In Jinnaras v. Alfant, decided on May 5, 2016, the New York Court of Appeals rejected a proposed settlement of a shareholder class action, where the proposed settlement would have deprived out-of-state class members of a “cognizable property interest” by failing to provide a mechanism for class members residing outside of New York to opt out of the settlement.
The Jinnaras case arose from a 2009 merger agreement between Google and On2 Technologies, a Delaware corporation domiciled in New York. On2’s shareholders commenced class action litigation in both New York and Delaware courts alleging that On2’s directors breached their fiduciary obligations to the shareholders by failing to ensure that they would receive the maximum value for their shares and favoring the interests of certain “insider” shareholders, among other allegations. The Complaint demanded rescission of the merger agreement and an injunction prohibiting the proposed merger unless certain conditions were satisfied.
Read the full post on our Corporate Defense and Disputes Blog.