Dismissal of shareholder challenge to Lubrizol's $9.7 billion merger with Berkshire Hathaway upheld on appeal

Client(s) Board of directors of The Lubrizol Corporation

Jones Day represented the board of directors of The Lubrizol Corporation in class-action and derivative litigation challenging the company's merger with Berkshire Hathaway, Inc., in a transaction valued at approximately $9.7 billion.

The plaintiffs first sought to enjoin the transaction, but withdrew their injunction motion on the eve of a hearing. The transaction closed as scheduled with no changes to the deal terms. After closing, the plaintiffs asserted claims for monetary damages against the directors for breach of fiduciary duties in connection with the sale of the company. The trial court dismissed the complaint, finding that, under Ohio law, the plaintiffs' class-action claim could be asserted only derivatively and that the plaintiffs lacked standing to maintain their derivative claim.

The appellate court affirmed dismissal, finding that the complaint failed to plead demand futility and therefore the plaintiff lacked standing to sue derivatively. The court concluded that allegations criticizing the deal negotiation process did not undercut the board's disinterestedness and good faith, neither did allegations that senior management received financial benefits as a result of the transaction.

The company was represented by in-house attorney Jeffrey Lauderdale.

In re The Lubrizol Corporation Shareholder Litigation, No. 11-CV-000684 (Lake Cty., Ohio) (Judge Culotta), aff'd, 11th Dist. Lake No. 2016-L-026, 2017-Ohio-622