Henkel v. Aschinger, 167 Ohio Misc. 2d 4

Shareholders filed derivative and direct challenges to a cash merger of Pinnacle Data Systems, Inc. (PDSi) with Avnet, Inc. for $2.40 per share, valued about $22 million.
A special shareholder meeting was noticed; the proxy statement included GBQ’s fairness opinion.
Defendants moved to dismiss, arguing lack of standing for direct claims and improper Civ.R. 23.1 pleading for derivative claims, plus lack of demand futility and verification failures.
The consolidated complaint references material omissions in the proxy and challenges the fairness opinion, the no-shop clause, and the breakup fee.
Discovery was broad but the complaint remained generic; the court allowed proxy-documents to be considered on a motion to dismiss and treated them as central to the claims.
The court dismissed direct claims for lack of individualized injury and required derivative pleading; derivative claims were later dismissed for failure to meet presuit demand and verification requirements; Avnet’s aiding-and-abetting and other claims were also dismissed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether direct claims can proceed or only derivative claims exist	Plaintiffs seek a Civ.R. 23 class action for their own interests.	Only a derivative remedy exists for common shareholder injury; direct claims lack standing.	Direct claims dismissed; remedies limited to derivative claims.
Whether presuit demand was futile and excused for the derivative claims	Demand would have been futile given speed of deal and director conflicts.	No particularized facts show futility; demand should have been made.	No substantial likelihood of futility; demand not excused; derivative claims dismissed.
Whether the proxy disclosures were legally sufficient to support claims of fiduciary breach	The proxy omits material facts and GBQ’s fairness opinion was flawed.	Proxy provides material information; omissions are not material under standards of disclosure.	Proxy disclosures deemed adequate; no material omissions shown.
Whether the derivative claims were properly verified	Verification provided, albeit late, should suffice under Surowitz.	No proper verification; affidavits are missing or defective; precludes standing.	Verification deficient; derivative claims dismissed.

Surowitz v. Hilton Hotels Corp., 383 U.S. 363 (1966) (verification is to prevent strike suits while not blocking meritorious claims)
Weston v. Weston Paper & Mfg. Co., 74 Ohio St.3d 377 (1996) (demands under Civ.R. 23.1 require particularized futility showing)
In re Ferro Corp. Derivative Litig., 511 F.3d 611 (6th Cir. 2008) (demand futility must be evaluated with respect to the specific causes of action)
Adair v. Wozniak, 23 Ohio St.3d 174 (1986) (concept of injurious impact on shareholders informs derivative standing)