Securities Litigation

Weil attained a decision from the Second Circuit Court of Appeals affirming a 2011 dismissal of a high-profile securities fraud class action that alleged that CBS and its executives delayed taking a $14 billion impairment charge in order to keep its stock price artificially inflated.

Weil successfully represented lululemon in obtaining the dismissal of a shareholder class action in the U.S. District Court for the Southern District of New York arising out of disclosures related to alleged defects in lululemon's popular yoga pants. The Court of Appeals for the Second Circuit summarily affirmed in May 2015.

Weil represented Sanofi, the global pharmaceutical company, and its former CEO in a consolidated securities fraud class action brought by a putative class of investors in Sanofi American Depositary Shares. Plaintiffs principally alleged that Sanofi’s public disclosures were materially misleading because they failed to disclose that growth in Sanofi’s diabetes franchise was boosted by alleged illicit promotional activities. In January 2016, the U.S. District Court for the Southern District of New York granted the defendants’ motion to dismiss the complaint in its entirety.

Weil also represented Sanofi, its wholly-owned subsidiary Genzyme Corporation and certain of their senior executives in federal securities class and individual actions brought by holders of contingent value rights issued in connection with Sanofi’s 2011 acquisition of Genzyme, relating to the development of Genzyme’s multiple sclerosis drug, Lemtrada™. In a January 2015 Opinion and Order, the U.S. District Court for the Southern District of New York granted the defendants’ motions to dismiss the cases in their entirety and disposed of all federal claims with prejudice. Subsequently, in March 2016, the Second Circuit affirmed the dismissal in a landmark opinion that is the first by the Second Circuit to address the U.S. Supreme Court’s seminal Omnicare decision, which articulated the standard for securities fraud liability for allegedly misleading statements of opinion.

In April 2017, Weil negotiated a settlement that will, upon confirmation, bring an end to a 15-year-old securities fraud class action – one of the few ever to be tried to a verdict (which Weil handled along with co-counsel in 2010). Leading up to this settlement, Weil successfully defeated more than 90% of the initial claims in the post-trial and appellate phases of the case. Most recently, we did so by securing summary judgment in 2015 and 2016 in two key component cases brought by so-called “value investors”. The decisions rejecting these claims are significant because, as the court noted in one of the decisions, securities fraud class actions in which reliance on share price can be disproved “are as rare as hens’ teeth.”

In October 2018, Weil obtained the complete dismissal of a securities fraud class action brought against Walgreens Boots Alliance and its senior executives in U.S. District Court for the Middle District of Pennsylvania. Plaintiff alleged that Walgreens misled investors about the likelihood the Federal Trade Commission would approve an announced merger between the company and Rite Aid. Our team secured a judgment on the pleadings, after arguing that a previous order by the Court narrowing the alleged class period had deprived the only named plaintiff of standing.

Weil has represented legacy Willis (pre-dating its 2016 “merger of equals” with Towers Watson) in connection with approximately 15 securities class and individual actions arising out of the heavily publicized, $8 billion Ponzi scheme orchestrated by R. Allen Stanford and his Houston-based Stanford Financial Group. The complaints in these actions, originally filed in various state and federal courts across the country and centralized in the U.S. District Court for the Northern District of Texas by the Judicial Panel on Multi-District Litigation, generally allege that Willis and other defendants aided Stanford’s fraud.

In August 2017, following motion practice, limited discovery, and appellate proceedings before the Fifth Circuit Court of Appeals and the U.S. Supreme Court, a Texas federal judge approved a settlement by Willis that favorably resolved the litigation. In 2019, the U.S. Court of Appeals for the Fifth Circuit affirmed the settlement.

Weil is lead counsel nationwide for AIG in shareholder class, derivative and ERISA actions arising out of AIG’s billions of dollars of subprime-related losses and its financial rescue by the U.S. government. Among our notable victories, Weil secured the widely noted dismissal of a shareholder derivative action alleging mismanagement by AIG directors and officers, and more recently obtained the dismissal of all derivative claims asserted in the lawsuit brought by Hank Greenberg’s company, Starr International, against the U.S. government for more than $50 billion arising out of the government's financial assistance to AIG during the financial crisis.

Weil successfully represented GE and its board of directors in four shareholder derivative actions in New York federal and state courts arising out of the financial crisis of 2008. Weil obtained the dismissal of each case. The actions alleged wrongdoing concerning GE earnings projections, GE's dividend, alleged unduly risky financial transactions involving GE's financial services subsidiaries, and alleged accounting practices and policies that were the subject of a settlement by GE with the SEC in which GE paid $50 million without admitting or denying liability. The actions asserted claims for, among other things, breach of fiduciary duty, contribution and indemnification, abuse of control, gross mismanagement, waste, unjust enrichment, and insider trading.

