We represent many prominent hedge funds, activist investors, boards of directors, special committees, individual directors, and large public and private companies in the defense and pursuit of activist investment strategies. These disputes often play out in board rooms, in negotiations across the table between stakeholders, or in court rooms—and we have proven success in all forums.
Our experience spans proxy contests, hostile takeover and other contests for control, as well as disputes over board representation and between stockholders over stockholder agreements. We have represented activists and targets in nearly every type of action, such as bringing and defending books and records inspection demands, proxy contests, expedited proceedings to enforce or enjoin mergers or other strategic transactions, and full blown trials in the Delaware Court of Chancery and other courts around the country.
Quinn Emanuel’s entry into a case sends an unmistakable message to the other side: we will take this all the way. There is a reason why we have been recognized for over a decade as one of four firms that general counsel at major Fortune 500 companies fear facing the most in any dispute. And we have taken that reputation to the Delaware courts and courts around the country, where we have achieved many unparalleled, high-profile victories on behalf of our clients.
We believe that our intimate understanding of where any activist campaign may end up—the courtroom—allows us to develop and execute a highly effective strategy from day one, whether from the initial outreach to a board on behalf of an activist investor seeking to effect change at the company or in the board room in responding to a demand or action taken by an activist investor. We also understand that an out-of-court resolution is often the optimal one. Time and time again, we have found that our expertise in knowing what is at stake and what an in-court dispute would look like allows us to craft efficient out-of-court resolutions in our client’s best interests that minimize management distraction and the unnecessary expenditure of our client’s resources.
Perhaps our greatest strength in pursuing or defending against shareholder activist litigation is our independence. Because we are a litigation-only firm and do not have a corporate transactional practice, we approach each client and case with a fresh perspective. We are free from any biases that come with having to defend past decisions and relationships or a desire to stick with the status quo. Instead, we develop strategies for our clients based on what will win in court, if the dispute gets there. Having gone to trial more often than our peer firms, we understand that in litigation the overall record—which starts even before an activist campaign goes live—must be shaped from inception, with careful attention paid not only to the applicable corporate governance principles, but also to how the actions our clients take in the heat of the moment may be perceived months, or even years, down the line in a court room. Our goal is simple: to help our clients win—whether pre-litigation at the negotiating table, during litigation, or after trial. And we win a lot.
While the following list is far from exhaustive, some of our notable representations in the shareholder activist context include:
Board Representation Campaigns
- We represented an individual activist shareholder in a proxy contest for a seat on the Board of Lone Star Steakhouse, an underperforming restaurant chain with long-entrenched management. The company, controlled by its CEO and Chairman, sued the activist based on his proxy materials, alleging SEC violations, and sought a restraining order and an injunction. We successfully defended the activist and defeated the restraining order and injunction, allowing him to complete the proxy contest, whereby he was elected to the board along with his slate of candidates. The Institute of Institutional Investors, as well as numerous large pension funds, supported his efforts.
- We represented a majority of the Board of Reading International, a publicly held company, in a series of lawsuits over the termination of the CEO, including defending against investor claims challenging the board and seeking to change the direction of the company. We ultimately defeated all claims in Clark County District Court (Nevada), and obtained affirmance by the Nevada Supreme Court.
- We represented Elliott Managementin its activist campaign at Twitter, securing one board seat.
- We represented the Harte Family Foundationin connection with its proxy battle for Harte Hanks, Inc., securing a majority of Harte Hanks’s board seats.
- We represented aprominent hedge fund in connection with a proxy battle, securing two board seats.
- We represented a family foundationin connection with a proxy battle for a publicly-traded company, securing two board seats.
- We served as Co-Lead Counsel to a class of former Dell Technologies Inc. Class V (DVMT) common stockholders against the board of directors of Dell Technologies—including Michael Dell—along with Silver Lake and Goldman Sachs, to challenge a 2018 transaction that redeemed all shares of Class V common stock for Dell Technologies Class C common stock and cash. We alleged that the transaction’s unfair terms resulted from a deeply flawed process—including stockholder coercion and conflicts of interest—and ultimately obtained a $1 billion cash settlement—the largest such settlement in Delaware history by more than $700 million—on behalf of the class. The Court of Chancery approved the settlement in April 2023.
- We represented a group of shareholders who sold a cannabis company to a large multi-state operator in exchange for cash and a tranche of shares. The number of shares was to be determined in accordance with a formula that was based on the relative values of the two companies. The shareholders challenged the share determination in arbitration, alleging that the company valuations were skewed to depress the number of shares they were awarded.
