Corporate / Partnership & Securities / M&A Litigation

Pestotnik LLP has extensive experience litigating state and federal securities law claims and defending SEC enforcement actions. Our attorneys have represented corporations, mutual funds and individuals in cases involving alleged fraud in stock and bond issuances, derivative claims, fraud on the market claims, insider trading, violations of SEC Rule 10b5, securities class actions, claims regarding mergers and acquisitions, private company sales, option backdating and claims arising out of viatical and life settlement transactions. Our partners represent parties in a variety of corporate and partnership litigation, including cases involving officer, director and partner liability, partnership disputes, disputes involving LLC members, and other civil lawsuits involving allegations of breach of contract, fraud, breach of fiduciary duty, breach of the covenant of good faith and fair dealing, improper disclosure, accounting irregularities, recklessness, negligence, embezzlement, or mismanagement. We also assess insurance coverage issues arising in these disputes.

Here are some examples:

Minority Shareholder v. Directors

In a derivative action brought by a minority shareholder against officers and directors of a biomedical research institute alleging various breaches of fiduciary duties, we filed a motion for summary judgment on behalf of our client and the case resolved shortly thereafter with our client paying nothing.

In re PETCO Animal Supplies, Inc. Shareholder Litigation

Pestotnik LLP was co-counsel for Texas Pacific Group who, along with defendant Leonard Green Partners, purchased all of PETCO’s public stock in a leveraged buy-out. Plaintiffs, represented by the Coughlin Stoia law firm, sought a preliminary injunction to prevent the shareholders from voting on the acquisition. Pestotnik LLP was part of the defense team that successfully defeated plaintiffs’ preliminary injunction, and the shareholders then voted to approve the acquisition. Our clients were ultimately dismissed with prejudice, and paid nothing.

Pronko v. Tyson

Our firm represented Valeant Pharmaceuticals International in this shareholder derivative action alleging stock option backdating and spring-loading. The case settled with our client paying nothing to the plaintiffs.

Newell v. American Tool Companies, Inc.

Our lawyers represented a director in this shareholder action in Illinois state court that involved control of a large hand tool company by a 49% minority shareholder. The case settled without any payment by or on behalf of our client.

Herman v. Crosswater Financial Corp., et al.; and Faith v. KPMG, et al.

Pestotnik LLP was co-counsel for Tremont Group Holdings, Inc. and related entities in lawsuits filed in San Diego Superior Court arising out of the Ponzi scheme and securities fraud masterminded by Bernard L. Madoff, and his firm Madoff Securities.

In re SureBeam Securities Litigation

Our lawyers represented some of the directors and officers who were sued in a federal court class action lawsuit alleging securities fraud. After our motion to dismiss was granted in part, and denied in part, the lawsuit settled with insurance funds. The director and officer clients paid no money to anyone.

In re Mitek Securities Litigation

Our lawyers represented a software company and its officers in a Rule 10b-5, Section 20(a) and Section 16(b) securities class action. Plaintiffs alleged improper revenue recognition for software sales following a restatement of earnings, and alleged short term stock sales liability.

Yohe v. TerraGlobal Communications, Inc.

Our lawyers defended a securities class action brought in federal court in Los Angeles against TerraGlobal and certain of its officers and directors. We counterclaimed. Plaintiff’s case was dismissed pursuant to a settlement without any payment to the plaintiff, and with our client taking a judgment against the lead plaintiff.

Wolfkiel v. The Altus Group, et al.

Our partner successfully defended two individuals at trial against allegations of securities fraud and violations of the Colorado Viatical Settlements Act arising out of the sale of three limited liability companies that collectively held nearly $30 million in life insurance. The plaintiff, who was an active investor in “life settlement” transactions, sought more than $5 million in damages. Following a trial on the merits, however, the district court rejected each of the plaintiff’s claims.

Hermann v. Miller & Schroeder

Our lawyers represented two stock brokers in a multi-party state court lawsuit alleging securities fraud in connection with the sale of bonds. After the court sustained a demurrer on behalf of our broker clients, the plaintiffs dismissed the case against our remaining clients.

Eftekhary v. CompuOne Corp.

Pestotnik LLP represented CompuOne Corporation and its owners in successfully resolving a lawsuit with the company’s prior owners who were alleging a variety of business torts, including trade secret claims, all of which the clients vigorously disputed. The settlement involved our clients taking over the entire company.

Smith v. Jones

We represented a majority shareholder in an action brought by a minority shareholder alleging various direct and derivative claims in an alleged “squeeze out” of the minority shareholder by the majority shareholder. After significant litigation, we successfully resolved all claims alleged against the majority shareholder client.

Minority Shareholder v. Majority Shareholder

In a dispute between two large shareholders, Pestotnik LLP successfully obtained $300,000 for the minority shareholder after the majority shareholder and CEO unilaterally increased her own salary thereby allegedly attempted to disguise profits and share dividends as “salary.”