Papa Murphy’s Investors Seek Final Nod for $2.4 Million Deal

Papa Murphy’s Holdings Inc. investors who say it misled them ahead of a 2019 merger with MTY Food Group Inc. asked a federal judge in Washington state to sign off on a $2.4 million settlement.

The cash deal “represents approximately 6.75-17.25% of the potential damages, which exceeds the 1.8% median recovery in 2021 for securities class actions,” the take-and-bake pizza chain’s investors said in a final settlement approval motion in the U.S. District Court for the Western District of Washington.

Investors say Papa Murphy’s made misleading statements before MTY purchased the chain in 2019 in a deal worth $190 million. Judge Benjamin H. Settle in April 2021 adopted a magistrate judge’s recommendations and rejected the company’s request to throw out the case.

The parties settled following a “multi-month” negotiation process and reached a deal in October 2021 “less than an hour before” the U.S. Court of Appeals for the Ninth Circuit told Papa Murphy’s it could file an interlocutory appeal after Settle allowed the suit to move forward, the memo said. The appellate court’s permission “came as a surprise” to investors and increased the risks of pursuing the case.

The settlement covers investors who bought, sold, or held Papa Murphy’s common stock from April 25, 2019, through May 22, 2019, with exceptions for those with certain close ties to the company. “To date, there have been no objections to the Settlement and only one request for exclusion,” the Wednesday memo said.

Lead counsel Monteverde & Associates PC in a separate Wednesday filing asked for one-third of the settlement fund—$800,000—in attorneys’ fees. The firm also requested just over $9,000 as reimbursement for its litigation expenses.

Perkins Coie LLP represents Papa Murphy’s, which didn’t admit any wrongdoing.

The case is Brown v. Papa Murphy’s Holdings Inc., W.D. Wash., No. 3:19-cv-05514, final settlement approval motion filed 3/23/22.