- We represent investors in a case asserting breaches of federal and state securities laws, as well as voidable transfers, against several individual and entity defendants, including William “Beau” Wrigley, Jr., scion of the Wrigley Family. Wrigley and his lieutenants, James Whitcomb and Jay Holmes, are/were directors and officers of Parallel, a cannabis company in which Wrigley in particular held substantial interests. But beginning almost immediately after Wrigley’s assumption of the CEO role from Robert “Jake” Bergmann (defendant to the voidable transfers cause of action), he overloaded the company with debt and otherwise mismanaged it to the point where a sale or substantial cash infusion was necessary to keep it afloat. Although hopeful of a sale through a SPAC, once that fell through, Defendants made various misrepresentations and omissions about the company, its finances, its outstanding debt, and the level of interest from other equity investors (as well as from Wrigley himself) to induce our clients to invest $25 million in a Simple Agreement for Future Equity (SAFE). Among other misrepresentations and omissions, remarkably, just two days after our clients finished funding their investment, the company experienced a cascade of major defaults on the vast majority ($300 million) of its outstanding debt—imminent defaults Defendants had not disclosed during our clients’ diligence. On July 5, 2023, we defeated defendants’ motion to dismiss and will now proceed to discovery.
- 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 successfully represented Chatham Asset Managementin an expedited action in Delaware Chancery Court seeking to enjoin takeover defenses erected by the board of target R.R. Donnelley, facilitating execution of a merger agreement between Chatham and the Company.
- We represented shareholders in a class action against Australia’s largest general insurerfor misstating the likely effect of management failure to update policies to exclude pandemic shutdowns in business interruption cover.
- We represented a large not-for-profit entity and minority investorin several DAX companies in a campaign to get certain topics on the agenda for the companies’ annual shareholder meetings.
- Represented Blackwells Capitalin connection with its investment in SuperValu.
- We represented Elliott Managementin connection with its sale of Metrologic to Honeywell.
- We represented Elliott Managementin connection with its position in Bayer relating to Bayer’s Roundup-related liabilities.
- We represented Elliott Managementin connection with its investment in XPO Logistics, resulting in a €230 million buy-out.
- We represented Madryn Capitalin connection with its investment in SomaLogic and its announced SPAC merger, resulting in a private sale.
- W represented Crest Financialin challenging Sprint’s deal to acquire Clearwire, leading to an increased bid that raised the deal price by over $1.5 billion.
- We represented shareholdersin a class action against a publicly owned law firm for misrepresenting revenue and fee recovery.
- We provided strategic advice relating to minority shareholders’ rightswith respect to a German squeeze-out resolution adopted by the general meeting.
- We represented shareholdersin the annual general meetings of a German DAX company to exercise information rights.
- We represented three “Zohar” CLO funds and current manager, Alvarez & Marsal Zohar Management, in multiple actions in Delaware courts against the funds’ creators and prior managers, Patriarch Partners and Lynn Tilton. We obtained 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 advised on minority shareholders’rights to adjust claims for fair compensation under domination and profit and loss sharing agreements.
- We represent Dr. Mark H. Rachesky, MHR Fund Management, and certain of its affiliates in a dispute related to the acquisition of Emisphere Technologies, Inc. (“Emisphere”) by Novo Nordisk A/S (“Novo”). Verified stockholder class action complaints were filed in the Court of Chancery of the State of Delaware by a number of minority stockholders in Emisphere after the acquisition. The actions concern a merger in late 2020, by and among Emisphere and Novo, and a simultaneous asset purchase arrangement between Novo and MHR and certain of its affiliates. The principal claim is a breach of fiduciary duty challenge brought against Dr. Rachesky and certain other members of Emisphere’s board of directors. The actions allege the Emisphere board failed to maximize the consideration for both the merger and the asset purchase agreement, and also allege a disproportionate amount of consideration was allocated for the asset purchase. The actions were consolidated on December 6, 2021, under the caption In re Emisphere Technologies, Inc. Stockholder Litigation, C.A. No. 2021-0025-JRS. A verified amended class action complaint was filed on February 11, 2022. A second amended complaint was filed on June 14, 2022. Quinn Emanuel partially moved to dismiss the second amended complaint. The motion was heard on April 3, 2023.
- Quinn Emanuel represents KKR in a suit brought by Plaintiff Shareholders against the former directors, preferred shareholders, and corporate affiliates of Scottish online sports betting company, FanDuel, in connection with a 2018 merger transaction between FanDuel and another sports betting company, Paddy Power Betfair. Funds affiliated with KKR were preferred shareholders of FanDuel and are named, along with KKR itself and its boar designees, as defendants in the suit. Plaintiffs’ Complaint alleges that in their roles as investors, KKR and another preferred shareholder, Shamrock (represented by Proskauer) breached their fiduciary duties (and/or aided and abetted the FanDuel board’s breach of their duties) by improperly exercising a contractual drag-along right to force a sale of FanDuel at an improperly low price, which resulted in preferred shareholders receiving the entire benefit of the transaction at the expense of common shareholders, who were left with nothing. Quinn Emanuel moved to dismiss the Complaint, arguing that as minority shareholders, KKR and Shamrock owe no fiduciary duties, and after repeatedly saving FanDuel from financial ruin, had properly invoked their bargained-for drag along rights. The trial Court dismissed all but one of Plaintiffs’ claims against KKR, holding that Plaintiffs failed to sufficiently plead a breach of fiduciary duty, but upheld certain other claims on the basis that those claims were stated under New York law and not the law of Scotland, where FanDuel is incorporated. KKR and its co-defendants appealed that decision to the First Department, which then overturned the ruling in favor of KKR, finding that Scots law applied and that Plaintiffs failed to state a claim for breach of fiduciary duty, dismissing the remaining causes of action. The case is now proceeding to appeal before the New York Court of Appeals.
