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Appellate Court Affirms Dismissal of Suit Against Elliott Associates Challenging Compuware Merger

The Michigan Court of Appeals affirmed a circuit court’s dismissal, on summary judgment, of a lawsuit against Paul, Weiss client Elliott Associates and others related to Thoma Bravo’s 2014 acquisition of Compuware Corporation.

In their lawsuit filed in circuit court in Wayne County, Compuware’s former chairman and CEO and his children, all Compuware shareholders, asserted 12 causes of action against Compuware, certain former Compuware directors and officers, Thoma Bravo and minority stakeholder Elliott Associates, including breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and various fraud claims. They alleged that Elliott Associates, a less-than-10 percent shareholder of Compuware, had compiled sensitive personal information about certain Compuware directors in order to influence them with regard to the deal.

The circuit court dismissed the case in 2016, finding that the plaintiffs lacked standing because they had failed to make a demand on the Compuware board; their derivative claims were barred by res judicata; and they had failed to state a claim. The court also emphasized that the allegations against Elliott Associates were conclusory and inadequately pled, and that plaintiffs hadn’t alleged that Elliott Associates had an improper interest in the merger, had received any consideration distinct from that received by other Compuware shareholders, or had otherwise engaged in any wrongful conduct.

In affirming, the Court of Appeals confirmed that the plaintiffs’ claims were derivative in nature under Michigan law and that the plaintiffs lacked standing to pursue them, both because the plaintiffs failed to make a demand on the Compuware board and because their claims were barred by res judicata.

The Paul, Weiss team included litigation partners Daniel Kramer and Daniel Leffell and counsel Robert Kravitz and Daniel Mason. Dan Kramer argued the appeal on Elliott Associates’ behalf.

November 29, 2018

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