In Re Celera Corporation Shareholder Litigation, et al. v. New Orleans Employees’ Retirement System, et al.

Appellant BVF Partners L.P. ("BVF") appealed a Chancery Court certification of Appellee New Orleans Employees' Retirement System ("NOERS") as class representative in this action challenging the acquisition of Celera Corporation ("Celera") by Quest Diagnostics, Inc. ("Quest"). BVF also appealed the Court of Chancery's approval of a class action settlement without an opt out right for BVF between NOERS and Defendants-Appellees Richard H. Ayers, Jean-Luc Belingard, William G. Green, Peter Barton Hutt, Gail M. Naughton, Kathy Ordonez, Wayne I. Roe, Bennett M. Shapiro, Celera Corporation, Quest Diagnostics Incorporated, and Spark Acquisition Corporation ("Spark"). BVF contended that the Court of Chancery erred in certifying NOERS as the class representative, because NOERS lacked standing to represent the class. BVF argued that when NOERS sold its stock in Celera on the public market (before the merger was actually consummated and nearly a year before the Court of Chancery certified the class) NOERS no longer had a legally cognizable stake in the outcome of the litigation. BVF raised multiple other grounds for why the Court of Chancery erred in certifying NOERS as class representative, including that NOERS was uniquely susceptible to equitable defenses and was therefore an improper class representative. Even if that certification was proper, BVF argued that the Court of Chancery should have exercised its discretionary powers to allow BVF to opt out of the class in order to pursue its individual claims for monetary damages against the defendants. Upon review, the Supreme Court agreed with the Court of Chancery that NOERS had standing to represent the class. The Court declined to adopt a rule of law that a shareholder class representative in a breach of fiduciary duty action must own stock in the corporation continuously through the final class certification. With regard to BVF's other arguments regarding NOERS' certification as class representative, the Court found them "unconvincing." The Court concluded that the Court of Chancery did not abuse its discretion in certifying the class, however, there was merit to BVF's claim that the Court of Chancery should have exercised its discretion to allow BVF to opt out of the shareholder class under the circumstances of this case. Accordingly, the Court affirmed in part and reversed in part. View "In Re Celera Corporation Shareholder Litigation, et al. v. New Orleans Employees' Retirement System, et al." on Justia Law