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 testimonial from the firm’s client. 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.”
Mr. Johnson and Mr. Holleman were the attorneys at the firm responsible for helping obtain this settlement for shareholders. Englehart v. Brown, Case No. 13-2-33726-6-KNT (Wash. Super. Ct. King Cnty.).
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.).
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: In re Sunrun Shareholder Litigation, No. CIV. 538215 (Cal. Super. Ct., San Mateo Cnty.) ($32 million settlement achieved on behalf of investors who purchased shares in the Sunrun IPO); In re MobileIron, Inc. Shareholder Litigation, No. 1-15-284001 (Cal. Super. Ct., Santa Clara Cnty.) ($7.5 million settlement achieved on behalf of investors who purchased shares in the MobileIron IPO); In re Ooma, Inc. Shareholder Litigation, No. CIV536959 (Cal. Super. Ct., San Mateo Cnty.) (($8.65 million settlement achieved on behalf of investors who purchased shares in the Ooma IPO – preliminary approval pending); and Switzer v. W.R. Hambrecht & Co., LLC (Cal. Super. Ct., San Francisco Cnty.) ($2.45 million settlement achieved on behalf of investors who purchased shares in the Arcimoto IPO – preliminary approval pending).
Examples of Settlements Requiring Stricter Company Controls
- In re Motorola, Inc. Derivative Litigation, Case No. 07CH23297 (Ill. Cir. Ct. Cook County). Johnson Fistel was appointed Co-Lead Counsel in a shareholder derivative action filed against current and former officers and directors of Motorola, Inc. The derivative claims 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 Heelys Inc. Derivative Litigation, Case No. 07-CV-1682 (N.D. Tex.). Johnson Fistel’s predecessor firm was appointed Co-Lead Counsel in this shareholder derivative action filed against current and former officers and directors of Heelys Inc. After prevailing on defendants’ motion to dismiss, and more than a year of litigation including multiple mediations, this matter settled on terms that required the implementation of significant corporate therapeutic changes that benefitted the company and its shareholders for years to come. When granting final approval of the settlement, the Honorable Ed Kinkeade, United States District Court Judge for the Northern District of Texas, praised Johnson Fistel’s efforts. “The quality of representation by the Derivative Plaintiffs’ Counsel was witnessed first hand by this Court through their articulate, high quality, and successful pleadings. Moreover, as shown by their excellent efforts in this case, Derivative Plaintiffs’ Counsel are dedicated to vindicating the rights of shareholders.”
- In re MannKind Corporation Derivative Litigation, Lead Case No. 11-cv-05003-GAF-SSx (C.D. Cal.). Johnson Fistel was appointed sole Lead Counsel in this shareholder derivative action filed against current and former officers and directors of MannKind, alleging that the defendants had misled shareholders about the FDA approval process for MannKind’s core product. After more than two years of litigation and a mediation, this matter settled on terms that required the implementation of significant corporate therapeutic changes, including the creation of a new Board-level Disclosure & Controls Committee and significant enhancements to financial reporting requirements.
- Singh v. Hsu, Case No. 1-13-cv-243247 (Cal. Ct. Santa Clara Cnty.) (Impax Laboratories, Inc. Derivative Litigation). Johnson Fistel was appointed sole Lead Counsel in this shareholder derivative action against certain current and former officers and directors of Impax Laboratories, Inc. for allegedly failing to correct systemic problems at the company’s manufacturing centers and for misleading shareholders about FDA sanctions related to these problems. After two years of litigation and a mediation, the matter settled on terms requiring the implementation of company-wide corporate governance reforms, significantly enhancing reporting and oversight at the Board, officer, and employee level.
- In re LHC Group, Derivative Litigation, No. 6:13-CV-02899-JTT-CBW (W.D. La.). Johnson Fistel, as co-lead counsel in this shareholder derivative action, was able to resolve the action for substantial corporate governance reforms at LHC Group which included, among other reforms, amendments to the company’s compliance policies designed to address allegations concerning the company’s Medicare home health program and to the Audit Committee Charter to provide greater oversight of the company’s compliance-related activities, Medicare and Medicaid reimbursement policies, compliance audits, handling of anonymous complaints, and the effectiveness of the company’s Code of Conduct. The settlement also caused changes to be made to the company’s insider trading and preclearance policies to provide more clarity and transparency, as well as additional restrictions, on insider sales of company stock.
- Weitzman v. Ullman, et al., Civ. No. 4:13-cv-00585 (E.D. ) (J.C. Penney Company, Inc. Derivative Litigation). In its role as lead counsel, and after almost five years of litigation and nearly two years of protracted settlement negotiations, Johnson Fistel was able to secure a settlement that provided for a series of material reforms to JCPenney’s corporate governance systems, which were designed to strengthen the Company’s internal control functions and board accountability, and ultimately prevent the recurrence of the events that led to the alleged harm to the company and the filing of the derivative lawsuit.
- Orrego & Kim v. Lefkosky, et al., Case No.: 12 CH 12420 (Consolidated with 12 CH 19431) (Ill. Cir. , Cook Cnty., Ch. Div.) (Groupon, Inc. Derivative Litigation). Johnson Fistel, serving as co-lead counsel, negotiated a settlement which included extensive and detailed measures designed to improve corporate governance at Groupon and restore and maintain investor confidence in the Company. Groupon’s Board of Directors agreed to implement these sweeping corporate governance reforms designed to improve decision-making and legal-regulatory compliance in the critical areas of accounting and financial disclosure, earnings guidance, and committee oversight at the company.
- In re World Acceptance Corporation Derivative Litigation, Lead Case No. 6:15-cv-02796-MGL (D.S.C.). Johnson Fistel, as co-lead counsel, was able to resolve the action for the benefit of World Acceptance even though the District Court granted defendants’ motions to dismiss the case, and that order was being appealed to the U.S. Court of Appeals for the Fourth Circuit. Johnson Fistel, its co-counsel, and our clients never gave up, and fought to achieve a significant settlement despite significant obstacles. Specifically, the settlement, among other things, preserved corporate resources by ensuring that the related securities class action was resolved within insurance policy limits and without monetary contribution from the company, and caused significant corporate governance reforms designed to increase shareholder control and provide for improved operational oversight at the company. The settlement will have a lasting, positive impact on the Company and its shareholders for years to come.
- In re Marrone Bio Innovations, Inc. Derivative Litigation, Lead Case No. CV14-1481 (Cal. Super. Ct., County of Yolo). Johnson Fistel, in its role a co-lead counsel, negotiated a settlement on behalf of Marrone Bio Innovations which reformed its governance practices in order to prevent the misconduct alleged in case from reoccurring again in the future. The case stemmed from the criminal misconduct of the company’s former Chief Operating Officer and the control and oversight environment at the company that allowed such misconduct to occur in the first place causing harm to Marrone Bio Innovations. Specifically, the reforms put into place by the settlement created more transparency in connection with stockholder proposals, created more extensive oversight of management by the Audit Committee, revised the company’s Code of Business Conduct and Ethics and added responsibilities to the company’s Compliance Officer to foster a corporate environment of legal and ethical compliance, revised the company’s policies with respect to expense recognition policies and training in connection therewith, and formalized the company’s Disclosure and Controls Committee and defined the responsibilities of it.