Delaware Chancery Court Approves $17.9 Million Settlement for Minority Stockholders of Cornerstone Therapeutics
Wolf Popper was appointed as a lead counsel to represent the class of Cornerstone Therapeutics Inc. stockholders in a case arising from Cornerstone’s acquisition by its majority shareholder: Chiesi Farmaceutici SpA., which had already owned a 65 percent stake, In re: Cornerstone Therapeutics Inc. Stockholder Litig., Case 8922, (Del. Ch.). In the suit, Cornerstone and individual directors were accused of selling the company at an unfair price in breach of their fiduciary duties.
The litigation that followed included a midcase appeal to Delaware’s Supreme Court, producing an important high court ruling that, to avoid dismissal, claims against independent directors have to plead facts suggesting nonexculpated breaches of fiduciary duty, such as actions in bad faith or adverse self-interest.
The parties entered into a stipulation of settlement and the hearing on the settlement occurred on January 26, 2017. At the settlement hearing, Vice Chancellor Glasscock approved a settlement that established a gross settlement fund of $17.9 million for the benefit of Cornerstone’s minority stockholders. Specifically, the Court stated that class attorneys achieved “almost nothing short of the best result.”
The Court pointed out that “[t]here was a great deal of litigation done. Interesting and undetermined areas of law had to be explored by counsel for both sides.” Vice Chancellor Glasscock later said at the hearing that it was “vanishingly unlikely” that shareholders left any claims behind in the deal.
Wolf Popper Defeats Motion to Dismiss in Cornerstone Therapeutics Stockholder Litigation
Wolf Popper LLP, as Co-Lead Counsel for Plaintiffs, is prosecuting an action under Delaware law on behalf of the former public shareholders of Cornerstone Therapeutics Inc. (“Cornerstone”), against Cornerstone’s controlling shareholder Chiesi Farmaceutici S.p.A. (“Chiesi”), and against Cornerstone’s former directors, for breaches of fiduciary duty related to Chiesi’s $255 million buyout of Cornerstone.
On September 10, 2014, Vice Chancellor Sam Glasscock, III of the Delaware Court of Chancery denied the former Cornerstone directors’ motion to dismiss the claims against them. In upholding Plaintiffs’ claims, Vice Chancellor Glasscock found that, “the Plaintiffs have made a sufficient pleading that a stockholder controlled the corporate machinery; that it used that machinery to facilitate a transaction of which it thus stood on both sides; that the transaction was not entirely fair to the minority; and that the Director Defendants negotiated or facilitated the unfair transaction. Such a pleading is sufficient, under controlling precedent, to withstand a motion to dismiss on behalf of the Director Defendants.” Vice Chancellor Glasscock found that, because Delaware’s “entire fairness” standard applies to the buyout, the former directors “must await a developed record, post-trial, before their liability is determined,” and thus cannot have claims against them dismissed at this stage.
For further information about this case, please contact the following attorneys:
Chet B. Waldman