Securities Law Daily provides daily coverage of developments in the regulation of federal, state, and international securities and futures trading, with objective coverage of the...
Aug. 23 — Investors lost their bid to revive class claims against Ohio-based tire manufacturer Cooper Tire & Rubber Co. over its failed $2.5 billion merger with Apollo Tyres Ltd. ( OFI Asset Mgmt. v. Cooper Tire & Rubber Co., 2016 BL 271668, 3d Cir., No. 15-2664, 8/22/16 ).
Investors didn't adequately plead that Cooper's statements during merger negotiations were false or misleading, Judge Kent A. Jordan of the U.S. Court of Appeals for the Third Circuit said Aug. 22. In addition, under the Private Securities Litigation Reform Act, forward-looking statements—when accompanied by meaningful cautionary language—are protected under the act's safe harbor provision.
In 2014, OFI Asset Management and Timber Hill LLC sued Cooper for concealing risks that ultimately caused its merger with Apollo to fail (194 SLD, 10/7/14). According to the investors' complaint, Cooper “touted the deal to the company's shareholders as an unbeatable offer” despite knowing that opposition from Cooper's joint venture partner would likely jeopardize the merger.
The U.S. District Court for the District of Delaware dismissed the case in July 2015, finding that the investors didn't allege facts with the particularity required under PSLRA.
The Third Circuit agreed. “It is difficult to discern precisely which statements OFI alleges to be actionable, let alone what specific facts are asserted to support each allegation,” the appeals court said. The investors' “kitchen-sink pleading has been a hindrance at every stage of these proceedings,” the Third Circuit said.
The appeals court also held that the investors didn't adequately plead scienter—culpable intent.
The potential merger also led to insider trading charges against entrepreneur Amit Kanodia—whose wife was Apollo's general counsel—and his friend, Steven Watson (64 SLD 64, 4/3/15).
Watson pleaded guilty to the charges and agreed to settle related Securities and Exchange Commission allegations (223 SLD, 11/19/15).
The civil and criminal proceedings against Kanodia are still pending.
The investors were represented by Bernstein Litowitz Berger & Grossmann, New York; and Entwistle & Cappucci, New York.
Copper was represented by Jones Day and Potter, Anderson & Corroon, Wilmington, Del.
Attorneys couldn't be immediately reached for comment.
To contact the reporter on this story: Cameron Finch in Washington at firstname.lastname@example.org.
To contact the editor responsible for this story: Phyllis Diamond at email@example.com.
To view the court's opinion, visit: http://www.bloomberglaw.com/public/document/OFI_Asset_Mgmt_v_Cooper_Tire__Rubber_Co_No_152664_2016_BL_271668_.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)