A federal judge in Delaware last week dismissed a class action investor lawsuit against SunCoke Energy Partners that alleged the company violated securities laws when its board of directors and an independent conflicts committee approved its 2019 merger with SunCoke Energy Inc.
In addition to federal securities laws, the April 2019 lawsuit filed by lead investor Michael Cohn alleged the defendants violated their obligations under the SunCoke Energy Partners (SXCP) partnership agreement and Delaware state laws because they breached their duty of good faith while evaluating the deal and did not make a fully-informed, non-conflicted vote when they approved the transaction.
The defendants named in the lawsuit included SXCP; its general partner, SunCoke Energy Partners GP LLC; and the members of both entities’ board of directors.
The plaintiffs had also claimed the equity holders were not provided with enough information to make an informed decision on the transaction, but as U.S. District Judge Colm F. Connolly pointed out in his ruling, that argument does not apply because the investor votes were not needed to authorize the merger.
Issued Wednesday, Judge Connolly’s compact, 11-page ruling dissected multiple aspects of the plaintiffs’ arguments in quick succession, ultimately finding that the plaintiffs failed to adequately plea their securities violations arguments and that their other claims lacked standing.
Lawyers on both sides were not immediately available for comment.
The lawsuit was filed two months after the February 2019 announcement of the merger, which the defendants called a simplification transaction. At the time the deal was announced, SunCoke and SXCP said the deal would give SXCP an estimated enterprise value of $1.52 billion.
Texas lawyers from Akin Gump advised the conflicts committee of SXCP’s general partner during the deal, which led Dallas Akin Gump litigators Michelle Reed and Scott Barnard to represent the conflicts committee in the resulting litigation.
The same happened with Baker Botts. During the deal, New York and Texas-based lawyers from the firm represented the buyer, SunCoke Energy, which closed on its acquisition of SXCP last June by purchasing the remaining SXCP units it did not already own via a stock swap.
Houston Baker Botts securities litigator David Sterling is among a group of lawyers representing SXCP and five of the individual directors named in the litigation. Others involved from Baker Botts’ Houston office include partner and firm deputy general counsel Paul Elliott and associate Matt Allen, who recently left the firm.
Delaware lawyers from Potter Anderson & Corroon and Morris, Nichols, Arsht & Tunnell are also on the defense team.
The plaintiffs’ legal team is from Faruqi & Faruqi in Delaware.