“…strong work ethic…unquestionable integrity.”
Johnson Fistel aggressively pursues complex litigation matters for both hourly paying clients and for contingency fee clients. While not an exhaustive list, below are a few of the cases for which the firm has achieved noteworthy successful results for its clients.
A Happy Client Following Trial
On behalf of a marketing firm, Johnson Fistel pursued claims for breach of contract and fraud against the manufacturer of a weight loss product. After a week-long jury trial, the jury returned a seven-figure verdict in favor of Johnson Fistel’s client, including actual and punitive damages. See testimonials from the firm’s client, Ronald T. Fricke, and the firm’s co-counsel, Gerald J. Stubenhofer, Esq., under Testimonials. Healthy Life Marketing, LLC, et al. v. Jaime Brenkus’ Sound Body, Inc., Case No. GIC822927 (Cal. Super. Ct. San Diego Cnty.).
Record Setting Class Action Settlement in Washington
In what is believed to be the largest recovery ever obtained in a class action challenging the price of a merger or acquisition of a public company in a Washington court, on January 20, 2017, the court approved a $12.75 million settlement for the benefit of former Flow shareholders. Specifically, the case challenged the fairness of the price shareholders received from the 2014 acquisition of Flow by American Industrial Partners. Johnson Fistel served as court-appointed Co-Lead Class Counsel.
After three years of hard-fought litigation, which included 26 depositions taken throughout the country, defeating defendants’ motions to dismiss, defeating defendants’ motion for summary judgment, and obtaining an order certifying the class, the parties reached an agreement to settle the case just before trial. “I am proud to be part of a settlement that achieved what is now a rarity, more money for the shareholders in a merger case,” said Frank Johnson, one of the founding partners of Johnson Fistel. Cornerstone Research recently published a report regarding M&A shareholder suits in 2015 and the first half of 2016, reporting that amongst the hundreds of merger-related lawsuits identified, only six of those cases resulted in any monetary recovery for shareholders. The report concluded that in merger-related litigation, “monetary consideration paid to shareholders has remained relatively rare.” Englehart v. Brown, Case No. 13-2-33726-6-KNT (Wash. Super. Ct. King Cnty.).
Recovering Cash for and Reforming Practices at a Global Social Media Company
Johnson Fistel, as Co-Lead Counsel served as a lead negotiator in this stockholder derivative action against certain current and former officers and directors of Twitter, Inc., recovering $38 million for the company and successfully negotiating robust governance reforms tailored to address and prevent the reoccurrence of directors and officers of Twitter from issuing materially false and misleading statements about the company’s user growth and user engagement prospects, a central allegation in the case. In reflecting on Johnson Fistel’s efforts, Jim Porter, one of the shareholder plaintiffs that stepped up to prosecute the claims on behalf of Twitter, referred to the settlement as an “excellent result achieved for the company and its stockholders” and lauded Johnson Fistel’s lawyers and staff as “professional, responsive, and personable….I would use them again and recommend them without hesitation.” In re: Twitter, Inc. Shareholder Derivative Litigation (n/k/a X), C.A. No. 18-062 (D. Del.).
One of the Largest Recoveries in a Derivative Case in Tennessee
Johnson Fistel was appointed sole Lead Counsel in this shareholder derivative action against certain current and former officers and directors of HCA Holdings, Inc., the largest private hospital chain in the country. The derivative claims related to similar facts that resulted in the company paying $215 million to settle a class action lawsuit filed by shareholders who alleged the company used false and misleading information to sell stock during its 2011 initial public offering.
The parties litigated the action for more than four years and attended multiple mediations, after which Johnson Fistel secured an extremely favorable settlement for HCA and its shareholders, including a payment of $19 million to HCA (believed to be among the largest recoveries in a derivative case in the State of Tennessee), the appointment of a new independent director, and implementation of significant corporate therapeutics. Bagot v. Bracken, et al., Case No. 11C5133 (Tenn. Cir. Ct., 6th Cir.).
Helped Secure $24 million for the Company
Johnson Fistel was initially appointed Co-Lead Counsel in state court in one of the highest-profile cases in the country challenging the award of backdated stock options by executive officers of Brocade. For years, Brocade’s insiders engaged in a secret stock option backdating scheme designed to reward executives and recruit engineers with stock options priced below their fair market value as of the date of the grants. The U.S. Government pursued and ultimately won criminal convictions against the responsible executives.
