Emulex Corp. v. Varjabedian

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Supreme Court of the United States
Emulex Corp. v. Varjabedian
Term: 2018
Important Dates
Argument: April 15, 2019
Decided: April 23, 2019
Outcome
Dismissed as improvidently granted
Vote
N/A
Majority
Per curiam

Emulex Corp. v. Varjabedian is a case argued before the Supreme Court of the United States on April 15, 2019, during the court's 2018-2019 term.

The case concerned Section 14(e) of the Securities Exchange Act of 1934. It came on a writ of certiorari to the United States Court of Appeals for the 9th Circuit.[1] On April 23, 2019, the court dismissed the writ of certiorari as improvidently granted.[2] Click here for more information.

HIGHLIGHTS
  • The case: In May 2015, Emulex Corp., a technology company, merged with Avago Technologies Wireless Manufacturing, Inc. Avago had agreed to pay $8.00 per share for outstanding Emulex stock—26.4 percent higher than the value of Emulex stock at the time of the merger's announcement. Goldman Sachs concluded the offer was fair but believed a 26.4 percent premium was below average compared to similar mergers. After the merger, some Emulex shareholders brought a class action lawsuit against Emulex and Avago, alleging the companies misled them and violated federal securities laws, specifically Section 14(e) of the Securities Exchange Act. The district court dismissed the lawsuit, but the 9th circuit reversed part of the district court's ruling.
  • The issues: Whether the 9th Circuit correctly held, in express disagreement with five other courts of appeals, that Section 14(e) of the Securities Exchange Act of 1934 supports an inferred private right of action based on a negligent misstatement or omission made in connection with a tender offer.[3]
  • The outcome: The court dismissed the writ of certiorari as improvidently granted.


    • You can review the lower court's opinion here.[4]

    Timeline

    The following timeline details key events in this case:

    • April 23, 2019: U.S. Supreme Court dismissed the writ of certiorari as improvidently granted
    • April 15, 2019: Oral argument
    • January 4, 2019: U.S. Supreme Court agreed to hear case
    • October 11, 2018: Petition filed with U.S. Supreme Court
    • April 20, 2018: 9th Circuit affirmed in part, reversed in part, and remanded in part the case

    Background

    On February 25, 2015, Emulex Corp., a Delaware-incorporated technology company, and Avago Technologies Wireless Manufacturing, Inc. issued a statement announcing a merger agreement where Avago agreed to pay $8.00 for every share of outstanding Emulex stock. Avago's $8.00-per-share offer was 26.4 percent higher than the value of Emulex stock as of February 25, 2015.[4][5] Pursuant to the terms of the merger, an Avago subsidiary, Emerald Merger Sub, Inc., initiated a tender offer for Emulex's outstanding stock on April 7.[4]

    Emulex hired Goldman Sachs to determine if Emerald Merger Sub's tender offer was fair to Emulex's shareholders. Goldman Sachs concluded the offer was fair, although they believed the 26.4 percent premium was below average compared to similar mergers. Emulex then filed a statement with the Securities and Exchange Commission (SEC) recommending stockholders tender their shares.[4][5]

    The merger took place on May 5, 2015. However, some of the shareholders believed the $8.00-per-share price was inadequate and argued they had been misled. These shareholders (the plaintiffs) brought a class action lawsuit against Emulex, Avago, Emerald Merger Sub, and the Emulex board of directors (the defendants). The plaintiffs alleged that the defendants violated federal securities laws, specifically Section 14(e) of the Exchange Act, by failing to summarize Goldman Sach's analysis of a below-average premium.[4][5]

    The district court dismissed the complaint. The 9th Circuit affirmed the district court's dismissal of one claim regarding Section 14(d) of the Exchange Act and reversed the district court's dismissal of the Section 14(e) claim. In doing so, the 9th Circuit disagreed with five other circuit court interpretations of Section 14(e).[5]

    Emulex appealed to the Supreme Court. On January 4, 2019, the court agreed to hear the case.

    Questions presented

    The petitioner presented the following questions to the court:[3]

    Questions presented:
    • Whether the Ninth Circuit correctly held, in express disagreement with five other courts of appeals, that Section 14(e) of the Securities Exchange Act of 1934 supports an inferred private right of action based on a negligent misstatement or omission made in connection with a tender offer.

    Outcome

    In a per curiam decision, the court dismissed the writ of certiorari as improvidently granted.[2] A per curiam decision is issued collectively by the court. The authorship is not indicated. Click here for more information.

    Dismissed as improvidently granted, often referred to as DIG, occurs when the court chooses not to decide a case, even after accepting the appeal or hearing the arguments.[6]

    Text of the opinion

    Read the full opinion here.

    Audio


    Transcript

    See also

    External links

    Footnotes

    1. ↑ Supreme Court of the United States, "18-459 Emulex Corporation, et al., Petitioners v. Gary Varjabedian, et al.," accessed March 7, 2019
    2. ↑ 2.0 2.1 Supreme Court of the United States, Emulex Corp. v. Varjabedian, April 23, 2019
    3. ↑ 3.0 3.1 Supreme Court of the United States, "18-459 Emulex Corporation, et al., Petitioners v. Gary Varjabedian, et al.," accessed March 7, 2019
    4. ↑ 4.0 4.1 4.2 4.3 4.4 SCOTUSblog, "Emulex Corp. v. Varjabedian," accessed March 7, 2019
    5. ↑ 5.0 5.1 5.2 5.3 Oyez, "Emulex Corp. v. Varjabedian," accessed March 7, 2019
    6. ↑ Porter Wright, "Can you 'DIG' it? The dismissal of appeals as improvidently granted," accessed April 23, 2019
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