Matter of Renren, Inc. Derivative Litig. v. XXX

Matter of Renren, Inc. Derivative Litig. v. XXX

Opinion

Andrew Borrok, J.

The following e-filed documents, listed by NYSCEF document number (Motion 023) 865, 866, 867, 868, 869, 870, 871, 872, 873, 874, 898, 936, 937, 939, 940, 941, 942, 943, 944, 945, 946, 947, 948, 949, 950, 951, 952, 953, 954, 955, 956, 957, 958, 959, 960, 961, 962, 963, 964, 965, 966 were read on this motion to/for DISMISSAL.

Reference is made to the (i) Decision and Order (the 2020 Decision), 67 Misc 3d 1219[A], 127 N.Y.S.3d 702, 2020 NY Slip Op 50588[U] [Sup Ct, NY County 2020] affd 192 A.D.3d 539, 140 N.Y.S.3d 701 (1st Dept 2021) and (ii) the Decision and Order dated December 10, 2021 (the December 10, 2021 Decision; NYSCEF Doc. No. 846), (ii) Supplemental Order dated December 29, 2021 (the First [*2]  Supplemental Order; NYSCEF Doc. No. 851), and (iii) Supplemental Order dated December 31, 2021 (the Second Supplemental Order; NYSCEF Doc. No. 852; the Second Supplemental Order, together with the December 10, 2021 Decision and the First Supplemental Order, hereinafter, collectively, the 2021 Decision) pursuant to which this Court held that the proposed settlement was "so unfair on its face to preclude judicial approval" (Benedict v Whitman Breed Abbott & Morgan, 77 A.D.3d 870, 872, 910 N.Y.S.2d 474 [2d Dept 2010], citing Zerkle v Cleveland Cliffs Iron Co., 52 FRD 151, 159 [SD NY 1971], quoting Glicken v Bradford 35 FRD 144, 151 [SD NY 1964]; see Mathes v Roberts, 85 FRD 710, 713 [SD NY 1980]; Trainor v Berner, 334 F Supp 1143, 1149 [SD NY 1971]) both because the proposed settlement of the derivative action was structured with direct payments to certain minority shareholders but excluded relevant other injured minority shareholders and also because the proposed legal fees were an excessive allocation of the settlement proceeds to the attorneys and away from the injured parties.

Additionally, based on the objections received at the time, and the fact that the spin-off transaction which forms the basis for the complaint was announced on April 30, 2018, the Court indicated that it would appear that the record date should be set for April 29, 2018 — i.e., the day immediately preceding when the announcement was made. Based on the record in front of the Court at that time, the Court gave [*3]  leave to the defendants to bring a motion to dismiss as to any of the plaintiffs who were not shareholders as of the record date. Based on the papers submitted in connection with this motion, however, it is now apparent that June 21, 2018 is the appropriate record date. For clarity, the issue is when did any such damage to Renren become final and fixed. As such, the motion to dismiss must be granted to the extent that shareholders who were not shareholders on June 21, 2018 (i.e., the date of the closing of the transaction that forms the basis of this lawsuit), do not have standing to maintain this lawsuit.

Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.