Following oral arguments that focused on another issue, on Tuesday, the US Supreme Court took its case for a case on whether shareholders only had to claim that the defendants had acted negligently, rather than intentionally, in tendering cases.
In a one-sentence arrangement in Emulex Corp et al. v. Gary Varjabedian et al., The court said: "The Certioraris letter is rejected for being cautiously granted."
The Supreme Court had agreed to consider the 9th US court of law in the San Francisco case, where it was the only federal appeal court to decide that when submitting disputes over tendering procedures, the plaintiff only needs to claim that the defendants had acted negligently.
At least five other circuits have not held each other, and the holders have to state that the defendants have acted
A bidding process is a conditional offer to buy a large number of shares at a price that is usually higher than the current price of the share. Experts say they account for a relatively small share of offers compared to mergers where the companies' boards meet an agreement.
Oral arguments at the Supreme Court heard focus on the fundamental question of whether the shareholders had a private right to bring an action in this case.
Daniel L. Geyser, Dallas-based Geyser PC, said in a statement that an act of the Supreme Court "is never a big slam, but this is a pretty solid rule double. We argued three times (in our brief in opposition, in our brief and in last week's arguments) that this case was the wrong vehicle to determine these problems. As usual, all Justices were deeply engaged and we are proud that the court eventually saw our way.
"Today's decision gives the same private right that has been around for half a century. While I am confident that future trials will face the same challenge, I believe they will find that this is the exceptionally rare charter that meets the demanding standards of the court to recognize implied rights of action. "
An Emulex lawyer could not immediately be reached for comment.
Kevin LaCroix, Vice President of RT ProExec, a division of RT Specialty LLC, in Beachwood, Ohio, who is not involved in the case, said verbally several justice, especially Justices Elena Kagan and Sonia Sotomayor, seemed to worry that the issue of a private trial "has not been fully considered by the courts below."
He said that when things stand now, the Supreme Court's actions can lead to forum shopping by plaintiffs who will post these cases wherever possible in California.