Randall J. Baron

Topeka, November 2010

In the spring of 2006 a group of Kinder Morgan insiders led by Richard Kinder, the pipeline company's co-founder, and investors led by The Goldman Sachs Group, with entities controlled by the Carlyle Group, Riverstone and AIG, proposed to take the Kansas-incorporated, Houston-based company private at $100 a share. The offer rose to $107.50 in August, and on August 28, 2006 the board announced that it had approved a $22 billion merger agreement. Stockholders sued in Kansas and Texas; the cases were consolidated in the District Court of Shawnee County, Kansas, and the stockholders approved the merger on December 19, 2006. Baron and his team litigated the consolidated case. The court certified a nationwide class in February 2009; the plaintiffs took more than thirty depositions and reviewed more than 650,000 pages of documents produced by the defendants and third parties; and five separate summary-judgment motions were pending when the parties agreed to settle. In November 2010 Judge David Bruns approved a $200 million settlement, paid into a common fund for the class.

Twenty Days

On November 24, 2010 Del Monte Foods agreed to be acquired for $19 a share, about $5.3 billion, by a group of Kohlberg Kravis Roberts, Vestar Capital Partners and Centerview Partners. Barclays Capital was Del Monte's financial adviser in the sale. Stockholders led by the NECA-IBEW Pension Fund sued in the Delaware Court of Chancery with Grant & Eisenhofer and Robbins Geller as co-lead counsel, Baron, A. Rick Atwood, Jr., David T. Wissbroecker, Edward M. Gergosian and David A. Knotts appearing for the firm, and discovery showed that in September 2010 Barclays had paired Vestar with KKR without the board's consent and against the confidentiality agreements the bidders had signed, had concealed Vestar's involvement from the board, and, while the price was still being negotiated, had sought a role financing KKR's purchase that it expected to earn it $21 million to $24 million. On February 14, 2011 Vice Chancellor J. Travis Laster found that Barclays had “secretly and selfishly manipulated the sale process” and that the board “failed because it was misled by Barclays.” He enjoined the stockholder vote for twenty days and, pending the vote, barred enforcement of the merger agreement's no-solicitation and matching-right provisions and its $120 million termination fee for a topping bid. On December 1, 2011 the court approved a settlement of $89.4 million, $65.7 million from Del Monte and $23.7 million from Barclays. Baron later said the case “very much changed the way investment banking is practiced.”

An Objection at the Fairness Hearing

Rural/Metro, the ambulance operator, agreed in March 2011 to be acquired by an affiliate of Warburg Pincus for $17.25 a share, about $438 million, and the merger closed on June 30, 2011. Two stockholders had sued on April 6, 2011, Beatriz Llorens in Delaware and Joanna Jervis in Arizona; the Court of Chancery consolidated the actions and appointed Llorens lead plaintiff, and she agreed with the defendants to settle for supplemental disclosures and an unopposed fee application. At the fairness hearing on January 17, 2012 Jervis objected, represented by Baron and Joel Friedlander of Bouchard Margules & Friedlander. Vice Chancellor Laster rejected the disclosure-only settlement as inadequate, Jervis's lawyers took over the case, and the amended complaint added claims against the board's financial advisers, RBC Capital Markets and Moelis & Company. The directors settled for $6.6 million and Moelis for $5 million shortly before trial, and Baron and Friedlander tried the case against RBC over four days.

On March 7, 2014 the court held RBC liable for aiding and abetting the directors' breaches of fiduciary duty. In December 2010 RBC had told the special committee that “selling the Company today is opportunistic” and proposed running the sale alongside the auction of Rural/Metro's competitor EMS, without disclosing that it hoped to finance EMS's buyers, a pairing that could have brought it as much as $60.1 million in fees across the two deals; in the final days before the board's approval it lobbied Warburg for a buy-side financing role it did not get; and the board received RBC's written valuation, which the court found had been revised to make Warburg's price look better, three hours before it met to approve the merger. On October 10, 2014 the court set the class's damages at $4.17 a share, $91,323,554.61, and held RBC responsible for 83 percent, $75,798,550.33, plus interest; with the earlier settlements the recovery approached $110 million. On November 30, 2015 the Delaware Supreme Court, sitting en banc in an opinion by Justice Karen L. Valihura, affirmed: “Propelled by its own improper motives, RBC misled the Rural directors into breaching their duty of care.”