On behalf of its client, Johnson Fistel helped prevent an inadequate settlement of a related federal action from being approved, which would have released the officers, directors, and agents of the company responsible for the criminal backdating scheme resulting in no money to the company and only a payment of attorney’s fees for the lawyers. Brocade then formed a Special Litigation Committee and retained Johnson Fistel as co-counsel to Brocade to help litigate claims against ten former officers and directors of the company. After years of litigation, over $24 million was recovered for Brocade. In re Brocade Communications, Systems, Inc. Derivative Litigation, Case No. 1:05cv41683 (Cal. Super. Ct. Santa Clara Cnty.).
Helped Secure $29 Million for Shareholders
Johnson Fistel was appointed Co-Lead Counsel in a derivative lawsuit that involved claims against the officers and directors of Titan Corporation for breach of fiduciary duty. During the pendency of the litigation, Titan announced that it would be acquired, threatening to cause the shareholders in the derivative action to lose standing. Johnson Fistel then coordinated with counsel in a related derivative action pending in Delaware to negotiate a settlement that resulted in $29 million in increased consideration to Titan’s shareholders in the all-cash merger acquisition. In re the Titan Corp. Derivative Litigation, Case No. GIC 832018 (Cal. Super. Ct. San Diego Cnty.).
Keeping Corporate America Accountable
Johnson Fistel, as court-appointed Co-Lead Counsel pursuant to the Private Securities Litigation Reform Action of 1995 (“PSLRA”), recovered $21 million for a class of shareholders who invested in Flowers Foods, Inc. The detailed, 154 page, 352 paragraph complaint withstood defendants’ motions to dismiss and for reconsideration, and alleged that defendants made false and misleading statements in connection with the Company’s labor strategy, resulting in the price of Flowers Foods stock to trade at artificially inflated prices during the Class Period. The $21 million class settlement is believed to be the largest securities fraud class action recovery since the passage of the PSLRA in the Middle District of Georgia. In re Flowers Foods, Inc. Securities Litigation, No. 7:16-cv-0022-WLS (M.D. Ga.).
Creating Shareholder Value Through Innovative Corporate Reforms
Johnson Fistel was appointed Lead Counsel in a shareholder derivative action brought on behalf of RH, Inc. alleging, among other things, that certain officers and directors of RH violated federal and state laws by making false and misleading statements concerning RH’s business operations, financial condition, and growth prospects, as well as that certain defendants engaged in improper insider trading. On RH’s behalf, Johnson Fistel negotiated sweeping and innovative corporate governance reforms to benefit the company, including installation of a new Chief Compliance Officer and adoption of a Disclosure Committee Charter. On December 18, 2020, the Honorable Yvonne Gonzalez Rogers granted final approval, noting that “the Court rarely comments on counsel’s performance. Here, such commentary is appropriate. . . . Counsel performed excellent work in not only investigating and analyzing the core of the issues, but in negotiating and demanding the necessary reforms to prevent malfeasance for the benefit of the shareholders and the consumers. The Court complements counsel for its excellence.” In re RH Shareholder Derivative Litigation, No. 4:18-cv-02452-YGR (N.D. Cal).
Likewise, as Co-Lead Counsel, Johnson Fistel helped bring about reformative change at Motorola, Inc. The derivative claims there charged certain officers with making misrepresentations about the company’s financial statements and prospects of success in order to artificially inflate the company’s stock price while they personally sold shares and while causing the company to simultaneously purchase shares on the open market. After six years of hard-fought litigation, the action settled on terms that required the implementation of significant corporate therapeutic changes throughout the company—changes that were valued by one expert at over $1 billion. In re Motorola, Inc. Derivative Litigation, Case No. 07CH23297 (Ill. Cir. Ct. Cook County).
Helped Investors Who Suffered Losses In Connection with Public Offerings
Johnson Fistel has extensive experience representing investors who purchased shares and suffered losses in connection with public offerings. In that regard, Johnson Fistel has successfully brought claims under the Securities Act of 1933 and helped investors recover many millions of dollars, including in the following class action cases: Gerneth v. Chiasma, Inc., et al., No. 1:16-cv-11082-DJC (D. Mass.) ($18.75 million settlement achieved on behalf of investors who purchased shares in the Chiasma IPO); Glock v. FTS International, Inc., et al., Civil Action No. 4:20-cv-03928 (S.D. Tx.) ($9.875 million settlement achieved on behalf of investors who purchased shares in the FTSI International IPO); Desrocher v. Covisint Corporation, et al., Case No. 1:14-CV-03878-AKH (S.D.N.Y.) ($8 million settlement achieved on behalf of investors who purchased shares in the Covisint IPO); and In re EverQuote, Inc. Securities Litigation, Index No. 651177/2019 (N.Y. Sup. Ct., New York Cnty.) ($4.75 million settlement achieved on behalf of investors who purchased shares in the EverQuote IPO).