In In re: PHC, Inc. Shareholder Litigation, the plaintiff, a shareholder of a behavioral health company sought damages arising from a stock-for-stock merger in which the company’s CEO and chief negotiator received a multi-million dollar payment as well as an attractive employment package in the newly combined company. On January 14, 2016, the Court certified a class of all Class A shareholders of the company who abstained or voted against the merger, and appointed Wolf Popper LLP as Lead Counsel to represent the class. MAZ Partners LP v. Shear, No. CV 11-11049-PBS, 2016 WL 183519 (D. Mass. Jan. 14, 2016). After over five years of litigation, a two-week trial commenced in February 2017, resulting in a jury finding that the CEO, through his control of the company’s board of directors, effectuated a merger unfair to the Class A shareholders. Following trial, Chief Judge Patti Saris complemented counsel, stating “I think you all did a great job trying this case….[Y]ou’re very civil throughout this entire proceeding and I thank the folks in [your office] for so much support that they’ve given along the way because I know it’s a big case with a lot of paper.... And someone should study the case in terms of how attorneys should treat one another, and I appreciate that.”
In a post-trial decision dated July 13, 2017, Judge Saris ordered the CEO to disgorge $2,964,396 plus interest, representing his ill-gotten gains from the merger. While Judge Saris had certified a class consisting only of Class A shareholders who abstained or voted against the merger, she found that the CEO breached his fiduciary duty to all Class A shareholders of the company. Citing to the folk tale of “The Little Red Hen,” Judge Saris proceeded to award the entire disgorgement amount to the certified class represented by Wolf Popper LLP, reasoning that it alone “did the work in proving the breach of fiduciary duty” and thus could reap the full extent of the rewards resulting from its diligence.