On June 28, 2017, a securities class action complaint, captioned Timber Hill LLC v. Pershing Square Capital Management, L.P., et al., (the “Action”), was filed in the Court on behalf of all persons or entities that sold Allergan, Inc. call options, purchased Allergan, Inc. put options and/or sold Allergan, Inc. equity forward contracts from February 25, 2014 through April 21, 2014, inclusive. Timber Hill alleged that Defendants violated the federal securities laws through their illicit insider trading and front-running scheme that financially damaged Timber Hill and similarly situated investors by artificially deflating the value of the underlying security and the options and equity forwards traded by Timber Hill and the members of the Class.
Timber Hill’s allegations are also the subject of another related action, In re Allergan, Inc. Proxy Violation Securities Litigation, Case No. 8:14-cv-2004-DOC (KESx) (“the Common Stock Class Action”), filed in the Court on December 16, 2014. In that action, on March 15, 2017, the Court issued an order (“Class Certification Order”) certifying a class (the “Common Stock Class”) consisting of: “All persons who sold Allergan, Inc. common stock contemporaneously with purchases of Allergan, Inc. common stock made or caused by Defendants during the period February 25, 2014 through April 21, 2014, inclusive and were damaged thereby.”
In certifying the Common Stock Class, the Court also denied Defendants’ separate motion to dismiss for failure to join necessary parties under Federal Rule of Civil Procedure 19(a)(1)(B)(i). In so doing, the Court concluded that derivatives traders “can also be given notice the same time the Class members are given notice of this lawsuit meaning they will have notice and opportunity to intervene to bring their own claims before the case is resolved.”
On April 28, 2017, the plaintiffs in the Common Stock Class Action filed a motion seeking approval of notice to the class of the pendency of the Common Stock Class Action. On June 5, 2017, the Court issued an Order denying the plaintiffs’ motion for an order approving the class notice, recognizing that “[t]he derivatives traders’ potential interests seem more analogous to those of dropped class members, who may have valid claims, but whose claims will not be pursued through this litigation.” The Court further noted that “the derivatives traders may have a stronger interest than absent class members, as their hypothetical claims may be essentially precluded if Plaintiffs prevail here.” In this regard, the Court also held that if the plaintiffs “recover all of Defendants’ gains or losses avoided that there will be nothing left for others to recover who were allegedly harmed by Defendants conduct.” On June 12, 2017, the plaintiffs in the Common Stock Class Action filed a motion seeking the Court’s approval of a modified Notice and Summary Notice of Pendency of Class Action. On June 14, 2017, the Court issued an Order approving the plaintiffs’ modified Notice and Summary Notice, finding that the notices “satisfactorily incorporate reference to the likelihood of a damages cap” pursuant to the Court’s June 5, 2017 Order. Plaintiffs’ approved Notice of Pendency of Class Action states:
IF YOU TRADED PRICE-INTERDEPENDENT DERIVATIVE SECURITIES OF ALLERGAN, INC. (I.E., DERIVATIVE SECURITIES WITH A VALUE THAT IS A FUNCTION OF OR RELATED TO THE VALUE OF ALLERGAN, INC. COMMON STOCK (“ALLERGAN, INC. DERIVATIVE SECURITIES”), YOUR TRANSACTIONS IN THOSE SECURITIES ARE NOT COVERED BY THE ACTION. THE COURT HAS NOT DETERMINED, AND THIS NOTICE DOES NOT EXPRESS ANY OPINION AS TO, WHETHER TRADING IN ALLERGAN, INC. DERIVATIVE SECURITIES GIVES RISE TO ANY CLAIMS. BUT BECAUSE DEFENDANTS’ LIABILITY FOR DAMAGES IS LIKELY CAPPED AT THEIR GAINS OR LOSSES AVOIDED FROM THE SECURITIES LAW VIOLATIONS ALLEGED IN THIS ACTION, IT IS POSSIBLE THAT PLAINTIFFS WILL RECOVER THE ENTIRETY OF THE DAMAGES POOL AVAILABLE TO PERSONS ALLEGEDLY HARMED BY THE DEFENDANTS’ CONDUCT. IF SO, IT IS POSSIBLE THAT THERE WILL BE NOTHING LEFT FOR OTHERS TO RECOVER FROM DEFENDANTS ON ANY SIMILAR CLAIMS AGAINST DEFENDANTS THAT THEY MAY HAVE AND THOSE CLAIMS MAY BE EFFECTIVELY PRECLUDED.
Thus, Timber Hill and other members of the Class in the present action are expressly excluded from the Common Stock Class Action.
The parties in the Common Stock Class Action engaged the Hon. Layn R. Phillips, a well-respected former United States District Judge and highly experienced settlement mediator, and Gregory Lindstrom to assist them in exploring a potential negotiated resolution of the claims asserted against Defendants. Timber Hill subsequently became involved in the settlement negotiations with Defendants regarding the Action, and participated in negotiations assisted by both mediators.
On December 28, 2018, following multiple lengthy mediation sessions with Judge Phillips, conducted in person and by telephone, Timber Hill and Defendants entered into a binding Memorandum of Understanding to settle the Action for $40 million. Following the hearing held on January 16, 2018, the Settling Parties agreed to the settlement set forth in this Stipulation.
Prior to agreeing to settle the Action, Timber Hill, through Class Counsel, conducted a thorough investigation of the claims, defenses, and underlying events and transactions that are the subject of the Action. This investigation and Class Counsel’s efforts included, among other things: (i) review and analysis of the evidence and applicable law, including the review and analysis of hundreds of thousands of pages of documents produced by plaintiffs in the Common Stock Class Action, Defendants and third parties; (ii) consultation with experts retained by Class Counsel; and (iii) engaging in motion practice.
On March 19, 2018, the Court entered its Order Granting Preliminary Approval of Class Action Settlement, Approving Form and Manner of Notice, and Setting Date for Hearing on Final Approval of Settlement, which preliminarily approved the Settlement, authorized that this Notice be sent to Class members, and scheduled the Settlement Hearing to consider whether to grant final approval to the Settlement.
Please read the Notice of Proposed Settlement and Motion for Attorneys’ Fees and Expenses (“Notice”) to fully understand your rights and options.
Your legal rights will be affected whether you act or do not act. If you do not act, you may permanently forfeit your right to recover on this claim. Therefore, you should read the Notice carefully.