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.

Employment and Labor Litigation FAQs

The attorneys at Johnson Fistel have obtained successful and efficient results for both employers and employees in litigating employment disputes, negotiating separations and severance, and evaluating employment policies, practices, and contracts. Below are answers to frequently asked questions relating to employment and labor issues:

Many states allow for at-will employment, meaning employees may be terminated, and job applicants may be denied employment, for nearly any reason at all, or for no reason whatsoever.  However, federal law, state law, and often company policies prohibit adverse employment decisions (such as termination or job denial) based on certain protected characteristics, including sex, race, color, national origin, religion, disability, age (40 years or older), and use of leave under the Family and Medical Leave Act.

An employee who complains in good faith of a potential violation of the Fair Labor Standards Act and/or a federal law prohibiting employment discrimination, and is thereafter subjected to an adverse action (such as termination, pay cut, demotion, or reassignment, among other actions), may be able to recover backpay and more for unlawful retaliation.

Employees who believe they have suffered some form of employment discrimination or retaliation, should contact a reputable law firm to evaluate potential claims.  Similarly, employers who have been accused of some form of wrongful conduct, should contact a reputable firm sooner rather than later.  Johnson Fistel has experience working with federal and local government agencies—such as the Equal Employment Opportunity Commission (EEOC)—and has engaged in litigation prosecuting and defending against claims of employment discrimination and retaliation.

Except where an employee is “exempt” under one of several enumerated exemptions, the Fair Labor Standards Act (FLSA) requires employers to provide employees with minimum wage (currently at least $7.25 per hour, or higher in some states) for all hours worked.  The FLSA also requires that employees receive overtime pay (one and one-half time their regular rate of pay) for all hours worked beyond 40 in a workweek.  An employer who improperly characterizes an employee as “exempt,” and fails to pay minimum wage and/or overtime, could face liability under the FLSA.

Employment can entail many significant benefits for employees, some or all of which are typically not granted to independent contractors.  However, workers’ entitlement to benefits is not governed simply by whether their place of work classifies them as an “independent contractor” or an “employee.”  If the “economic realities” dictate an employment relationship, but workers are nevertheless misclassified as independent contractors, these employees may be able to recover unpaid benefits for the misclassification.

Restrictive covenants, such as non-compete, non-solicitation, or confidentiality clauses, are agreements entered into between employers and employees that restrict an employee’s ability to engage in certain other employment activities—such as competing with the employer, soliciting the employer’s employees or customers, or disclosing the employer’s confidential information—typically following the conclusion of their employment relationship.  In some states, restrictive covenants are generally not enforceable; in other states, covenants that are overbroad or unreasonable in duration or scope may be deemed unenforceable; finally, in some other states, overbroad or unreasonable covenants may be “blue-penciled” (i.e., re-written by a court to be more reasonable, and enforced as re-written).  Violation of a restrictive covenant can subject an individual to substantial civil liability, and prevent his or her ability to engage in certain subsequent employment activities.

If you own or represent a business that has been accused of an unlawful employment practice, you should contact an attorney immediately to help determine and protect your rights.  Johnson Fistel can help investigate and evaluate the claims waged against your business and/or its management, work carefully with you to negotiate favorable resolutions, defend against administrative charges and single-plaintiff or class/collective action lawsuits, and even file suit to safeguard your important business interests, assets, and reputation.  We can also draft and implement sound employment policies and contracts to help you prospectively avoid time-consuming and costly litigation.

The attorneys at Johnson Fistel have significant experience handling employment issues, having obtained successful and efficient results for both employers and employees.  We have represented employers in defending lawsuits brought by employees, investigating and evaluating employment practices, drafting and implementing sound employment policies and contracts, negotiating severance and executive compensation, and enforcing restrictive covenants.  We have also represented employees in prosecuting their rights under federal, state, and local laws, understanding and negotiating employment contracts, separating their employment on favorable terms, and analyzing and defending restrictive covenant disputes.  Whether you’re an employee or an employer, please contact us today to determine whether and how we may be able to assist you.

Estate Planning FAQs

Johnson Fistel has the experience to help implement proven strategies that eliminate risk, mitigate tax exposure, and protect everything you have worked so hard to build. Below are answers to frequently asked questions relating to estate planning and asset protection:

Estate Planning is the process of protecting your financial assets and mitigating potential risks, liabilities and tax exposure with the assistance of proven legal strategies and trusted advisors.

A will allows most of your property to transfer pursuant to your wishes upon your death. A will does not control the disposition of non-probate property (including jointly-owned real estate or property that has a beneficiary designation like insurance policies, securities, certain financial accounts, etc.). A will also does not keep your other property from going through probate.

Probate is the court-supervised process of recognizing your will and appointing an executor who will control your estate. It varies from state to state, but the California probate process is public, time-consuming and expensive. All property going through probate is public record, so everyone will know all of the personal details of your estate and exactly what your heirs and beneficiaries receive. In addition, California imposes a graduated probate fee starting at 4% of the value of the assets.

A revocable living trust essentially keeps the bulk of your personal property from going through the probate process. A pour-over will transfers all non-trust property into your trust immediately upon your death, allowing the trustee to control the disposition of your assets and estate without going through the probate process. It saves time and money, and keeps the disposition of your estate completely private and confidential.

A revocable living trust is a useful tool, but it has its limitations.  It will not help mitigate your income tax or estate tax exposure, and it will not protect your assets from scam artists, frivolous litigation, aggressive creditors or ex-spouses trying to claim your separate property. If you are a high net worth individual or involved in a high-risk profession, you are a prime target for meritless lawsuits and ruthless criminals intent upon liberating you from your assets.

Asset Protection is the process of using irrevocable, asset-protection trusts, domestic and offshore venues, life insurance and other legal entities and strategies to protect your accumulated wealth. Asset protection essentially removes assets from your estate, while allowing you to continue to enjoy the benefits from these assets. In some cases, you may also be able to mitigate (and possibly eliminate) state income tax and federal estate/gift tax on these assets. An asset protection trust can also be a useful alternative (or addition) to a pre-nuptial arrangement where one spouse has significantly more assets than the other.

Absolutely not. Everyone can benefit from good planning. All of us face daily threats to our financial stability and future, including catastrophic accidents, health issues and/or vexatious litigation. A strategic estate/asset protection plan will help protect everything you have worked so hard to build, so you can be more comfortable knowing that your nest egg and your family’s future is safe and secure.