Ervin Cohen & Jessup LLP recently prevailed in a multimillion-dollar class-action lawsuit under the California unfair business practices law (Business and Professions Code Section 17200) against one of our Fortune 500 financial-services clients. The client assists brokerage firms and other financial institutions in locating and soliciting “lost shareholders” whose stock should be exchanged or surrendered following corporate mergers and similar transactions. The class-action suit was filed by a former shareholder of a merged bank holding company for whom ECJ’s client was providing its services.
ECJ’s Barry J. MacNaughton and Rodney C. Lee successfully defeated the action by demurrer to the complaint before our client had to suffer through extensive discovery or the significant costs of preparing for trial. Since Delaware, the state of incorporation of the merged bank holding company, does not recognize a cause of action equivalent to Section 17200, Barry and Rodney successfully argued that Delaware law applied to the merger transaction and further that our clients conduct did not contravene any California law or public policy. The Court agreed and dismissed the plaintiffs’ claims against our client with prejudice at the pleading stage, thereby allowing it to avoid further participation in a drawn out, expensive class-action battle.