In re Barnes & Noble Stockholders Derivative Litigation
We obtained $29 million in settlements on behalf of B&N investors in this derivative litigation, alleging abuse of fiduciary duties by the B&N defendants.
This Action alleges wrongdoing by the Barnes & Noble, Inc. (the "Company" or "B&N") directors for recklessly causing the Company to acquire Barnes & Noble College Booksellers, Inc. ("College Books") (the "Transaction") from B&N's founder, Chairman and controlling stockholder, Leonard Riggio ("Riggio") at a grossly excessive price, subjecting B&N to excessive risk.
On August 7, 2009, B&N agreed to acquire the privately-held College Books from Riggio, in a transaction valued at $596 million. In the Acquisition, B&N received the "Barnes & Noble" trade name, which was owned by College Books and which B&N licensed from College Book and College Books' brick and mortar operations. The Transaction was completed on September 30, 2009.
The Action alleges that as a controlling stockholder of B&N, Riggio is obligated to sell College Books at a price entirely fair to B&N's stockholders and engage in a process that is also entirely fair. The Action further alleges that the B&N Board members acted disloyally and caused B&N to waste valuable corporate assets by allowing the B&N Chairman and 32.1% shareholder, Riggio, to force B&N to acquire his company, College Books, at an unfairly high price, exposing B&N to substantial increased risk.
On October 21, 2010, ruling from the bench, the Court allowed most of co-lead plaintiffs' claims for breach of fiduciary duty to survive against Riggio and all but two of the remaining B&N directors.
On December 23, 2011, all defendants except for Leonard Riggio, the Company's founder, Chair and controlling shareholder, filed motions for summary judgment and supporting briefs. On March 27, 2012, the Court heard oral argument on defendants' motions for summary judgment. Ruling from the bench, the Court allowed co-lead plaintiffs' claims for breach of fiduciary duty to proceed to trial against Riggio and two of the remaining B&N directors.
On June 13, 2012, the parties entered into a formal Settlement Agreement, which includes the following terms: (i) a $22,750,000.00 reduction in the purchase price for College Books; and (ii) a $6,256,250.00 reduction in the remaining interest payable on the Junior Seller Note for College Books through its maturity date. Together, this represents a $29 million benefit to B&N shareholders.