Wednesday, December 21, 2011

Morton's Investor Says $117M Fertitta Deal Doesn't Cut It

DECEMBER 21, 2011

Morton's Investor Says $117M Fertitta Deal Doesn't Cut It
By Lance Duroni
Law360, Wilmington (December 20, 2011, 9:32 PM ET) -- A Morton's Restaurant Group Inc. shareholder launched a class action Monday in Delaware challenging restaurant magnate Tilman Fertitta's $117 million bid for the steakhouse chain, claiming the deal shortchanges investors.
Fertitta, the owner of Houston-based restaurant and hospitality giant Landry's Restaurants Inc., announced Friday that Morton's board had agreed to the $6.90-per-share deal, which boasts a 34 percent premium.
But Morton's shareholder Lon Myers calls the price "grossly unfair and inadequate" in a complaint filed in Delaware court, claiming Morton's board members breached their fiduciary duty to shareholders by signing off on the deal.
The offer neglects to factor in synergies created through the merger and the company's generally rosy financial prospects, according to the suit.
"[W]hile Fertitta will benefit from cost savings and synergies in the proposed transaction, the Morton's shareholders are left without adequate consideration," Myers said.
To support his claim that the deal undervalues Morton's, the plaintiff cites revenue increases at the company of 5 to 10 percent for each quarter of 2011 over the same quarters in 2010, along with one independent Wall Street analysis that suggested a $9-per-share price target for Morton's.
"The proposed transaction is wrongful, unfair and harmful to Morton's public shareholders because they will not be able to share equitably in the true value of the company," Myers said.
The suit also takes issue with various provisions in the merger agreement that allegedly discourage competing offers and set the deal in stone, including a so-called "top-up" option allowing Fertitta dodge a shareholder vote on the deal by purchasing shares to reach the 90 percent threshold necessary to complete the merger.
Private equity fund Castle Harlan Partners III LP, which owns roughly 28 percent of the Morton's outstanding shares, has entered into an agreement to tender its shares into the offer and vote in favor of the merger.  The fund's CEO John Castle is also a Morton's director and a defendant in the suit.
The plaintiff is seeking an injunction barring the deal, along with unspecified damages.
The complaint comes on the heels of a settlement last week in a similar class action in the same court over Fertitta's proposed purchase of McCormick & Schmick's Seafood Restaurant. McCormick agreed to disclose additional information on the deal to shareholders in return for the claims being dropped, according to court documents.
Chicago-based Morton's owns 77 restaurants throughout the U.S. and one in China.  Fertitta's acquisition of the chain is expected to close in February.
Myers is represented by James P. McEvilly and Juan E. Monteverde of Faruqi & Faruqi LLP.
Counsel information for the defendants was not immediately available.
The case is Lon Myers v. Morton's Restaurant Group Inc. et al., case number 7122, in the Delaware Court of Chancery.
--Additional reporting by Sindhu Sundar. Editing by Elizabeth Bowen.