Nine Days of Trial

On November 1, 2013 David Murdock, Dole Food's chairman and chief executive and the owner of 40 percent of its stock, took the company private at $13.50 a share for the shares he did not already own, a $1.2 billion buyout that the unaffiliated stockholders had approved by 50.9 percent. Stockholders sued in the Court of Chancery, with Grant & Eisenhofer, Robbins Geller and Kessler Topaz Meltzer & Check as co-lead counsel and Baron, Atwood, Wissbroecker, Gergosian and Maxwell R. Huffman appearing for Robbins Geller, and the case was tried before Vice Chancellor Laster over nine days in February 2015. On August 27, 2015 he held that Murdock and C. Michael Carter, Dole's president and chief operating officer, had breached their duty of loyalty. Carter had given the special committee “lowball management projections” while supplying Murdock's advisers and lenders with better figures at a meeting the committee did not know about; he had cancelled a recently adopted stock repurchase for pretextual reasons; and he had made false disclosures about the savings Dole could realize after selling about half of its business in 2012. Their conduct, the court wrote, was “not innocent or inadvertent, but rather intentional and in bad faith.” It found the shares had been worth $16.24, held the two jointly and severally liable for $148,190,590.18, an additional $2.74 for every share in the class, and added that “although facially large, the award is conservative to what the evidence could support.” The settlement that followed, approved on February 10, 2016, paid the class that $2.74 a share plus interest, $115,793,059.57 delivered on March 28, 2016.

Other Courtrooms

Baron was one of the lead lawyers for about seventy-five public and private institutional investors who opted out of the WorldCom securities class action in the Southern District of New York and settled their own actions for more than $657 million. He was lead trial counsel for Dollar General's stockholders in the Circuit Court for Davidson County, Tennessee, over Kohlberg Kravis Roberts's 2007 buyout, a case that settled shortly before trial for a common fund of up to $57 million. In the Court of Chancery his team objected to a proposed settlement of the claims over Prime Hospitality's sale to a private-equity buyer, litigated the fiduciary claims itself and produced a $25 million cash fund for stockholders; the Chaparral Resources stockholder case, tried in full and then mediated before the Chancellor, settled for $41 million; and in the Tesla stockholder litigation over the 2016 acquisition of SolarCity, the directors other than Elon Musk settled for $60 million, approved on August 17, 2020. In the Central District of California he recovered $45 million for Intermix shareholders over News Corp.'s acquisition of the company in Brown v. Brewer, and in Dallas County he negotiated concessions from Xerox in its acquisition of ACS that left stockholders free to accept more money from another buyer.

One Week Before Trial

Bioverativ, the hemophilia company Biogen spun off in February 2017, had been independent for three months when Sanofi approached two of its directors, Alexander Denner and its chairman, Brian Posner, in May 2017 about buying it. They told Sanofi the company was not for sale and did not tell the other directors, and within days Denner's hedge fund, Sarissa Capital Management, bought more than a million Bioverativ shares, octupling its holding. In October 2017 Denner invited Sanofi to bid in a process with no other bidder, at a point the court later noted appeared timed to the end of the six-month period in which Sarissa's short-swing profits could have been recaptured under Section 16. Sanofi offered $98.50 a share in early November, when the rest of the board first learned of its interest, then $101.50, and accepted the board's counter of $105; the merger agreement was signed on January 21, 2018, the $11.6 billion deal closed on March 7, 2018, and Sarissa's profit on its purchases was about $49.7 million.

Stewart N. Goldstein, M.D., an anesthesiologist who had held Bioverativ stock, brought the case with Robbins Geller and Prickett, Jones & Elliott as co-lead counsel. The lawyers began with a demand for the company's books and records and built the complaint's chronology from them. On May 26, 2022 Vice Chancellor Laster, in a 124-page opinion, denied the motions to dismiss the sale-process and disclosure claims against Denner, Posner, chief executive John Cox and other defendants, finding it reasonably conceivable that “Denner's conflicts tainted the sale process” and “affected the price negotiations with Sanofi”; on June 2, 2022 he sustained the insider-trading claim against Denner and the aiding-and-abetting claim against Sarissa, finding it reasonable to infer that Denner had traded on Sanofi's approach. In January 2024 the court sanctioned defendants, with evidentiary presumptions, for failing to preserve text messages. The officers and directors settled the sale-process claims for $84 million, approved in September 2023, and Baron, Atwood and Christopher H. Lyons prepared the insider-trading claims for trial. In April 2024, one week before the trial was to begin, the defendants to those claims agreed to pay $40 million. The court approved that settlement on September 12, 2024, bringing the recovery for Bioverativ's former stockholders to $124 million.