St. Clair Combs et al. v. Case et al.

The court found in favor of the defendants in both cases.

In the first case, the shareholders of Grove Farm petitioned the court to effectively revoke their earlier vote in favor of a merger, under the theory that key information related to the value of the company was absent from the shareholder proxy materials. Professor Klausner examined the actions of the board related to the disputed proxy materials—specifically the processes by which a board typically solicits and evaluates bids for a company and decides what information is appropriate to disclose to bidders and to shareholders. Professor Klausner also opined on whether it was reasonable for the board to refuse to delay the vote given the company’s financial circumstances.

Based on his analysis of company records and communications, as well as research on the valuation methods and information available to the board, Professor Klausner opined that the information provided to shareholders was appropriate and in line with normal merger practices and that it was appropriate not to delay the shareholder vote.

In the second, related matter, counsel for Grove Farm retained Professor Klausner to opine on whether the board and executives had provided improper information to the acquirer, such that the acquirer would be in violation of securities “tippee” laws. Professor Klausner opined that the information received by the acquirer appeared to be appropriate and acquired through typical and normal channels. The court found in favor of the defendants in both cases.