RELATED FILES

Thursday, December 1, 2011

Ladish Shareholders Sue To Block $778M Allegheny Buy

DECEMBER 01, 2011

Ladish Shareholders Sue To Block $778M Allegheny Buy
By Leigh Kamping-Carder
Law360, New York (December 01, 2010, 1:47 PM ET) -- A Ladish Co. Inc. shareholder has launched a putative class action seeking to stop the $778 million acquisition of the Wisconsin metal components producer by specialty metals manufacturer Allegheny Technologies Inc.
Irene Dixon filed a complaint Tuesday in the U.S. District Court for the Eastern District of Wisconsin, alleging that the consideration Ladish shareholders would receive is “woefully inadequate.”
The suit, filed by Jason R. Oldenburg and Kathleen F. Goodrich of Previant Goldberg Uelmen Gratz Miller & Brueggeman SC and Nadeem Faruqi and Juan E. Monteverde of Faruqi & Faruqi LLP, alleges that the Ladish board of directors engaged in self-dealing.
Under the terms of the deal, Allegheny will pay Ladish shareholders $24 in cash plus 0.445 percent of a share of Allegheny stock in exchange for each share of Ladish stock. The consideration amounts to $48 per share based on the average trading price of Allegheny stock in the 10 days leading up to the Nov. 17 announcement, the companies said.
Since then, however, the Allegheny share price has dropped from the mid-$50 range to $48.50, cutting into the value for Ladish shareholders, according to Dixon. Meanwhile, Ladish is set to improve its financial outlook as the economy recovers, the complaint claims.
Based in Cudahy, Wis., Ladish experienced a dip in 2009, with a 25 percent drop in sales compared to 2008. But in July, the company reported something of a rebound.
Ladish President and CEO Gary J. Vroman, who is named as a defendant, said in October that every Ladish product “has new opportunities lined up in 2011 which will drive growth.”
Dixon also claims that Vroman and Vice President of Law and Finance Wayne E. Larsen stand to benefit from the transaction through lucrative severance packages. Larsen and Vroman, who have worked for the company for nearly 30 years, do not own significant Ladish stock, according to the suit.
The merger agreement also includes certain provisions — including a nonsolicitation clause and a $31 million termination fee — that make the Allegheny acquisition a “fait accompli,” the suit said. Ladish's financial adviser, which owns Allegheny stock, has a conflict of interest, Dixon claims.
Larsen and a spokesman for Allegheny did not immediately respond to requests for comment on Wednesday.
Dixon, a New York native, brought the suit on behalf of all Ladish shareholders. She alleges the Ladish board of directors breached their fiduciary duties of loyalty, due care, diligence, good faith and fair dealing and independence.
The transaction, which is still subject to approval from Ladish shareholders, is expected to close in early 2011.
Ladish engineers, manufactures and markets technologically advanced metal parts for the jet engine, aerospace and industrial markets. Its top three customers — Rolls-Royce Motor Cars Ltd., United Technologies Corp. and General Electric Co. — account for more than half its revenues, with the bulk of the remainder coming from contracts with the U.S. and foreign governments, according to the complaint.
In announcing the Allegheny acquisition, Vroman said, “new markets are well within our reach that were previously a stretch for us. Without question, this merger significantly improves the long-term outlook for Ladish.”
L. Patrick Hassey, Allegheny's chairman and CEO, said the combination of his company's product portfolio and Ladish's forging, investment casting and machining capabilities would create a “more integrated, stable and sustainable supply chain for the aerospace, defense and industrial markets.”
Dixon is represented by Previant Goldberg Uelmen Gratz Miller & Brueggeman SC and Faruqi & Faruqi LLP.
Counsel information for the defendants was not immediately available.
The case is Dixon v. Ladish Co. Inc. et al., case number 2:10-cv-01076, in the U.S. District Court for the Eastern District of Wisconsin.

Wednesday, November 23, 2011

Court Upholds Consumer Fraud and Breach of Implied Contract Claims Against Michaels Stores, Inc.

NOVEMBER 23, 2011

Court Upholds Consumer Fraud and Breach of Implied Contract Claims Against Michaels Stores, Inc.
On November 23, 2011, Judge Charles P. Kocoras of the United States District Court for the Northern District of Illinois denied defendant Michaels Stores, Inc.’s (“Michaels Stores”) motion to dismiss the consolidated class action lawsuit in In re: Michaels Stores Pin Pad Litigation, Case No. 1:11-cv-03350.  Judge Kocoras ruled that plaintiffs sufficiently pled claims for breach of implied contract and violations of the Illinois Consumer Fraud and Deceptive Practices Act, and the Illinois Personal Information Protection Act. 
Plaintiffs allege Michaels Stores failed to adequately protect their financial information and failed to adequately notify customers of a widespread data breach.  This breach resulted in unauthorized withdrawals from customers’ bank accounts. 
For further inquiries regarding this matter, please contact:
Antonio Vozzolo, Esq.
Faruqi & Faruqi, LLP
369 Lexington Avenue, 10th Floor
New York, NY 10017
Telephone: (877) 247-4292 or (212) 983-9330
avozzolo@faruqilaw.com