Weil secured a victory for the board of iStar in a shareholder action challenging iStar’s modification of stock incentive awards and demanding iStar’s board of directors commence a litigation asserting the shareholders’ claim that the modification of the awards was not permitted by the governing plan. Weil was retained to represent a committee of iStar’s board, which investigated the claim and ultimately recommended that the board refuse the demand. iStar’s full board then refused the demand, and the shareholders commenced a shareholder derivative action in Maryland state court challenging the board’s refusal of the demand and the modification of the stock incentive awards. In October 2014, the trial court dismissed the plaintiffs’ complaint; in January 2016, the Court of Special Appeals affirmed the dismissal; and in January 2017, the Court of Appeals – Maryland’s highest court – again affirmed.

Both decisions are likely to become leading corporate law and REIT decisions in Maryland, and underscore the important protections afforded to boards and corporations by the business judgment rule and related corporate governance doctrines.

Weil secured a victory on behalf of the board of Liquidity Services in a stockholder derivative suit alleging that the board wrongfully allowed stock sales of the officer defendants – similar to claims raised in a preceding federal court securities class action – and themselves engaged in insider trading. In November 2017, the Delaware Court of Chancery dismissed the complaint.

Weil won a decisive victory for the Board of Directors of global retailer lululemon athletica inc. in a stockholder derivative action alleging breaches of fiduciary duties by the board relating to the separation of the former CEO from the company. The complaint alleged that the CEO “created a toxic culture at lululemon and engaged in a pattern of sexual harassment and sexual favoritism while CEO.” In April 2020, the Delaware Court of Chancery granted the Board’s motion to dismiss the action in its entirety.

Weil achieved a decisive win in a shareholder lawsuit related to Massey Energy Co.’s deadly Upper Big Branch mine explosion in 2010, the worst mining disaster in the United States in 40 years. Shareholders pressed the Massey board to pursue damages on behalf of the company for expenses and losses it would bear because of the Board’s alleged failure to ensure that Massey complied with mine safety regulations. In response, the Board created an Advisory Committee and retained Weil to guide it through the process of evaluating whether Massey should pursue those claims. Massey shareholders subsequently filed claims against Massey’s former and current directors and officers in the Delaware Court of Chancery, which proceeded against the backdrop of a federal criminal investigation and the conviction of Massey’s former CEO. On a motion to dismiss that Weil argued, the Court granted the dismissal of all claims against the directors and members of the Special Committee.

For many years, Weil has lead the representation of Archstone in connection with nationwide securities litigation and arbitrations arising from one of the largest REIT deals in history, the 2007 $22 billion acquisition of Archstone-Smith Trust by affiliates of Lehman Brothers and Tishman Speyer Development Corporation. The $4 billion class action was originally filed in 2007 by investors in the REIT, who claimed that the structure of the acquisition diluted their interests and cost them billions of dollars in tax liability and/or inferior securities.

After more than a decade of litigation, Weil won a complete victory in August 2017 in the U.S. District Court for the District of Colorado when the Court granted summary judgment on every count as to each of the more than 20 defendants, including Lehman Brothers, Tishman-Speyer, Equity Residential, the Archstone-Smith REIT and the indemnifying parties. Weil represented all of the defendants. As a result of this decision, the trial that had been scheduled for January 2018 has been vacated, and all counts against all defendants have been dismissed. In December 2018, the Tenth Circuit affirmed the summary judgment decision in a thorough opinion.

Weil represents Rouse Properties, Inc. and Brookfield Asset Management in appraisal suits filed in Delaware Chancery Court arising out of Brookfield’s $2.8 billion acquisition of Rouse, as well as shareholder litigation filed in the same court challenging the acquisition itself.

Weil represents DIRECTV and the members of its board of directors in multi-jurisdictional shareholder litigation arising out of AT&T’s $67.1 billion acquisition (including the assumption of debt) of DIRECTV.

On behalf of the former directors of Elizabeth Arden, Inc., Weil secured the dismissal with prejudice of all claims in a putative shareholder class action in Florida state court arising from Arden’s acquisition by Revlon, Inc.

