Appraisal Action Leads To...

Some appraisal actions can have a long tail. In 2015, Verizon agreed to buy AOL. Shortly thereafter, some AOL shareholders demanded appraisal. The case worked its way through the Delaware Court system – something we covered on a few occasions. Ultimately, petitioners were awarded 2.6% below merger price. We covered some commentary discussing the AOL case in the context of other cases, including Dell.

Now the AOL appraisal case has resulted in a malpractice action against petitioners’ expert [from Law360, $$$]. The AOL Petitioners (now malpractice-Plaintiffs) allege that the expert they hired harmed their case, giving Respondent AOL ammunition as a result of emails and other message the expert sent to others, suggesting Petitioners had a poor case and that the expert allegedly held a “grudge” against Verizon for not hiring him. According to Petitioner-Plaintiffs, the result was that they had to drop the expert and rely on Respondent’s expert, which contributed to the award of below merger price. Plaintiffs are seeking damages for the lost value.

Does D&O insurance cover appraisal?  Last year we discussed this topic – and now Solera Holdings** has sued its D&O insurance providers alleging that they have refused coverage for the costs of the appraisal action as well as the interest Solera owes.

Here again we see an appraisal proceeding resulting in further litigation after the fact – here an insurance action, to go with the securities fraud actions we’ve seen before and breach of fiduciary duty litigation as well.

** This firm is counsel of record to petitioners in the Solera matter.