August 13, 2009

Paul, Weiss Obtains Affirmation of Class Action Settlement for CP Ships

On August 13, the United States Court of Appeal for the Eleventh Circuit affirmed the district court's final approval to a class action settlement between our client, global container shipping company CP Ships, and a class of CP Ships' shareholders. The lawsuit was triggered by two restatements the company made in May and August 2004, and a series of stock sales company insiders made in the months between the two restatements. In 2007, we succeeded in having the case dismissed, and plaintiffs appealed that decision to the Eleventh Circuit. While the appeal was pending, we reached an agreement with plaintiffs to certify a settlement class and settle the case for $1.3 million. The settlement was attacked by two shareholders in league with Canadian plaintiffs' lawyers who had filed three parallel securities class actions in Canada and who were unhappy that the settlement of the U.S. case would likely have the effect of reducing the size of the Canadian class actions. The first attack on the settlement failed when we were successful in arguing that the shareholder objector lacked standing to object to the settlement. The second, and final, attack on the settlement was brought by a Canadian shareholder who bought on the NYSE, but had not opted out of the class. The primary argument on appeal was whether the district court had subject matter jurisdiction over Canadian citizens who bought on the NYSE and over foreign investors who purchased on the Toronto Stock Exchange. Adopting the arguments we advanced in our briefs and at argument, the Eleventh Circuit unanimously held that the district court had subject matter jurisdiction because the objector had made only a facial challenge to jurisdiction, requiring the Court to accept the allegations regarding jurisdiction in the complaint as true, and the complaint alleged sufficient facts to find jurisdiction existed. The Court also held that notice to the class had been adequate and the settlement was fair, reasonable and adequate. The Paul, Weiss team on the Eleventh Circuit appeal included litigation partner Dan Kramer, who argued the appeal, counsel Amy Barton, associates Aaron Delaney and Rebecca Kinburn and paralegal Matthew Kane.