Morano v. Redfin Corporation
2:25-cv-00883
W.D. Wash.Jun 3, 2025Background
- Redfin Corporation's Board considered strategic alternatives in late 2024, ultimately negotiating a proposed merger with Rocket Companies, Inc.
- The merger terms offered Redfin shareholders a notable premium over recent trading prices, but Morano, a Redfin shareholder, challenged the adequacy of proxy disclosures ahead of a June 4, 2025 shareholder vote.
- Plaintiff filed a class action alleging violations of Sections 14(a) and 20(a) of the Securities Exchange Act and Delaware fiduciary duty law, and sought a preliminary injunction to stop the vote.
- The main claimed omissions involved Goldman Sachs’s potential conflict as financial advisor (due to lending relationships with Rocket) and failure to disclose certain financial projections used in the fairness analysis.
- After suit was filed, Redfin issued supplemental disclosures, including additional information on the challenged topics, but Morano argued they remained insufficient.
- The court’s decision was on the preliminary injunction, assessing whether the alleged omissions were material and whether Morano was likely to succeed on the merits.
Issues
| Issue | Morano's Argument | Redfin's Argument | Held |
|---|---|---|---|
| Omission of size of Goldman’s lending commitment to Rocket | Proxy omits material facts about Goldman Sachs’s conflict; the amount is necessary for shareholders to judge fairness opinion | All material information is publicly available (SEC filings, declarations); no material omission | No material omission—public filings disclose lending details; info is in "total mix" |
| Omission of NOL financial projections in fairness analysis | Proxy hides key data used in Goldman Sachs’s discount analysis, impeding informed vote | Supplemental disclosures now provide these projections; claim is moot | Moot—supplemental disclosures cured this omission |
| Section 20(a) control person liability | Section 20(a) liability derives from primary Section 14(a) claim | Plaintiff can’t establish Section 14(a) violation | No likelihood of success—derivative claim fails as primary claim fails |
| Delaware law breach of disclosure duty | Omitted lending info is material under Delaware law, altering "total mix" | Info is already available; omission not material | No likelihood of success—not a material omission under Delaware law |
Key Cases Cited
- Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7 (Supreme Court established standard for preliminary injunctions)
- TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438 (Defined "materiality" in the context of proxy disclosure omissions)
- Garcia v. Google, Inc., 786 F.3d 733 (Likelihood of success is threshold and most important factor for injunction)