Dist. Ct. erred in approving proposed settlement of shareholder action seeking additional disclosures from corporation regarding details surrounding proposed acquisition of another corporation that would allow shareholders to make more informed decision as to whether to approve or deny said acquisition. Terms of settlement called for corporation to disclose six different facts that played role in proposed acquisition in exchange for shareholder’s attorneys receiving $370,000, and record showed that said supplemental facts either: (1) did not provide information that was not otherwise disclosed in proxy statement; (2) did not concern any material fact regarding acquisition process; or (3) did not provide facts that had material bearing on either cost of acquisition or cost of future formation of combined corporate entity. As such, where disclosed facts did not have any actual significance to shareholders, any award of attorney fees associated with proposed settlement of instant case would be inappropriate. Ct. further suggested that on remand, Dist. Ct. should give consideration to either appointing new class counsel or dismissing instant lawsuit.
Federal 7th Circuit Court
Civil Court
Settlement