Wednesday, November 2, 2011

Court Appoints Faruqi & Faruqi, LLP Class Counsel in Stiepleman v. Oreck Corporation

NOVEMBER 02, 2011

Court Appoints Faruqi & Faruqi, LLP Class Counsel in Stiepleman v. Oreck Corporation
On November 2, 2011, Judge William P. Dimitrouleas of the United States District Court for the Southern District of Florida appointed Faruqi & Faruqi, LLP to serve as Interim Class Counsel in Stiepleman v. Oreck Corporation, Case No. 11-61861 to represent a proposed nationwide class of purchasers of Oreck air purifiers.
The lawsuit alleges Oreck deceptively advertised the Oreck XL Professional, Oreck ProShield and Oreck ProShield Plus air purifiers were scientifically proven to substantially reduce risk of the flu and other illnesses caused by bacteria, virus, mold and allergens.
For further inquiries regarding this matter, please contact Antonio Vozzolo at avozzolo@faruqilaw.com or (212) 983-9330.

Wednesday, October 19, 2011

Court Appoints Faruqi & Faruqi, LLP Sole Lead Counsel in In re Zoo Entertainment, Inc. Securities Litigation

OCTOBER 19, 2011

Court Appoints Faruqi & Faruqi, LLP Sole Lead Counsel in In re Zoo Entertainment, Inc. Securities Litigation
Faruqi & Faruqi, LLP was appointed sole lead counsel for the class in Ricker v. Zoo Entertainment, Inc. et al., C.A. No. 1:11-cv-00490-SAS-KLL in the United States District Court for the Southern District of Ohio.


For further inquiries regarding this matter, please contact Antonio Vozzolo: avozzolo@faruqilaw.com, (212) 983-9330 or Jacob A. Goldberg: jgoldberg@faruqilaw.com, (215) 277-5770.

Wednesday, August 31, 2011

Faruqi & Faruqi, LLP Wins Victory For Employees In Third Circuit

AUGUST 31, 2011

Faruqi & Faruqi, LLP Wins Victory For Employees In Third Circuit
Faruqi & Faruqi, LLP, along with its co-counsel, recently won a groundbreaking decision for employees seeking to prosecute wage and hour claims on a collective basis in Symczyk v. Genesis Healthcare Corp. et al., No. 10-3178 (3d Cir. 2011).  In Symczyk, the Third Circuit reversed the district court’s ruling that an offer of judgment mooted a named plaintiff’s claim in an action asserting wage and hour violations of the Fair Labor Standards Act of 1938 (“FLSA”). Writing for the Circuit Court, U.S. Circuit Judge Anthony Scirica held, “[d]epriving the parties and the court of a reasonable opportunity to deliberate on the merits of collective action ‘conditional certification’ frustrates the objectives served by [the FLSA].”  The Circuit Court then established that “when an FLSA plaintiff moves for “certification” of a collective action, the appropriate course ... is for the district court to relate the motion back to the filing of the initial complaint.”  In so holding, the Third Circuit held that an FLSA plaintiff enjoys the same procedural protections as a traditional Rule 23 class action plaintiff.  Notably, the Third Circuit also affirmed the two-step process used for granting certification in FLSA cases.  Consequently, this watershed decision will likely be widely cited in subsequent wage and hour decisions.

