Louis Gottlieb argues on behalf of investors harmed by power company
In an attempt to throw out a proposed class action alleging Eaton Corporation cost shareholders $3 billion when it could not spin off its automotive division tax free, Firm partner Louis Gottlieb argued on behalf of the proposed class. Gottlieb noted, while there was no legal bar to a spinoff, there was an economic one, since it could not be done tax-free.
“The ability to do it in the real world was taken away,” he said. “It would have been economically impossible to spin off the automotive division in that time period.”
But Gottlieb said that company officials repeatedly implied to analysts that Eaton could spin off the division whenever it wanted. “They continually implied and misrepresented that they had the ability to do it,” adding later, “By ability I don’t mean the theoretical ability, but the practical ability.”
He told the judge that when the tax implications became clear, the stock experienced its largest price drop in six years and three analysts downgraded it the next day.