For more than a decade, Weil has represented Kinder Morgan in connection with a number of transformative M&A transactions and related shareholder litigation in courts around the country, including:

• Successfully representing Kinder Morgan as special appellate counsel in an appeal to the Delaware Supreme Court of a $171 million trial verdict issued by the Delaware Court of Chancery against El Paso Pipeline GP Company, L.L.C., a Kinder Morgan subsidiary, in a derivative action brought by a limited partner in a partnership who alleged that the partnership overpaid for certain assets.
• Successfully representing Kinder Morgan in unitholder litigation in Delaware Chancery Court and on appeal before the Delaware Supreme Court that challenged Kinder Morgan’s $70 billion consolidation of three publicly traded subsidiaries, including two master limited partnerships, into Kinder Morgan Inc. Motion to dismiss granted; affirmed on appeal.
• Successfully representing Kinder Morgan in Harris County (Tex.) District Court challenging its $37 billion acquisition of El Paso. Preliminary injunction motion denied after expedited discovery.
• Leading the successful defense against a shareholder action seeking to enjoin Kinder Morgan’s going-private transaction.

Weil successfully represented Lender Processing Services (LPS) and Fidelity National Financial in a landmark trial in Delaware Chancery Court of an appraisal action brought by a hedge fund seeking $90 million in additional consideration in connection with Fidelity’s $4.2 billion acquisition of LPS. The court applied 100% weight to the transaction price and ruled that petitioner, Merion Capital, an appraisal arbitrageur, was entitled to no additional consideration.

Weil secured a victory for Signet Jewelers Limited in a significant decision issued by the Delaware Supreme Court which has since been widely discussed for its future implications in M&A shareholder litigations. The Delaware Supreme Court’s unanimous decision in Singh v. Attenborough, No. 645, affirmed the Court of Chancery’s dismissal of a case challenging Signet’s $690 million acquisition of Zale Corporation. Singh also confirms the rule set forth in Corwin v. KKR Financial Holdings, LLC, 125 A.3d 304 (Del. 2015), that when a majority of a company’s disinterested, fully informed, uncoerced stockholders vote in favor of a merger with an acquirer that is not the company’s controlling stockholder, the business judgment rule applies to a claim for breach of fiduciary duty against the company’s board of directors and “dismissal is typically the result.” The Singh decision also clarified that, under these circumstances, claims against the company’s financial advisor for aiding and abetting the directors’ alleged breaches will also be dismissed.

Weil successfully represented AIG in regulatory investigations by the SEC, DOJ and U.K. authorities arising out of the financial crisis. The investigations were closed with no actions commenced.

Weil was engaged by the Audit Committee of the Board of Directors of American Realty Capital Properties, a publicly-traded real estate investment trust, to conduct an internal investigation of allegations of accounting irregularities. The investigation resulted in a restatement and the separation from the company of several top executives. A multi-disciplinary Weil team advised the Audit Committee and the Board of Directors with respect to all aspects of the investigation and the resulting fallout. Weil is also representing the company in a related shareholder class action and derivative suit.

Weil represented Parmalat, an Italian manufacturer, in connection with SEC enforcement proceedings arising out of financial fraud (settled based on remediation/corporate governance procedures only, and without payment of any compensatory or punitive damages).

Weil represents a major foreign financial institution in a well-publicized, high-profile SEC investigation concerning Chesapeake Energy Corp. — the second-largest U.S. natural gas production company — and its chief executive officer.

Weil represented a health industry company Audit Committee in investigating and resolving, without any SEC or DOJ enforcement proceedings or sanctions, Federal False Claims Act and Securities Act violations.

Weil represents a number of confidential clients in connection with SEC and DOJ investigations relating to alleged violations of the Foreign Corrupt Practices Act.

Weil represents AIG in numerous disputes with counter parties. In addition, Weil Structured Finance & Derivatives attorneys are managing the restructuring of the multi-billion dollar CDS and derivatives books at AIG-FP.

Weil represented Bear Stearns in connection with regulatory investigations and civil litigation related to its CDO business.

Weil represents Lehman Brothers in connection with all matters related to its collapse and the consequences to its multi-billion dollar CDO, swap, and derivative positions. Our litigators have argued (and won) key derivatives decisions in the Metavante, BNY, and Ballyrock matters (among others). Additionally, over the past four years, Weil has successfully litigated on Lehman’s behalf numerous novel disputes involving derivatives transactions. We have also represented Lehman in alternative dispute resolution (ADR) proceedings with respect to hundreds of derivatives disputes arising out of the Lehman bankruptcy. Well over one hundred of the ADRs were conducted before experienced mediators, with each side filing detailed mediation statements laying out its arguments. ADR “mini-trials” are confidential, providing Weil with unique perspective on a wealth of derivatives issues.

Weil represents MBIA in litigations in connection with CDO transactions where MBIA acts as insurer. Among other notable cases, Weil won a significant victory for MBIA when the U.S. District Court for the Southern District of New York granted summary judgment in favor of MBIA in an interpleader action brought by the trustee of a CDO transaction, in which a senior noteholder alleged events of default.