Dole Food Co., its CEO and general counsel have agreed to a $74 million settlement with a class of investors. This comes about in a Delaware case that had accused the Defendants of driving down Dole’s price before a 2013 take-private deal. This is the second settlement for the company and its executives over the transaction.
A December 2015 settlement was reached by Dole, CEO David Murdock, and General Counsel C. Michael Carter with shareholders in Delaware Chancery Court. The Plaintiffs were the San Antonio Fire and Police Pension Fund and Fire & Police Health Care Fund San Antonio. It appears that CEO Murdock made a series of moves to reduce the company’s value before taking the company private. It was contended by the Plaintiffs that the fraud not only harmed shareholders, but also prevented sellers of the stock from getting a fair value.
On March 16, U.S. District Judge Sue L. Robinson granted preliminary approval to a $74 million cash settlement for the investment funds in the federal suit, certifying for settlement purposes a class of shareholders who sold Dole common stock from Jan. 2, 2013, to Oct. 31, 2013.
The investment funds’ complaint in federal court had relied on Vice Chancellor J. Travis Laster’s August 2015 ruling in the separate, consolidated shareholder class action as evidence of wrongdoing. In that decision, Vice Chancellor Laster wrote that although the Dole board’s merger committee made a herculean effort to overcome Murdock and Carter’s efforts to keep investors in the dark, it was deprived of information about the company’s ability to cut costs and improve income and was unable to negotiate on a fully informed basis to reject the merger offer. The Vice-Chancellor found Murdock and Carter to be liable to investors to the tune of $148 million. In December, the state court parties announced settlement terms that matched Vice Chancellor Laster’s findings.
The February 2016 decision, approving the core of that settlement, awarded nearly $101 million to shareholders before adding about $13.5 million in accrued interest and subtracting legal fees. A related award was carved out from the overall total for shareholders whose lawsuit sought a corrected appraisal, with Vice Chancellor Laster’s decision mooting that case. The approval order by the Vice Chancellor included a 30 percent fee award, totaling nearly $33.9 million, to lawyers leading the larger of two consolidated suits filed after the November 2013 merger. Meanwhile, in December 2015, the San Antonio funds filed suit in the Delaware federal court with claims that focused on the lost value of those who sold shares while the company’s stock value was depressed.
The investors are represented by Katherine M. Sinderson and Gerard H. Silk of Bernstein Litowitz Berger & Grossmann LLP; Joel Friedlander, Jeffrey M. Gorris and Christopher Foulds of Friedlander & Gorris PA; and Vincent R. Cappucci, Andrew J. Entwistle and Arthur V. Nealon of Entwistle & Cappucci LLP. The case is San Antonio Fire and Police Pension Fund et al. v. Dole Food Company Inc. et al., (case number 1:15-cv-01140) in the U.S. District Court for the District of Delaware.