Judge Consolidates King Lawsuits
Judge Consolidates King Lawsuits [Bristol Herald Courier, Va.]
From Bristol Herald Courier (VA) (November 3, 2010)
Nov. 03--KINGSPORT, Tenn. -- A newly formed legal team will represent the steadily growing group of disgruntled King Pharmaceuticals shareholders who hope to block the Bristol, Tenn., drug maker’s proposed merger with Pfizer Inc.
On Tuesday, Sullivan County Chancellor E.G. Moody combined six class-action lawsuits seeking to block the merger into one case in which the plaintiffs will be represented by five law firms with offices in Kingsport, Nashville, Philadelphia and San Diego.
"If a lead counsel is not appointed, then [arguing this case] will be a little like trying to herd cats," Nashville attorney Jim Stranch said as he presented his motion to consolidate the cases and name a lead counsel.
Pfizer announced its plan to buy King for roughly $3.6 billion, or $14.25 a share, during a news conference both companies held Oct. 12. This sale price was $4 more per share than the price at which King’s stock closed the night before.
Soon after the announcement, attorneys from across the country started filing lawsuits in Sullivan County’s Chancery and Circuit courts seeking to block the sale on behalf of King shareholders who felt they could get a better deal for their shares.
Each of the anti-merger lawsuits claims King’s board of directors undervalued the company when they agreed to Pfizer’s proposed purchase price and thus violated their fiduciary duty to make sure the company’s shareholders got the best price for their stock.
Specifically, plaintiffs in the anti-merger lawsuits claim King’s board ignored the profit potential for three of its drugs -- Embeda, Remoxy and Accurox -- that are winding their way through the U.S. Food and Drug Administration’s approval process.
"Pfizer will reap benefits and capitalize on King’s potential while King’s shareholders will be cashed out and denied those same benefits," reads a passage from Robert J. Casey v. King et al, which was filed in Chancery Court Oct. 13.
Five more anti-merger lawsuits have been filed, including one on behalf of the Louisiana Municipal Police Employees Retirement System, a public pension plan that once owned 100,000 shares of King’s stock.
During Tuesday’s hearing, Stranch and representatives from four other law firms asked Moody and Sullivan County Circuit Court Judge John McLellan, who is helping Moody with the case, to merge the six lawsuits and name them as co-lead and co-associate counsels.
Specifically, he asked the judges to name two nationally recognized class-action law firms -- San Diego’s Robbins, Geller, Rudman and Dowd and Barrack, Rodos and Bacine of Pittsburgh -- as co-lead counsel for plaintiffs in the case.
Stranch further asked that his law firm, Branstetter, Stranch and Jennings of Nashville, be named co-associate counsel for the plaintiffs along with Nashville’s Barrett Johnston LLC, and Kingsport’s Todd and Dossett, which will serve as local counsel.
Stranch’s motion was challenged by Bruce Shine, a Kingsport-based attorney who filed the second lawsuit seeking to block King’s merger -- L.A. Murphy v. King, et al -- who wanted himself and four other law firms named co-lead counsel.
The top selling point for Shine’s motion was that his law firm was closer to the court’s hearing room and offices than any of the co-lead counsels listed in Stranch’s motion.
Shine also mentioned his experience as a lead counsel in a derivatives action filed against King that was resolved in October 2009 and his plans to work with David Leventhal, a New York attorney who’s filed a lawsuit to block King’s merger in federal court.
But what impressed the two judges more than anything was the fact that Stranch and his team had already met with attorneys from King and Pfizer to discuss the discovery process they’d use to get the documents the companies used in merger negotiations.
Because these closely guarded financial documents will prove invaluable in any review of whether King’s shareholders woud receive a fair price, the five-firm team’s ability to start working with the company tipped the scales in their favor.
"We were impressed that you had already contacted the defendant’s counsel," McLellan said when he ruled in favor of Stranch’s motion, adding that he thought obtaining these documents would be the hardest part of the case.
The judge then looked at the 17 attorneys who gathered in his courtroom for Tuesday’s hearing -- including a few who represented the interests of King and Pfizer and welcomed the consolidation process -- and thanked them for traveling to Kingsport.
"It’s very good to see everyone here and I appreciate your economic impact on our county," McLellan said before the teams of attorneys left talking about the hotels they stayed in and where they planned to pick up lunch.
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Posted: November 2010