General Class Action FAQs
Johnson Fistel has a substantial amount of experience prosecuting various types of class action litigation on behalf of affected individuals in both federal and state courts across the country. Below are a series of general questions and answers about class action litigation:
A class action is a type of lawsuit that allows a person to bring a case on behalf of himself and all other persons who suffered similar harm. The “class” is the group of commonly affected individuals.
A lead plaintiff is the person or group of persons appointed by the court to represent the interests of all class members. Depending on the type of case, the lead plaintiff may have the largest financial interest in the case, the most experience with the particular subject matter of the case, or demonstrated the largest commitment to pursuing the case. The lead plaintiff works with court-appointed “lead counsel” in determining how the litigation should proceed and whether it should settle.
It is very unlikely. The overwhelming majority of class action cases are resolved without a plaintiff ever having to testify, such as at a deposition. In the rare case, and if the court appoints you as a lead plaintiff, you may be asked to testify to demonstrate that you are willing to act in the best interests of the class.
Whether you are serving as a lead plaintiff or are simply an unnamed member of the class, there are generally no out of pocket costs to any class member regardless of whether the class action is successful.
Because a class action covers many people, it is common for different law firms to pursue the same matter on behalf of different, similarly situated people. Typically, all of the related cases are consolidated and heard by the court as one unified lawsuit, and the court determines which law firm(s) get to lead the litigation and which other law firm(s) get to participate in a supporting role.
Johnson Fistel litigates class action and derivative cases on a contingency-fee basis, meaning that Johnson Fistel gets paid only if the firm is successful in prosecuting the litigation. If the case is successful, Johnson Fistel will file a petition with the court overseeing the case to award the firm attorneys’ fees and expenses for its work on the litigation. The amount of any fee and expense award will depend on a variety of factors including, among other things, the relief obtained, and the duration and complexity of the litigation.
The duration of class action litigation varies from case to case. Cases may be settled or dismissed before trial, or they can proceed through trial (and sometimes appeals). However, most class actions are resolved within 2 to 3 years.
A claim form is the court-required document that all class members must file to participate in a court-approved settlement.
A settlement notice describes your rights and options under a particular settlement as well as important deadlines related to the settlement process.
There are numerous variables that determine the amount of money a class member will recover from a class action lawsuit including, among other things, the type of lawsuit, the amount of money recovered, and the interest you have in the suit.
Yes, as long as it involves a different company.
Securities Class Action FAQs
Johnson Fistel is experienced in securities fraud class actions as well as other cases relating to when companies or their executives make false statements to the market which cause the company’s stock price to be artificially inflated. Below are answers to frequently asked questions relating to securities class actions:
A class period is time range used to determine whether a shareholder is a member of the class. The class period typically corresponds to when the alleged wrongdoing occurred. If you purchased stock during the class period, you will probably be a member of the class.
If you purchased stock during the class period and suffered damages, you are a person for whom the litigation seeks recovery. If the litigation is successful, you will be eligible to share in the recovery.
Yes, as long as the shares were acquired during the class period and you suffered damages.
Yes. If your overall investment during the class period in the security at issue resulted in a loss (realized or unrealized), you may participate in the litigation.
If the securities class action is based upon allegedly false statements made during the class period to artificially inflate the share price, then yes, you may sell some or all of your shares and still participate in any recovery.
If you have a significant financial loss, you should certainly consider seeking appointment as a lead plaintiff. As a lead plaintiff, you will be involved in making critical decisions during the litigation, including whether to resolve the litigation, at what amount, and the method of determining the appropriate attorneys’ fees request. Whether your losses are “significant” will depend upon the circumstances, so please contact us to discuss whether you would be in a good position to be appointed lead plaintiff.
No. You should submit your information to only one law firm, and you should retain only one law firm. Once you have retained Johnson Fistel, we will represent your interests, and there is no need to contact any other law firm.
No. As long as you purchased your shares on a U.S. exchange, you may participate.
Shareholder Derivative Action FAQs
Johnson Fistel has successfully prosecuted numerous shareholder derivative actions on behalf of companies against their directors and officers. Below are answers to frequently asked questions relating to shareholder derivative actions:
A shareholder derivative action is a lawsuit brought by a current shareholder of a company on behalf and for the benefit of that company, usually seeking to remedy breaches of fiduciary duties or other misconduct by the company’s officers and directors. Derivative actions can lead to corporate governance reforms designed to prevent future misconduct, removal of officers or directors whose misconduct injured the corporation, and monetary payments to the company itself.
