Cases & Investigations
PHC, Inc. Shareholder Litigation

On November 1, 2011, PHC, Inc. (“PHC”), a Massachusetts corporation, merged with Acadia, Inc. (“Acadia”) in a stock for stock Merger in which each share of PHC’s Class A Common Stock held by the members of the Class immediately prior to the Merger were converted into and became exchangeable for one-quarter (¼) of one share of Acadia Common Stock (the “Exchange Ratio”).  PHC Class A shareholders received 22.5% of the combined company and Acadia’s shareholders received 77.5%.  In addition, PHC’s Class B stockholders received a $5 million payment, $4.7 million of which went to Bruce A. Shear (“Shear”), PHC’s Chief Executive Officer (“CEO”), President and Chairman of its Board of Directors (“Board”).  Plaintiff alleges that, among other things, Shear breached his fiduciary duty and engaged in self-dealing as a controlling shareholder by negotiating the $5 million payment. Plaintiff further alleges that Shear and PHC’s other five directors breached their fiduciary duties to the Class A stockholders by agreeing to an inadequate Exchange Ratio and by providing Shear and the other Class B stockholders with an unjustified $5 million cash payment.
 
By Order dated March 30, 2012, the Court denied Defendants’ motion to dismiss the claims against them, but dismissed the claims against PHC. The Court thereafter denied Defendants’ motion for judgment on the pleadings and motion to strike Plaintiff’s class allegations. On September 30, 2013, the Court granted summary judgment dismissing Plaintiff’s complaint, but on August 6, 2014, the First Circuit Court of Appeals vacated and remanded that ruling, reinstating the case.
 
Wolf Popper is court appointed lead counsel for plaintiff and the Class.

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