Monthly Archives: November 2016

Recent Filings – November Digest

View Amanda Pickens’ Complete Bio at robinsonbradshaw.com Not every class action court filing in North and South Carolina becomes a full-length post on our blog. Here is a recap of November’s filings:

Anstrom v. Best Logistics Group, Inc., No. 1:16-cv-01365 (M.D.N.C. November 29, 2016) (purported class action and collective action brought under FLSA and state wage and hour laws by freight brokers alleging defendant misclassified employees and failed to pay overtime).

Pasqual v. Cempra, Inc., et. al., No. 1:16-cv-01356 (M.D.N.C. November 22, 2016) (putative class action filed on behalf of shareholders of Cempra, Inc., a clinical-stage biopharmaceutical company, against the company and its officers and directors alleging violations of Sections 10(b) and 20(a) of the Exchange Act arising out of a one-day stock price decline of 61% after the FDA issued a report analyzing Cempra’s clinical development drug).

Autry v. Charlotte Palm Corp., No. 3:16-cv-00797 (W.D.N.C. November 18, 2016) (purported collective action and class action brought under FLSA and state wage and hour laws by servers and bartenders to recover alleged unpaid wages, overtime pay and tips).

Fitzhenry v. Guardian Protection Servs., Inc., et. al., No. 2:16-cv-03597 (D.S.C. November 9, 2016) (order transferring to South Carolina a putative class action brought under the Telephone Consumer Protection Act for unsolicited phone calls).

Mullis v. Wings Over Spartanburg, LLC, et. al., No. 2:16-cv-03578 (D.S.C. November 7, 2016) (purported collective action and class action brought under FLSA and state wage and hour laws by bartenders for an improper “tip credit”).

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Recent Filings – October Digest

View Amanda Pickens’ Complete Bio at robinsonbradshaw.com Not every class action court filing in North and South Carolina becomes a full-length post on our blog. Here is a recap of October’s filings:

Stephens, et. al. v. Shoretel SC LLC, et. al., No. 4:16-cv-03515 (D.S.C. October 28, 2016) (purported collective action brought under FLSA alleging customer service representatives were not paid overtime while working for defendant’s call center).

Blunt v. Belk, Inc., No. 3:16-cv-00745 (W.D.N.C. October 27, 2016) (notice of removal of putative class action brought under the Fair Credit Reporting Act alleging Belk failed to provide proper notice required under the Act before obtaining background checks on individuals applying for jobs).

Smith v. American Health Associates, Inc., No. 6:16-cv-03480 (D.S.C. October 25, 2016) (purported collective action and class action brought under FLSA and state wage and hour laws by phlebotomists alleging AHA failed to pay overtime and improperly deducted wages for mileage reimbursement).

Humphery v. Fluor Enters., Inc., No. 0:16-cv-03474 (D.S.C. October 24, 2016) (purported collective action and class action brought under FLSA and state wage and hour laws alleging defendant failed to pay manual laborers overtime wages).

King v. Check Recovery Bureau, Inc., No. 6:16-cv-03357 (D.S.C. October 11, 2016) (putative class action brought on behalf of consumers residing in South Carolina alleging violations of the Fair Debt Collection Practices Act).

Phillips v. Smithfield Packing Co., Inc., No. 5:16-cv-00834 (E.D.N.C. October 4, 2016) (asserting collective and class action claims under FLSA and state wage and hour laws brought by workers of a pork processing plant alleging that defendant failed to pay workers overtime).

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Business Court Warns of Enhanced Scrutiny for Disclosure-Only Merger Settlements

View David Wright's Complete Bio at robinsonbradshaw.com We have previously commented about “disclosure only” settlements in class action merger cases, and the increasing scrutiny provided to them by courts here and in Delaware. Judge Bledsoe entered the fray yesterday, approving a settlement of litigation involving the merger of Yadkin Financial Corporation and NewBridge Bancorp in a 44-page order. In a stark preamble to his findings, Judge Bledsoe gave warning that the Business Court would likely be joining their brethren in Delaware in strictly reviewing such settlements in the future. The Court characterized such a shift as a “marked departure from [the Business Court’s] past practices in connection with the consideration of such motions,” and therefore “decline[d] to apply enhanced scrutiny to its consideration of the Motions” in the case before it.

But that reprieve is likely short-lived. In the next sentence, Judge Bledsoe “expressly advises the practicing bar that judges of the North Carolina Business Court, including the undersigned, may be prepared to apply enhanced scrutiny of the sort exercised in In re Trulia Stockholder Litigation, to the approval of disclosure-based settlements and attendant motions for attorneys’ fees hereafter.” We characterized this Delaware authority as “sound[ing] a trumpet of skepticism concerning ‘disclosure only’ settlements.”

The Settlement Agreement reviewed by the Business Court in the NewBridge Bancorp case provided that the Defendants would not object to a fee petition up to $300,000, and—to a penny—that’s what Plaintiffs’ counsel sought in the case. In this space, we have observed that the entry into a disclosure-only settlement “is a ‘kumbayah’ occasion for plaintiffs’ and defense counsel,” and Judge Bledsoe reiterates this point, albeit it in a less colloquial manner, agreeing with the Delaware courts that “the trial court’s assessment typically occurs, as it does here, without the benefit of an adversarial process.”

The Court, after reviewing applicable authority, cut the requested fee award from $300,000 to about $160,000. There were two principal reasons for the reduction. First, the Court concluded that “collectively, the Supplemental Disclosures were only of marginal benefit to the Class.” Indeed, the Court found no “substantial evidence that any of the Supplemental Disclosures were significant to a reasonable shareholder’s decision in voting on the Proposed Transaction.” Second, the Court observed that the average hourly rate charged by Plaintiffs’ counsel was “above the hourly rate customarily charged in North Carolina for similar services” and that “the demands of the Consolidated Action did not require Plaintiffs to retain counsel from outside North Carolina in order to prosecute” the case.

The Court, in contrast to Delaware decisions like Trulia, did not closely scrutinize the claims released by class members as part of the settlement. Judge Bledsoe, in two footnotes, indicated that future requests for approval of disclosure-based settlements will involve such consideration. He stated that the scope of the release needs to be an express factor in the Court’s analysis in future cases, but that the Court was “reluctant to set aside the settlement in light of the approval of prior similar settlements by the Business Court.” In this regard, Judge Bledsoe’s Newbridge Bancorp decision is similar to the Chancery Court’s ruling in In re Riverbed Technology, Inc. Stockholders Litigation, where Chancellor Glasscock explained that, “given the past practice of this Court in examining settlements of this type, the parties in good faith negotiated a remedy—additional disclosures—that has been consummated, with the reasonable expectation that the very broad, but hardly unprecedented, release negotiated in return would be approved by this Court.”

In Delaware, the Chancery Court—having apparently concluded that counsel and the parties were sufficiently on notice following its warning in Riverbed—refused to approve a settlement outright in Trulia, just four months later. Merger challenges in Delaware have significantly declined in the months since that decision.

The effect of Judge Bledsoe’s decision on merger litigation in North Carolina remains to be seen, but this admonition from the Business Court must be reckoned with by shareholders considering class filings in future North Carolina merger litigation.

(Adam Doerr and Tommy Holderness of our firm represented the members of the NewBridge Bancorp Board of Directors in this litigation.)

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