- We represented NantCell, Altor LLC, and Dr. Patrick Soon-Shiong in litigation in the Delaware Court of Chancery 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, among other things, claims brought by certain plaintiffs on the basis of covenants not to sue. With the merger closed, plaintiffs/petitioners’ claims proceeded as appraisal claims and as claims for breach of fiduciary duty (including a potential class action) relating to plaintiffs’ claim that the merger consideration was inadequate and the result of an unfair process. We obtained favorable settlements with petitioners and class plaintiffs to resolve all claims prior to trial.
- We represented Masimo Corporation in an expedited action in the Delaware Court of Chancery brought by an activist investment fund regarding the enforceability of certain of Masimo’s bylaws relating to director nominations.
- We represented Create Music Group, Inc. (CMG) in an action seeking rescission and asserting breaches of a stock repurchase agreement brought by Iraj Parvizi, a minority shareholder based in the United Kingdom, who contended that the company failed to pay the consideration due for his shares by the target closing date and that the stock agreement was procured by fraud, duress, or mistake. Specifically, Mr. Parvizi alleged that he was unaware CMG was relying on third-party financing. CMG filed counterclaims seeking to enforce the agreement and conclude the share repurchase. After engaging in discovery, including taking and defending more than a dozen depositions, and more than a year of motion practice, the parties reached a settlement accomplishing the repurchase.
- We represented long-standing client World Boxing Super Series AG in defending actions brought in Swiss courts by former shareholders for repayment of loans and services.
- 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 for alleged breaches of fiduciary duty, 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 which permits Athilon to continue executing the long-term business strategy that Quadrant challenged at trial. The decision was affirmed in its entirety on appeal.
- Cape Technologies, an Australian financial service and technology company, collapsed into insolvency in late 2021 following a shareholder dispute between its founders and investors. We were appointed lead counsel representing the joint and several administrators. The Cape business had limited cash and significant ongoing staff and operational expenses and, in order to hold the business together to facilitate its sale as a going concern, we designed a unique sale structure and accompanying court application in the Federal Court of Australia. We negotiated the structure and subsequent sale of Cape, and then designed and wrote the ‘judicial advice’ Court application (that ultimately allowed the accelerated sale to occur). The Federal Court of Australia granted the application, providing the administrators with justification to sell the business without having run a competitive sales process, and without risking the business. The Cape business has now been recapitalized out of administration with a successful AU$33.1m fundraising.
- The firm acted for a global services entity in a “bet the farm” shareholder dispute with a well-known billionaire shareholder who sought a greenmail outcome by obstructing the client from proceeding with a public listing. We successfully resolved the issue prior to trial and the client entity was successfully listed in 2021.
- We represented Chairman Shin, the CEO and majority shareholder of Kyobo Life Insurance Company, one of the leading life insurance companies in Korea. A consortium led by Hong Kong-based Affinity Equity Partners (“AEP”) had commenced arbitration against Dr. Shin based on a shareholder agreement governed by Korean law. The shareholders agreement included a put option in favour of the Claimants, which the Claimants purported to exercise in late 2018 and demanded over USD 1 billion. We challenged the put option agreement as unenforceable under Korean law, and that in any event, the USD 1 billion demand was grossly inflated. After two hearings, the arbitration tribunal issued a final award holding that our client was not obliged to pay the Claimants’ contended put price or any price at all for the Claimants’ shares. This was a complete victory for our client in a true “bet the company” case.
- We represented Alteva, and its board of directors against a shareholder alleging that the board of directors breached its fiduciary duties to public shareholders by entering into a proposed merger with Momentum Telecom.
- 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 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 alleged 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. Quinn Emanuel litigated the case through discovery, after which the case settled favorably.
- We represented MHR Capital Managementin its successful defense against a hostile takeover attempt for Lions Gate launched by Carl Icahn.
- We represented E*TRADEand its board of directors in connection with the board nomination rights of an E*TRADE investor.
- We represented NextGen Healthcare, Inc.in its successful defense against a potential proxy fight from an activist investor, resulting in an uncontested vote.
- We represented GetSwift and its managing director against an activist shareholder arising out of allegedly misleading statements made to the Australian stock exchange.