No. A plaintiff in a shareholder derivative action must maintain share ownership continuously, during the alleged time period of the wrongdoing, and throughout the entire litigation, even if the shareholder holds just one share of stock. If you have questions concerning your ability to participate in a shareholder derivative action, please contact us.
In a shareholder derivative action, a representative shareholder plaintiff pursues claims on behalf of the corporation, not on behalf of themselves personally. Representative plaintiffs must act in the best interests of the corporation and its shareholders to ensure corporate accountability and transparent, honest, and effective corporate governance and internal controls.
No. Plaintiffs in shareholder derivative actions brought by Johnson Fistel are not responsible for paying our attorneys’ fees or expenses. All such fees and expenses of the litigation are advanced by Johnson Fistel. If the case is successful, Johnson Fistel may ask the court for an award of attorneys’ fees and reimbursement expenses, which are typically paid by the company, the defendants, or their insurance carriers.
The duration of shareholder derivative litigation varies from case to case; however, the typical shareholder derivative action takes 2-3 years.
Yes. If you are a member of the class in a related shareholder class action and a recovery is obtained in that action, you are entitled to file a claim to recover your portion of the class action settlement proceeds.
Merger and Acquisition Action FAQs
Johnson Fistel’s tenacious reputation in challenging corporate transactions that benefit the few insiders rather than the Company’s public shareholders is second to none. The firm has worked both to stop bad deals from happening and to help shareholders recover damages after a deal has closed. Below are answers to frequently asked questions relating to merger and acquisition litigation:
A merger or acquisition is a combination of two or more companies. Mergers and acquisitions may occur as a result of numerous different transaction structures, which can involve subsidiaries and affiliates of the main companies involved. Sometimes two different companies “merge” to create a single company. In other cases, a larger company or private equity firm acquires a company and operates it as a subsidiary or portfolio entity. Your rights will likely differ depending upon the type of transaction(s) involved.
A tender offer is one method of accomplishing an acquisition. In the typical situation, a buyer or an affiliated entity of the buyer will commence a “tender offer,” under which shareholders are given the option of “tendering” their shares for a given price. Normally, the tender offer will remain open for at least 20 business days. If enough shareholders accept the buyer’s offer within the allotted tender offer period, then the purchasing party will be able to complete the transaction without any further action from the non-tendering stockholders. Companies utilize this mechanism if they want to complete the transaction on an accelerated basis.
Depending on the terms of any given transaction, shareholders may receive cash, stock from the acquiring company, stock in a new company created as a result of the merger, or any combination thereof. Moreover, in certain types of transactions, shareholders may receive “contingent value rights,” which offer the potential of additional payment in the future if the post-merger companies realize certain designated achievements, such as the approval of a new drug or recording a certain amount of sales.
All mergers and acquisitions require shareholder approval. In most instances, this involves either a shareholder vote on the merger or a tender offer. For mergers requiring a shareholder vote, the target company files a proxy statement with the SEC and also distributes it to shareholders asking them to vote in favor of the transaction at issue. For acquisitions involving a tender offer, once the acquirer has commenced the tender offer, the target company files with the SEC and distributes to shareholders a 14D-9, which recommends shareholders to tender their shares to the acquirer. In both types of transactions, the law requires companies to disclose to shareholders all “material” information, which allows shareholders to decide for themselves whether to support the merger, either by voting or tendering their shares.
Usually not. In transactions where shareholders’ stock is cancelled out in exchange for cash, the acquirer’s stock, or a combination of cash and stock, shareholders cannot keep the stock they owned in the original company. That is why it is important for shareholders to review proxy statements or 14D-9 filings, as the case may be, and to be actively involved in the process, whether by voting, participating in the tender offer, or pursuing litigation if shareholders’ rights have been violated.
As a general matter, directors owe shareholders fiduciary duties of loyalty, due care, good faith, and candor. In the context of mergers and acquisitions, many courts have explained that directors must focus on getting the best price possible. Directors must not favor one buyer over another for improper reasons, and it’s vital to ensure that potential conflicts of interest do not impinge on the process. Furthermore, after a deal has been announced, boards must disclose any and all material information in the proxy statement or 14D-9 to enable shareholders to make a fully informed decision to accept or reject the transaction.
In certain types of mergers and acquisitions, shareholders can surrender their right to receive the merger consideration and instead, seek “fair value” for their shares. The process for pursuing appraisal rights differs from state to state. In deals where appraisal rights are available, the proxy statement or 14D-9 will advise shareholders of what they need to do in order to exercise and pursue their appraisal rights.
In order to participate in a merger class action, you typically need to hold on to your shares through the completion of the merger.