Raskin v. Birmingham Steel Corp.
Court of Chancery of Delaware, New Castle
September 17, 1990, Submitted ; December 4, 1990, Decided
Civil Action No. 11365
The parties in this shareholders class action seek approval of a proposed settlement pursuant to Chancery Court Rule 23(e). The action was filed on behalf of the shareholders of Birmingham Steel Corporation seeking to foreclose the abandonment of a merger between Birmingham and Harbert Corporation. Plaintiff sought to enjoin the defendants to complete the merger or, alternatively, to pay damages in the [*2] amount of any decline in the value of Birmingham's stock that occurred after the merger was abandoned. Before very much transpired the merger was abandoned and the plaintiffs entered into a settlement agreement, subject to court approval, calling for the release of all claims that might arise from the series of events that are pleaded in the complaint.
Upon the stipulation of the named parties, an order was entered provisionally designating the action as a class action under Rule 23(b)(1) and (2), establishing a hearing date with respect to the fairness of the proposed settlement, and requiring that notice of the proposed settlement be sent by mail to each registered owner of Birmingham stock who held stock between September 18, 1989 and the date 30 days before the hearing date.
That hearing has now been held and this is the court's opinion on the motion to approve the settlement presented.
A number of shareholders have written to the court opposing the proposed settlement and more particularly opposing the authorization of the broad release of claims that the settlement agreement contemplates. That release would purport to release all claims of class members, including federal securities [*3] act claims, arising from any event surrounding the failed merger, including the agreement to terminate the merger agreement and the agreement to settle. Objectors contend that the complaint, if it is properly a class action, should be certified under Rule 23(b)(3) at this juncture and that in no event should the federal claims be released unless objectors are afforded an opportunity to opt out.
For the reasons that follow I cannot conclude that it is appropriate, in the current posture of the matter, to approve the proposed settlement and release of claims as fair to the members of the class.Read The Full CaseNot a Lexis Advance subscriber? Try it out for free.
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1990 Del. Ch. LEXIS 194 *; Fed. Sec. L. Rep. (CCH) P95,668
RICHARD K. RASKIN, Plaintiff, v. BIRMINGHAM STEEL CORPORATION; E. MANDELL DE WINDT; JAMES A. TODD, JR.; JOHN M. HARBERT, III; HARBERT CORPORATION; CONTINENTAL BANK CORPORATION and THE BEAR STEARNS COMPANIES, INC., Defendants
settlement, merger agreement, merger, shareholders, terminate, class action, financing, parties, proposed settlement, earnings, notice, announced, federal securities, commitment letter, opt out, discovery, adverse change, fiduciary duty, federal claim, class member, state law, circumstances, approve, damages, stock
Business & Corporate Law, Shareholders, Shareholder Duties & Liabilities, General Overview, Mergers & Acquisitions Law, Mergers, Duties & Liabilities of Directors & Officers, Directors & Officers, Management Duties & Liabilities, Corporate Governance, Civil Procedure, Special Proceedings, Class Actions, Compromise & Settlement, Subject Matter Jurisdiction, Jurisdiction Over Actions, Judicial Discretion, Settlements, Releases From Liability, Securities Law, Securities Act Actions, Civil Liability, Securities Exchange Act of 1934 Actions, Implied Private Rights of Action, Deceptive & Manipulative Devices, Blue Sky Laws, Offers & Sales, Elements of Proof, Notice of Class Action, Notice of Class Action, Content of Notice, Opt Out Provisions, Judgments, Relief From Judgments, Remedies, Damages, Monetary Damages, General Partnerships, Governments, Fiduciaries, Preclusion of Judgments, Res Judicata, Discharge, Release & Satisfaction