The $590.5M settlement that disbursed last month for a case against seven firms was not your average run of the mill securities class action scenario. The case is interesting because unlike the majority of class actions, the defendants were not the original security issuers. Instead, the case was brought against the firms that took the securities private through leveraged buyouts (LBO) of the security issuers. Seven firms contributed to the total settlement pool, affecting eight groups of shareholders. Another interesting aspect is the quickness with which the case disbursed. The claim deadline was in December of 2014 and it paid out just six months later in June 2015. On average, a typical case will pay out in 12-15 months of the claim deadline date. This is also a relatively large settlement, which indicates there were large, widespread losses incurred by investors.

The plaintiffs alleged that the defendants had violated the United States federal antitrust laws by participating in conspiracies to limit competition amongst themselves with the goal of reducing the sale prices of the publicly-traded companies that were acquired pursuant to the LBOs. The firms’ anticompetitive conduct was alleged to have caused the shareholders of each company to receive a depressed price per share in the LBOs, resulting in economic damages to the class members. The defendants continue to deny liability and any wrongdoing for the claims asserted. The plaintiffs and defendants agreed to the settlement to avoid further expense, inconvenience and distraction of protracted litigation.

The LBOs included in the settlement are:

• AMC Entertainment Inc.
• Aramark Corp.
• Freescale Semiconductor
• HCA, Inc.
• Harrah’s Entertainment Inc.
• Kinder Morgan Inc.
• Sungard Data Systems
• Energy Future Holdings

The challenges of filing claims in this case related to positively distinguishing the open market transactions from shares that were tendered in each of the LBOs. It also creates opportunities to misinterpret transactions and miss an opportunity to file a claim because a transaction may not have been recognized as being a tender transaction. Without the proper knowledge and expertise, there is a lot of room for error incorrectly addressing such a complex case.

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