Thursday, May 12, 2011

Faruqi & Faruqi, LLP Successful in Sixth Circuit Reversal of Dismissal of Shareholder Derivative Action

MAY 12, 2011

Faruqi & Faruqi, LLP Successful in Sixth Circuit Reversal of Dismissal of Shareholder Derivative Action
Faruqi & Faruqi, LLP, a national law firm concentrating on investors rights, consumer rights and enforcement of federal antitrust laws, on behalf of its client Alfred Freed, won reversal of a dismissal of a shareholder derivative action on behalf of Abercrombie & Fitch Co. (“Abercrombie” or “Company”) (NYSE: ANF).  The case is The Booth Family Trust, et al. v. Jefferies, et al., No. 09-3443, 2011 WL 1237583 (6th Cir. Apr. 5, 2011).  On April 5, 2011, the United States Court of Appeals for the Sixth Circuit reversed the district court’s dismissal of the shareholder derivative action.  On May 11, 2011, the Sixth Circuit denied the defendants’ petition for rehearing en banc.  The litigation will now proceed before the United States District Court for the Southern District of Ohio.
Represented by Faruqi & Faruqi attorneys Beth A. Keller and Jamie R. Mogil, Alfred Freed alleges, on the Company’s behalf, that certain of Abercrombie’s officers and directors caused the Company to make misleading public statements.  The Company touted its high gross margin business model while, the complaint alleges, it was amassing a large surplus of inventory.  Ultimately, the Company marked-down its merchandise dramatically to clear out its inventory.  Company insiders, the complaint alleges, were aware that share prices would fall and sold their personal shares on this inside information.
Abercrombie’s board of directors created a Special Litigation Committee (the “SLC”) to investigate the plaintiffs’ claims.  The SLC recommended that the Company seek to dismiss the plaintiffs’ shareholder derivative action.  The United States District Court for the Southern District of Ohio granted Abercrombie’s motion to dismiss, finding that the SLC was independent, proceeded in good faith and had a reasonable basis for its conclusions.  Plaintiffs appealed.
The Sixth Circuit reversed, holding that because of certain interlocking relationships between one of its members and Abercrombie’s President, COO and CFO, the SLC had lacked the independence necessary to assess the plaintiffs’ claims.  According to Faruqi & Faruqi’s Beth A. Keller, “This decision confirms that Delaware corporations that empower an SLC to investigate derivative allegations must ensure that any potential SLC members are conflict free and that a recusal of a conflict-laden member will not cure a potential independence issue.” 
Beth A. Keller, Esq.
Jamie R. Mogil, Esq.
Faruqi & Faruqi, LLP
369 Lexington Avenue, 10th Floor
New York, NY 10017
Telephone: (877) 247-4292 or (212) 983-9330
bkeller@faruqilaw.com
jmogil@faruqilaw.com

Thursday, February 24, 2011

Faruqi & Faruqi, LLP Partner Joins Esteemed Panel to Discuss Current Developments in M&A

FEBRUARY 24, 2011

Faruqi & Faruqi, LLP Partner Joins Esteemed Panel to Discuss Current Developments in M&A
Faruqi & Faruqi, LLP partner Juan E. Monteverde joined an esteemed panel of the country's top M&A litigators in Naples, Florida to discuss current trends and developments in M&A litigation.  Mr. Monteverde was invited to join as a panel speaker at the 2011 Corporate Counsel CLE Seminar sponsored by the American Bar Association in the segment entitled “Don’t Get Caught in the Past.”  The program explored new trends in corporate governance law and practice at the start of a new decade and covered various topics, including the extent to which rules governing director conduct and liability are changing, as well as new strategies in corporate governance cases and the impact these strategies have on boardroom behavior.

Sunday, February 20, 2011

Mr. Monteverde is a panel speaker in the session for “Don’t Get Caught in the Past” at the 2011 Corporate Counsel CLE Seminar in Naples, Florida, discussing the current corporate governance developments in the mergers and acquisitions law practice and new

FEBRUARY 20, 2011

Mr. Monteverde is a panel speaker in the session for “Don’t Get Caught in the Past” at the 2011 Corporate Counsel CLE Seminar in Naples, Florida, discussing the current corporate governance developments in the mergers and acquisitions law practice and new trends in corporate governance law and practice at the start of the new decade