BVF Partners L.P. v. New Orleans Employees' Retirement System
2012 Del. LEXIS 658
| Del. | 2012Background
- BVF appeals the Court of Chancery's certification of NOERS as class representative in Celera-Quest merger litigation.
- BVF challenges NOERS’ standing and argues NOERS was uniquely susceptible to equitable defenses, among other grounds.
- The Merger involved Spark’s tender offer at $8.00 per Celera share, a back-end merger, and a broad no-solicitation framework; a prior MOU granted therapeutic benefits rather than monetary gains.
- NOERS sold Celera stock four days before the short-form merger but remained stockholder when merger was approved, enabling it to fit the Settlement’s class definition.
- BVF objected to the non-opt-out settlement; the merger closed May 17, 2011, NOERS sold ahead of closing, and the settlement was approved months later, prompting BVF’s appeal.
- The court ultimately held NOERS had standing, affirmed certification under 23(b)(1) and (b)(2), but found error in denying BVF an opt-out discretionary right; case remanded for proceedings consistent with the opinion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing of NOERS to represent the class | NOERS had cognizable injury and fits the class definition | NOERS’ sale severed its stake, undermining standing | NOERS had standing to represent the class |
| Adequacy and typicality defenses against NOERS | NOERS did not acquiesce and was adequate | NOERS faced potential equitable defenses that could strip adequacy | NOERS sufficiently adequate; no abuse of discretion on adequacy/typicality |
| Rule 23(b)(1)/(b)(2) certification proper | Notwithstanding optics, certification aligned with precedent | Certification improperly combined equitable and monetary claims | Certification appropriate under Rule 23(b)(1) and (b)(2) |
| Discretionary opt-out right for BVF | Opt-out not necessary given global settlement | Discretionary opt-out rights should be denied to preserve settlement | Court abused discretion by denying discretionary opt-out; BVF must be allowed to opt out |
Key Cases Cited
- In re Beatrice Cos., Inc. Litig., 522 A.2d 865 (Del. 1987) (standing and class action principles in Delaware Chancery)
- Schultz v. Ginsburg, 965 A.2d 661 (Del. 2009) (stock ownership timing and standing rules in mergers)
- Bershad v. Curtiss-Wright Corp., 535 A.2d 840 (Del. 1987) (acquiescence defense to standing and typicality)
- Nottingham Partners v. Dana, 564 A.2d 1089 (Del. 1989) (Rule 23(b)(2) and opt-out considerations in class actions)
- Prezant v. De Angelis, 636 A.2d 915 (Del. 1994) (due process and adequacy of class representative; constitutional dimensions)
- In re Best Lock Corp. S'holder Litig., 845 A.2d 1057 (Del. Ch. 2001) (class action norms and certification standards)