On September 12, 2019, Justice Barry R. Ostrager of the Supreme Court of the State of New York, Commercial Division, issued a Decision & Order in which he denied approval of a proposed settlement in a lawsuit brought on behalf of a proposed class of shareholders of Xerox Corporation. The proposed class action settlement would have released current and former company directors from potential liability for, among other things, giving activist investors control over Xerox’s board of directors and potentially exposing Xerox to massive liability in a contract action brought by Fujifilm Holdings Corporation concerning termination of a potential merger of the two companies.
Levi & Korsinsky originally filed a derivative suit on behalf of Xerox shareholder Carmen Ribbe in May 2018, after Justice Ostrager had preliminarily enjoined Xerox’s deal with Fuji. After the Court issued this injunction, purported class plaintiffs in a related litigation entered into what they claimed was a tri-partite, two-step settlement with Xerox and activist investors Darwin Deason and Carl Icahn. Pursuant to the settlement framework, the activist investors hand-picked a majority of directors to on a reconstituted Xerox board without any input from the other 85% of Xerox shareholders. Moreover, the purported class plaintiffs sought to grant releases from liability to certain current and former Xerox directors for the role they played in terminating the Fuji deal, as contemplated by the activist investors’ private settlement with Xerox.
Levi & Korsinsky represented Mr. Ribbe in connection with this settlement which—if approved—would have precluded his claims on behalf of Xerox and its shareholders challenging the release of claims against directors for their role in creating potential liability to Fuji and the activist investors’ arrogation of control, respectively. In the objection, Mr. Ribbe’s legal team pointed out that U.S. District Judge John G. Koeltl had denied Xerox’s motion to dismiss Fuji’s suit, which seeks in excess of $1 billion in damages, at a hearing last February. They also argued that Xerox shareholders should not be bound by the ceding of control over the Board to the activists and should be given a voice in who sits on the Xerox board.
In an interview with Reuters, Levi & Korsinsky’s Christopher Kupka and named partner Eduard Korsinsky expressed that Justice Ostrager clearly understood their point: The now-rejected settlement did not benefit shareholders and therefore did not merit approval. “The proof is in the pudding,” Korsinsky added, “The settlement was not approved and nothing is changing.” Levi & Korsinsky will continue to vigorously prosecute Mr. Ribbe’s claims on behalf of Xerox and its shareholders.