© 2015 The Texas Lawbook.
By Dave Moore(July 28) – If the lawsuits were baseball games, shareholders and their lawyers trying to stop two San Antonio-based oil and gas pipeline and storage companies from merging were blown out in the first inning.
Only days after Tesoro Logistics and QEP Midstream Partners announced their plans for a $400 million merger, lawyers representing shareholders filed two class-action lawsuits to stop the combination.
Shareholders W. Joss Sanderson and Randy Behner claimed in their lawsuits filed in May that merger-related securities filings were too vague, omitted material facts and that the filings didn’t fully address the financial ramifications if Tesoro and QEP merged.
Specifically, the lawsuits claimed that a proxy statement circulated by the companies ahead of a shareholder vote contained material omissions in violation of federal securities laws. The plaintiffs also alleged that the statement failed to properly describe the duties and authority of a committee that would oversee the merger. Finally, the lawsuit claims that the companies did not spell out how the merger would affect share prices.
Tesoro General Counsel Charles Parrish turned to Norton Rose Fulbright partner Gerry Pecht to lead the fight against the shareholder litigation, which can be time consuming, expensive and delay proposed mergers for months. The firm also represented Tesoro in the QEP acquisition.
In response to Pecht’s filing, lawyers for Sanderson and Behner asked U.S. District Judge Orlando L. Garcia to dismiss the cases. The plaintiffs and defendants agreed to cover their own legal costs.
“I think that after the plaintiffs got that info, they understood their case didn’t have merit and they dropped the case,” said Pecht. “The greatest success you can have as a defense lawyer is where early in the case you convince the opposing side that their case has no merit.”
Pecht said the successful counter to the dual class-action lawsuits saved both sides considerable litigation costs.
“If you can explain yourself to the other side early on, and they can see your position early on, it’s the right thing for them to do,” says Pecht. “A lot of the class-actions that we handle, this doesn’t happen often.”
Several efforts were unsuccessful to reach the lead plaintiff attorneys Meredith Black-Mathews of Dallas-based Powers Taylor and Willie C. Briscoe of Dallas-based The Briscoe Law Firm.
If the Sanderson/Behner litigation had gained legal traction, Pecht said it threatened to stall Tesoro’s acquisition of QEP’s natural gas operations in the Rocky Mountains, including gas-processing plants and gas pipelines. In October, Tesoro announced a $2.5 billion deal to absorb QEP Resource’s business. Then, on July 22, Tesoro announced it finalized the merger, effectively eliminating QEP’s ticker symbol (QEPM) from the New York Stock Exchange.
As a result, QEP (NYSE: QEPM) is now a wholly owned subsidiary of Tesoro Logistics (NYSE: TLLP). QEP’s common units also will cease trading on the New York Stock Exchange.
An analysis by The Texas Lawbook shows that securities-related civil litigation in Texas has remained fairly steady over the past three years. This year, between January and July 24, plaintiffs filed 47 securities-related lawsuits in Texas federal courts. Nine of those cases were civil matters filed by the Securities & Exchange Commission. Last year, plaintiffs filed 42 in the same period of time, seven of which were initiated by the SEC.
© 2015 The Texas Lawbook. Content of The Texas Lawbook is controlled and protected by specific licensing agreements with our subscribers and under federal copyright laws. Any distribution of this content without the consent of The Texas Lawbook is prohibited.
If you see any inaccuracy in any article in The Texas Lawbook, please contact us. Our goal is content that is 100% true and accurate. Thank you.