite and subsequently obtained case-ending summary judgment requiring the client’s counterparty to provide full cooperation and information. Within two months of filing the case in the midst of the COVID pandemic, we were able to secure total relief for the client.
- We represented private equity fund Crestview Partners and various affiliates adverse to Bill Koch and a company he owns a majority stake in, Oxbow Carbon. The dispute arose when Crestview attempted to exercise its contractual right to exit its investment pursuant to the terms of Oxbow’s LLC agreement, which granted Crestview the right to compel an “Exit Sale” of 100% of Oxbow’s equity. Koch argued that small interest holders could block the sale. Though reversed on appeal, we won a trial victory on the implied covenant of good faith and fair dealing.
- We represented J. Christopher Burch and C. Wonder in a Delaware Court of Chancery action against Tory Burch and the directors of Tory Burch LLC. We filed a lawsuit asserting breach of fiduciary duty claims in the context of a proposed sale of Mr. Burch’s equity interests in the multi-billion-dollar Tory Burch fashion brand, and also defended against counterclaims filed by Tory Burch. Less than four months after expedited discovery and proceedings were ordered, we achieved a highly favorable settlement that enabled Mr. Burch to consummate a sale of his interests in Tory Burch LLC and to continue to operate his new fashion brand, C. Wonder.
- We represented shareholders in a derivative action in the Delaware Court of Chancery against the directors and officers of AGNC Investment Corp. (f/k/a American Capital Agency Corp.), a large real estate investment trust (REIT), alleging breaches of fiduciary duty in the handling and eventual internalization of AGNC’s management functions. Following discovery, the firm secured a $33.5 million cash settlement.
- We represented UMB Bank, as indenture trustee for Caesars’ first-lien bondholders, in a Delaware Court of Chancery action against Caesars and its senior officers and directors. We successfully obtained an expedited schedule for the appointment of a receiver for the company, which led to a settlement that was implemented in Caesars’ chapter 11 bankruptcy.
- We represented three “Zohar” CLO funds and current manager, Alvarez & Marsal Zohar Management, in multiple litigations in Delaware courts against the funds’ creators and prior managers, Patriarch Partners and Lynn Tilton. We succeeded at trial in obtaining trial judgments finding Patriarch in breach of obligations to turn over books and records and that the Zohar Funds are rightful owners of certain portfolio companies entitled to replace current boards of directors.
- We represent shareholders in a class action against Australia’s largest general insurer for misstating the likely effect of management failure to update policies to exclude pandemic shutdowns in business interruption cover.
- We represent a large not-for-profit entity and minority investor in several DAX companies in a campaign to get certain topics on the agenda for the companies’ annual shareholder meetings.
- We successfully prosecuted a books and records case under the LLC equivalent to Section 220 on behalf of private equity fund Crestview Partners and won a motion seeking our attorneys’ fees.
- We represented a major private equity fund in the Delaware Court of Chancery in a dispute arising out of portfolio company corporate governance and exit rights.
- We represent the founders of Onyx, Inc., a leading e-commerce automobile parts company, asserting claims for breach of fiduciary duty and breach of a stockholder agreement alleging that the controllers wrongfully forced through a SPAC transaction that resulted in a windfall to the controllers at the expense of the minority stockholders. The case is pending in the United States District Court for the District of New Jersey.
- We represented a major private equity fund in a pre-litigation dispute alleging that the corporate controllers breached fiduciary duties and a stockholder agreement by engaging in an unfair and highly dilutive recapitalization. After a letter writing campaign and sharing a draft complaint, we obtained a settlement for our client that nearly doubled the client’s shareholdings and reversed nearly all of the dilution.
- The firm won a major victory for two investment funds, Zohar II 2005-1, Ltd. and Zohar III, Ltd. (the “Zohar Funds”), in a dispute with their former collateral manager, Lynn Tilton. The immediate dispute concerned ownership and control over three Delaware corporations—FSAR Holdings, Inc., UI Acquisition Holding Co., and Glenoit Universal Ltd.—but has ramifications for dozens of other portfolio companies that are subject to the same dispute. The Zohar Funds claimed legal and beneficial ownership of the three subject companies, and elected new directors to their boards by written consent. Tilton refused to recognize the election, claiming that the Zohar Funds were merely record holders of equity in the companies, while she was the true beneficial owner entitled to all rights and privileges of ownership, including the right to elect their directors. Following a six day trial before the Delaware Court of Chancery, the Court issued a 95-page Memorandum Opinion finding for the Zohar Funds on all counts. The Court confirmed the Zohar Funds’ appointees as the rightful directors of the subject companies and rejected Tilton’s claim of beneficial ownership of the Defendant Companies as “not credible” and based upon “hindsight observations” the Court characterized as “revisionist.”
- We represented limited partners of a hedge fund in a shareholder derivative arbitration against a hedge fund manager and his stockbroker sister based on claims of systemic fraud through post-execution allocations of securities trades over more than a decade. After an arbitration that spanned seven months, the arbitration panel, in a unanimous opinion, awarded our clients $75 million in compensatory and punitive damages, which included $35 million for disgorgement of compensation for the period of the fraud.
- We represented MHR Fund Management and its affiliated funds relating to Carl Icahn’s 2010 hostile bid for Lions Gate Entertainment Corp. MHR is a longstanding significant investor in Lions Gate, and its founder is a member of Lions Gate’s board. Following a four day trial, the Supreme Court of British Columbia rejected Icahn’s bid to rescind the transactions or sterilize MHR’s votes. Two months later, the New York Supreme Court denied Icahn’s request for a preliminary injunction. Following these rulings, Icahn did not close his then-outstanding tender offer, and his slate of directors was defeated.
- We represented Bayerische Hypo-Und Vereinsbank AG (“HVB”) in a lawsuit against an investment vehicle that was wrongfully refusing to redeem shares held by HVB, bringing claims for breach of contract and seeking approximately $422 million in damages. Together with the filing of the complaint, we obtained an immediate ex parte attachment of all assets owned by the defendants located in the State of New York, and we obtained an order sealing the file. The following day, more than $380 million worth of the defendants’ assets in New York were attached. Having gained considerable leverage, we were able to reach a favorable settlement—$403 million for our client—shortly thereafter.
- We were retained by a private equity fund to advise on potential litigious issues in connection with the sale of one of the world’s leading railcar producers. One shareholder with significant rights was threatening to obstruct the sale with all means—therefore putting the deal at risk. Shortly after we were involved, the shareholder stopped his challenge and agreed to the sale of the company. Our client confirmed that our involvement shifted the adversary’s perspective and led to a smooth closing of the deal.
- We represent the Missouri state employee retirement system (MOSERS), a $9 billion pension fund, pursuing claims against a Canadian private equity manager, including claims for breaches of fiduciary duties, fraudulent inducement, breach of contract, and civil conspiracy.