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Saturday, June 15, 2024 | Back issues
Courthouse News Service Courthouse News Service

Bid to Certify Defendant Class Given the Boot

(CN) - A federal judge refused to certify a defendant shareholder class in an action over a $2 million tax liability that allegedly accrued from a breached merger deal.

Massachusetts-based Mercury Systems, a maker of big data-processing systems, acquired KOR Electronics, a California defense and intelligence company, for $70 million in 2011.

Shareholder Representative Services was designated as the agent, or proxy, of KOR stockholders with the power to act on behalf of all shareholders on matters arising out of the merger agreement.

But Mercury Systems claimed in a 2013 lawsuit against Shareholder and others that the breach of the merger agreement left it with more than $2 million in tax liabilities.

U.S. District Judge Richard Stearns refused Friday to let the plaintiff succeed in "seldom-seen litigating gambit, the certification of a defendant class."

"It takes no stroke of legal acumen to recognize that all the certification of a class of defendant security-holders will accomplish is an escalation of the procedural complexity of this litigation and its cost, while eviscerating the salutary purpose of having appointed a shareholder representative in the first place," he wrote.

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