This Week in Chancery Court: Paramount, Snap Inc. Settlements

Settlements aiming to end shareholder lawsuits over the merger of CBS Corp. and Viacom Inc. that created Paramount Global, changes to the control structure at Snap Inc., and an Israeli-American oil company merger will be considered by the Delaware Court of Chancery this week.

Here’s a look at more from the court’s post-holiday calendar:

Tuesday: Samuels v. CCUR Holdings Inc., Del. Ch., No. 2021-0358, oral argument 9/5/23.

At issue: A former CCUR Holdings Inc. shareholder sued its board in 2021, claiming it wrongly wrote off insured funds seized in a drug bust when cashing out investors. The shareholder, Craig Samuels, now asks the court to certify a non-opt-out class consisting of holders of CCUR’s common stock whose fraction shares where cashed-out in the reverse stock split on April 22, 2021. The board argues the case has moved into “uncharted waters,” with Samuels seeking “all the benefits of a true appraisal proceeding with none of its restrictions.” Vice Chancellor Paul Fioravanti Jr. previously dismissed a breach of fiduciary duty claim against the board while allowing a claim alleging a statutory violation to survive.

Court action: Hearing on motion for class certification in Wilmington, Del.

SPAC Affiliate Faces Lawsuit After Drug Bust Drops Price (1)

Tuesday: Goyal v. Cognosante, Del. Ch., No. 2023-0018, oral argument via Zoom 9/5/23.

At issue: The founder of defense contractor Enterprise Information Services LLC sued its acquirer, Cognosante LLC, claiming the health technology business misclassified certain federal contracts to avoid making post-transaction payments. Cognosante has filed a motion for summary judgment stating that profitable post-closing growth “never materialized,” with EIS earning “significantly less than it did” when its founder sold it. Vinod Goyal, the plaintiff, filed a motion for partial judgment on the pleadings, alleging that “Cognosante raises a variety of blatantly flawed contract interpretations as justification for refusing to include, in the earnout calculations, the expected value of the twelve government contracts and subcontracts.”

Court action: Hearing on motions via Zoom.

Cognosante Sued for Post-Deal Payments by Founder of Acquisition

Wednesday: Ligos v. Tsuff, Del. Ch., No. 2020-0435, hearing 9/6/23.

At issue: Haim Tsuff, the Israeli businessman who took Isramco Inc. private through a $96.5 million merger with another of his affiliates, Naphtha Israel Petroleum Corp., has said he will pay $6.5 million to settle a shareholder case challenging the transaction. The lawsuit accused Tsuff of trying manipulate the price of the 2019 merger between Naphtha and Isramco by intentionally prolonging a separate arbitration proceeding over oilfield royalties; Vice Chancellor Sam Glasscock III allowed the case to move forward in August 2021.

Court action: Settlement hearing in Georgetown, Del.

Israeli Oilman Will Pay $6.5 Million to End Isramco Buyout Case

Wednesday: In re CBS Corp S’holder Class Action Deriv. Litigation, Del. Ch., No. 2020-0111, hearing 9/6/23.

At issue: Paramount Global directors have agreed to a $167.5 million settlement of CBS investors’ lawsuits over the controversial merger of CBS and Viacom that created the entertainment company. The investors claimed CBS directors—including board member Shari Redstone—overpaid for Viacom to help Redstone bolster her family’s media holdings. Her father bought the network in 1999 for $35 billion and then spun it off in 2005. Glasscock approved a separate $122.5 million settlement reached with Viacom investors in late July; that deal awarded over $29 million in attorneys fees and expenses, to be paid from the settlement fund. The deals are the latest twists in years of corporate battles involving the companies; the combined firm operated as ViacomCBS until it changed its name to Paramount Global last year.

Court action: Settlement hearing in Georgetown, Del.

Paramount Directors Agree to $168 Million Settlement Over Merger

Thursday: City of Warwick Retirement System v. SNAP Inc., Del. Ch., No. 2022-0679, hearing 9/7/23.

At issue: A pension fund sued Snap and its co-founders last year, challenging their plan to prop up the tri-class stock structure that would give them 99.5% voting power over the company despite their minority stake. The lawsuit accused Snap’s board of adopting charter amendments aimed at letting Evan Spiegel and Robert Murphy sell large amounts of stock without triggering a series of stock conversions intended to simplify the company’s structure and hand control over to public investors. The parties now ask Fioravanti to approve a settlement whose terms include amendments to the co-founders’ agreements, the appointment of a new, independent board director, and $6.65 million in attorneys fees and expenses.

Court action: Settlement hearing in Wilmington, Del.

Snap Founders Accused of Stock Scheme to Keep Perpetual Control