November 20, 2017
On November 20, 2017, Weil won the dismissal of all claims in a putative shareholder class action in Florida state court arising from Revlon, Inc.’s acquisition of Elizabeth Arden, Inc., a Florida corporation, which closed in September 2016. Weil represented the former directors of Elizabeth Arden and filed the lead motion to dismiss brief on behalf of defendants.
Plaintiffs’ second amended complaint asserted claims for breach of fiduciary duty against the Elizabeth Arden directors and for aiding and abetting breach of fiduciary duty against various other defendants. Specifically, plaintiffs alleged that the acquisition price materially undervalued Elizabeth Arden, that the sale process was inadequate and unfair, and that the proxy statement filed by Elizabeth Arden with the United States Securities and Exchange Commission failed to disclose material information regarding the financial analyses conducted by the Elizabeth Arden Board’s financial advisor.
In its order granting defendants’ motions to dismiss, the court agreed with the Elizabeth Arden directors’ argument that plaintiffs lacked standing because, under Florida law, their claims are derivative, and not direct, absent allegations of both direct harm and a “special injury” to plaintiffs. Applying settled principles of Florida law, the court held that “the allegations asserted by plaintiffs do not seek to redress injuries sustained directly by Plaintiffs. Rather, claims concerning the inadequacy of the Merger Consideration, the sales process, and the failure to disclose material information in the Proxy, if true, do not constitute injuries that are separate and distinct from those sustained by other shareholders generally. As such, Plaintiffs’ claims relating to the merger can only be derivative.” Thus, the court dismissed plaintiffs’ claims in their entirety because “Plaintiffs no longer own [Elizabeth Arden] stock” and, therefore, do not have standing to pursue derivative claims on behalf of Elizabeth Arden.